Airtel accuses Jio of engineering monopoly
In this article (5)
India’s largest operator by subscribers Bharti Airtel has accused disruptive new market entrant Reliance Jio Infocomm of attempting to distort competition and create a monopoly with its proposal to scrap the current interconnect usage charge (IUC).
At an industry consultation held by telecoms regulator Trai to discuss the future direction of India’s planned new national telecoms policy, Jio called for the current 0.14 rupee IUC to be abolished and replaced with a “bill and keep” regime.
But the proposal was strongly opposed by incumbent operators including Airtel, with the operator’s chief regulatory officer accusing Jio of attempting to “build its business by getting a free ride on the highways built by Airtel and other operators.”
He said Jio appears to be attempting to engineer a monopoly situation by unduly burdening the existing operators.
While Jio accused Airtel of earning excess revenue from the current IUC, Airtel has insisted it is in fact losing 5.5 billion rupees ($85.4 million) per month interconnecting the large volume of calls coming from Jio’s network.
Jio burst on to the scene last year with a cutthroat promotional offer involving providing free services for a six month period to customers porting to its network. The company now charges for data but plans to keep voice calls free in perpetuity.
Some Indian MPs, consumer activists and Reliance Jio partner Reliance Communications have also called for the IUC to be scrapped, whereas top operators Airtel, Vodafone India and Idea Cellular want the charge to be raised.
Questions & Answers
Q.What is the Interconnect Usage Charge (IUC) that Jio wants to abolish?
What is the Interconnect Usage Charge (IUC) that Jio wants to abolish?
The IUC is a charge of 0.14 rupees that Jio wants to eliminate. Jio proposes replacing it with a "bill and keep" regime, which other operators like Airtel strongly oppose as they claim to be losing money under the current system.
Q.How did Jio initially attract customers to its network?
How did Jio initially attract customers to its network?
Jio initially attracted customers by offering free services for six months to those porting to its network. It now charges for data, but plans to keep voice calls free indefinitely, which is a key part of its disruptive strategy.
Q.Which other groups support Reliance Jio's call to scrap the IUC?
Which other groups support Reliance Jio's call to scrap the IUC?
Some Indian MPs, consumer activists, and Reliance Jio's partner Reliance Communications also support scrapping the IUC. This broadens the debate beyond just the competing telecom operators.
Q.What financial impact does Airtel claim the current IUC has on its business?
What financial impact does Airtel claim the current IUC has on its business?
Airtel insists it is losing 5.5 billion rupees ($85.4 million) each month due to interconnecting the high volume of calls originating from Jio's network. This figure highlights the financial strain it places on incumbent operators.