Interconnect Usage Charge: Facts that you should know

WHAT IS IT
IUC is a fee that one telecom company pays to another when a call from the former’s network lands on the latter’s. The charge is levied on a per minute basis.

WHAT IS BAK
Bill and keep is a mechanism under which there is no interconnect charge, one telco does not pay another, but keeps a record of the calls made to the other’s network. Since the call traffi c from one to the other and vice versa is almost similar, especially among large telcos, the call volumes usually get cancelled out.

WHAT HAS TRAI DONE
Trai has cut IUC to 6 paise a minute from the current 14 paise a minute from October 1, 2017. IUC will be brought down to zero paise from January 1, 2020, while moving to BAK.

WHO LOSES
Bharti Airtel, Vodafone India and Idea Cellular, large incumbents stand to lose a collective Rs 4,000-5,000 crore a year at IUC of 6 paise a minute. At zero IUC, the losses go to more than Rs 6,000 crore a year.

WHY
The three telcos control 60% of the 1 billion subscriber base, therefore most calls are likely to terminate on networks of the three. Hence, any cut in IUC will lead to lower revenue generation.

WHO GAINS
Reliance Jio, Reliance Communications, Aircel, BSNL stand to collectively gain Rs 2,000-3,000 crore from lower IUC at 6 paise. At no IUC, the gains could be more than Rs 3,000 crore. Majority of gains will go to Jio which has a larger subscriber base than RCom and Aircel.

WHY
Jio, smaller telcos would need to pay less to the three telcos