After IUC cut, older telcos seek relief

NEW DELHI: A day after Trai slashed the interconnect usage charges (IUC) by over 50%, the older telecom operators accused the regulator of favouring new entrant Reliance Jio and sought a "relief package" from the government to tide over impending financial difficulties.

"As part of an industry, which continues to be a critical driving force behind the economic growth in the country, we are genuinely dismayed by this (IUC) decision," Bharti Airtel said. "The suggested IUC rate, which has been arrived at in a completely nontransparent fashion, benefits only one operator, which enjoys a huge traffic asymmetry in its favour," it added.

Vodafone said the Indian telecom industry is experiencing the "greatest period of financial stress" in its history. "This is yet another retrograde regulatory measure that will significantly benefit the new entrant alone, while adversely affecting the rest of the industry," the company said.

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However, Reliance Jio rubbished charges that it stood to gain from the cut in call connect rates, saying cost of voice calls has slid to a fraction of a paisa and customers should enjoy the advantage. Jio said it is "appalling" that incumbent operators have made baseless allegations against the process for determination of IUC and regulator Trai. A Jio spokesperson said, "There is no question of any advantage from the new IUC regulation to Jio as it has already passed on all the benefits to customers. We deny any benefits to Jio."

Rajan Mathews, directorgeneral of industry lobby body Cellular Operators Association of India (COAI), said the government "should step in now" and take steps to help the industry tide over the "financial mess". "Unless the government does something dramatic, I think there is going to be only one company that will survive," Mathews told TOI.

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Mathews, who has often been at loggerheads with Jio over the stand taken by COAI on certain industry matters, said tax breaks and other incentives are required for older operators to survive the onslaught unleashed by the new operator in terms of tariffs. "The government should reduce the licence fee and bring down the spectrum usage charge that the companies need to pay. The companies should be given more time to pay for their spectrum purchases, while the interest rate charge on us should be softened."

The issue of providing a relief to the telecom industry is pending with an inter-ministerial group (IMG). The high-po wered Telecom Commission has studied some of the recommendations of the IMG and has sought further details and clarifications before approving any sort of a relief package.

The launch of services by Jio in September last year has put a severe pressure on older telecom companies as the new entrant announced disruptive plans such as lifetime free calling and highly-affordable data plans. While Idea Cellular, Vodafone India and Reliance Communications have slipped into losses post Jio's entry, Airtel has seen its profit decline sharply in the last two quarters.