The Indian telecom regulator has started consultation process to revise interconnection charges, which currently accounts for up to 75 per cent cost of calls.
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.
Currently this charge accounts for almost 75 per cent cost of the calls, any reduction in this charge will reduce call rates substantially.
Though Interconnection Usage Charges are not directly related to retail tariff, but they play a major role in determining the tariffs offered by the service providers.
While the new operators will welcome any reduction in these charges, older operators who have a wider network and larger customer base will not like to see such a move as it will dent their revenue as they are net gainers in the current regime.
TRAI has already acknowledged the complaints of smaller and new operators that incumbents gained most from termination charges and has sought the industry's response through this consultation process.
Some of the operators have demanded termination charges to be scrapped, however that seems to be unlikely as already the industry is struggling due to rock bottom call rates.
The industry is already divided on lot many issues and this new initiative might open a new war front amongst the warring factions of the industry.
The country's No 1 mobile operator, Bharti Airtel recently told TRAI that the costs of building and operating networks should be taken into account when determining termination charges and cautioned against extending "undue privileges or subsidisation" to new operators.
The Association of Unified Service Providers of India, an industry body representing firms such as Tata Teleservices and Reliance Communications, has urged TRAI to cut all components of interconnect charges right away.
Internationally too these charges are reviewed every two years and had fallen by 50 per cent during this period, it said.
Even though the consultation processes has started it is unlikely that there will be a decision anytime soon as the industry is currently undergoing a shaky phase with investigation underway about the 2G spectrum allocation scam.
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