Telcos, ILDOs Spar Over International Termination Rate Revenue Share

Mobile phone operators Bharti Airtel, Reliance Jio Infocomm and Vodafone Idea on Monday sparred with pure-play international long-distance operators (ILDOs) such as Tata Communications and Spectra over the sharing of international call termination charges (ITC).

The telcos, at an open-house discussion on the issue organised by the telecom regulator, argued for raising the ITC to Rs 0.65-Rs 1.25, from Rs 0.30 currently. ILDOs said whatever be the rate, they wanted the ITC to be shared in the ratio of 60:40 between the terminating network, or a telco, and the ILDO, warning that their business was under threat. The telcos, who are also ILD and National Long Distance (NLD) licencees, opposed this proposal.

ILDOs are telecom licensees who provide voice, data and video communication between Indian and foreign networks, and are paid a fee by the terminating telcos. An incoming international call is routed first through an ILDO, who passes it to an NLDO to which a call is made. In an integrated system, where both ILD and NLD belong to the same company, this can be done at zero margin, which is forcing the independent ILDOs to keep its charges low.

“Leveraging their status of being both ILD and Access Service Providers ,they (vertically integrated telcos) are able to give discounts to foreign operators…This has forced us (pure play ILDOs) to keep our charges to foreign operators as low as Re 0.30 per minute to remain competitive,” Praveen Sharma the head of Regulatory affairs at Tata Communications said at the open house discussions

“A revenue-sharing model for ILDOs is a win-win situation for both independent and integrated operators and will ensure healthy growth in the sector,” said Brajesh Chandra Jain, an advisor to Shyam Spectra Pvt Ltd, which is another pure-play ILDO. “The previous year, we had a turnover of Rs 0. Soon, we will not be able to survive in a lossmaking business and it will become a monopolistic structure with absolute power with the telcos.”

But a senior executive at one of the telcos said it was practically impossible to share revenue. “For something to be shared, it is required to be fixed. It is practically impossible to share ITC which is variable depending on the incoming voice traffic flowing into the country.”

Airtel and Jio want the current fixed ITC mechanism to continue, but back a higher rate. Vodafone Idea, though backed an element of forbearance, but at a higher price range. A higher ITC would add to the revenue of telcos.

Bharti Airtel wants ITC to be raised to Re 1 per minute immediately, and subsequently to Rs 3-3.50, which is equivalent to the charge paid by the Indian Access Providers for termination in foreign countries. Jio wants ITC to be fixed in the range of 65-75 paise per minute.

Vodafone Idea, in its submissions, said, “In our view, such approach should be forbearance in ITR within a prescribed range. In our view, such prescribed range at minimum should be Rs 0.75 to Rs 1.25 and we see all the objectives being met with this approach”.

The Telecom Regulatory Authority of India (Trai) last November issued a discussion paper on overhauling the current regulatory regime of fixing uniform ITC and moving to a variable pricing mechanism that would offer more leeway to local telcos to negotiate the best rates with foreign carriers.

Trai’s review call came less than two years after it slashed ITC to 30 paise a minute from 53 paise, in January 2018, to rein in the grey market for overseas incoming calls. The regulation was opposed by the older incumbent carriers, who saw a threat to their revenue. Jio had then backed the Trai move. Now, it also wants the charge to be increased.―Business Telegraph