Vodafone moves SC asking for TRAI's transparency on IUC
After the Delhi HC dismissed its plea against TRAI's consultation process for fixing IUC charges, telecom major Vodafone approached the Supreme Court for the same. In its plea, Vodafone said, non-sharing of the cost model with the Indian telecom operators was a violation of natural justice by TRAI and that Vodafone had vested legal right to ask for the cost model. Here's more.
What's it all about?
The Telecom Regulatory Authority of India (TRAI) has reduced interconnect usage charge (IUC) to 6 paise/minute, which is less than half of 14 paise/minute that was the norm till now. It'll come in effect from October 1 and from January 1, 2020, TRAI will scrap this charge completely. This move has irked majority of the telecom operators, which earn considerable revenue from IUC.
Understanding interconnect usage charges (IUC)
According to the norms, when a consumer, who uses X network, calls another consumer that uses Y network, the X network has to pay a certain amount of money to the Y network. IUC or 'interconnect usage charges', that the telecom operators pay each other, currently stands at 14 paise per minute. From October 1, it will be 6 paise per minute.
TRAI should explain its stance
Vodafone argues that when TRAI is fixing the IUC/MTC charges it is performing a "function," according to TRAI norms. These norms mandate that TRAI "ensures" transparency while undertaking such functions and/or exercising its powers regarding the same. The norms also give Vodafone vested legal right to seek clarification and a transparent process.
There is a lack of clarity
The telecom major said that the operators should be made aware of TRAI's views on the relevant heads of expenditure and the cost model. If the regulatory committee doesn't provide the same, it means that it has failed to carry out an effective and meaningful consultation. Therefore, the requirement of TRAI to maintain transparency has not been fulfilled here, according to Vodafone.
Another voice of discontent
Meanwhile, former TRAI chairman Rahul Khullar, in an interview with ET, said slashing IUC charges was "quite simply appalling." It didn't have any economic justification, said Khullar. He argued that voice calls still account for 80% of revenues accrued by telecom operators and data revenues will not exceed even 35% of the total telco revenues in the upcoming two years.
Major flak against TRAI move
Other operators have also voiced their discontent and are expected to take legal counsel soon. Airtel said, "The suggested IUC rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator which enjoys a huge traffic asymmetry in its favor." This decision "will negatively impact the already stressed financial health of the sector," said Idea Cellular.