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Trai cuts termination charges on ISD calls; Reliance Jio happy, others not

by January 12, 2018 General

Making into India much cheaper than earlier, the Telecom Regulatory Authority of India (Trai) on Friday reduced the international call to 30 paise from the present 53 paise. The new rates will be effective from Februray 1. 

This was being done to curb the “grey route” which was becoming a menace and posing serious security threat to the country, the regulator pointed out.  

Incumbent telecom operators, however, are opposing the move, saying this will skew the ratio between international incoming calls and outgoing calls even further. In 2011, there was one outgoing call from India against 5 incoming calls. That ratio has changed dramatically 1:25 now. So, revenues from international calls for incumbent operators have been declining steadily, even as international carriers are making huge amounts of money. While outgoing calls from India in a month stand at around 250 million minutes, incoming international calls total as much as 6,210 million minutes.

The incumbent operators have, in fact, represented to the government that the termination charges should be increased and brought closer to what Indian domestic customers pay when they place calls abroad. They have been seeking a level playing field. 

According to their estimates, by increasing termination charges India could earn at least Rs 60 billion of incremental forex for every Re 1 increase in termination charges. They argue that currently the opposite is happening – the country is losing foreign exchange by paying for high termination charges in other countries. It will also ensure that Indian customers get affordable tariffs. 

India has one of the lowest termination charges for international calls at 53 paise a minute. But when customers from India want to call abroad, they have to pay a hefty termination charge on an average seven to eight times higher (Rs 3.50 to Rs 4 per minute). 

So, domestic customers pay Rs 7.70 per minute on an average for calling into West Asia, Rs 2.48 a minute to Europe and 1.01 a minute to the US as termination charges. For calls to the Sultanat of Oman, domestic customers fork out a staggering Rs 15.44, and to Switzerland Rs 14.08 and Singapore Rs 2.44 as termination charges to the respective international carriers. 

There is, however, a contrarian view coming from Reliance Jio, the new kid on the block, which seems to agree with the regulator’s decision. In its presentations to Trai, it has pointed out that an increase in termination charges will only lead customers abroad to hasten their shift to other cheaper and free call alternatives like Skype, WhatsApp and Facebook. So, even the current revenues which Indian companies are getting will decline, just like it happened to the SMS business of telcos when WhatsApp messaging came about. 

They argue that as their call costs will drop, the chances are customers would use their phones rather than applications like Skype and WhatsApp to make calls. It will also reduce the growing menace of grey calls, as these alternatives will no longer be so attractive. And, thirdly, as far as the termination rates in other countries are concerned, there is very little that Indian telcos or the government can really do.