Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

What is Interconnection Usage Charge (IUC) in Telecom?


From UPSC perspective, the following things are important :

Prelims level: IUC

Mains level: TRAI and its regulations of telecom services

The termination charge for wireless to wireless domestic calls has been zeroed from January 1 onwards. Until now operators paid Interconnection Usage Charges (IUC) of 6 paise per minute on mobile calls.

We are heading for 5G and yet we were indulged in 2G era spat. Sounds strange, but finally IUC got away….

Interconnection Usage Charge (IUC)

  • IUC is the cost that a mobile operator pays to another operator for carrying through/ terminating a call.
  • If a customer of Mobile Operator A calls a customer of Mobile Operator B and the call is completed, then A pays an IUC charge to B for carrying/facilitating the call.
  • Essentially, it is the originating network compensating the receiving network for the cost of carrying the call. In India, IUC is set by the TRAI.

When was it introduced?

  • IUC was introduced at a time when some operators had a larger network footprint compared to new players.
  • In such a scenario, the larger operators had to be compensated for the investments it had to enable call completion. However, over the years this gap between operators has reduced.
  • All the remaining operators have identical network footprint when it comes to voice calls.
  • TRAI’s original deadline to phase out IUC was January 1, 2020.

What does it mean to Consumers?

  • For mobile users, this means that all voice calls will be free from now on.
  • While almost all operators had already started offering unlimited calls as part of their bundled pack, some were charging the 6 paise from consumers for paying IUC charges.
  • From January 1, operators will stop collecting the charges.
  • But other than that there will not be any significant gain for users. Tariff packs available in the market already offer data with unlimited voice calls.

What does the end of the IUC regime imply?

  • For the operators, the end of the IUC regime will lead to easier operations.
  • Many legal battles have been fought in the past over disputes related to IUC charges.
  • Now, the operators can keep whatever money they collect from consumers without having to keep a tab on where the call is terminating.
  • The change in the billing system will not have any significant impact on operators’ revenue.

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