Telecom Regulatory Authority of India(TRAI) has on 27th April issued Consultation Paper to review the current structure of Interconnection Usage Charges(IUC) And on 29th April, they made an amendment for including an item namely “Incremental Cost for Roaming Services”. Both these moves could further reduce the tariffs.

Interconnection Usage Charges are the wholesale charges payable by one telecom service provider to another for use of the latter’s network for originating, terminating or transiting or carrying a call.

Interconnection Usage Charges (IUC) Regime is an essential requirement to allow subscribers of one service provider to communicate with the subscriber of other service providers in multi-operator environment. The IUC regime determines not only the revenue accruals to the service providers but also how this revenue is to be distributed among various service providers.

Presently about 75 percent of the cost of the mobile call you make, goes towards IUC. Any reduction in IUC could directly impact the call rates you enjoy now.

Though Interconnection Usage Charges are not directly related to retail tariff, but they play a major role in determining the level of retail tariffs offered by the service providers. A number of factors like increasing competition, massive growth of subscribers, changes in retail tariff and in the cost of providing services, and adoption of new technologies by the service providers necessitate periodic review of the IUC Regime.

Almost all new operators and Tata along with Reliance are in favour of going away completely with these IUC Tariffs. But other established operators like Airtel, Vodafone etc are not in favour of this. This will for sure divide the industry once again. If the reduction in IUC happens, it could trigger a fresh round of tariff wars all over again. But lets see how much time it takes..!!