Reliance Jio recently announced a new year gift for its users by waiving the Interconnect Usage Charges, which used to cost them for calls made to non-Jio telecom services users. This announcement came on December 30 last year and was put into effect from the start of the new year.
Jio had made Jio-to-Jio calls free of charge, which was the main reason many users in India had switched to it. The telecom giant, however, introduced a top-up plan for users who wanted additional talk time over the free call limit set by it. This top-up fee will also be scrapped from this year as the iucare ending for Jio.
Jio users can now call up anyone regardless of the receiver’s telephone service provider. Reliance Jio’s competitors, such as Airtel and Vodafone Idea, offer unlimited calls only with bundles of 4G data services and other services. They still charge 2G service users for placed calls.
Telecom companies usually pay 6 paise per minute for every call made to different service providers. This was until the end of last year as TRAI had postponed the implementation of zero IUC to the start of the new year. While this new rule will lead to a decrease in the average revenue per user (ARPU) for telecom service providers, it will lead to savings in the long term as they do not have to pay a share of their revenues to other telecom service providers.
The decision, therefore, does not affect the profitability of a company’s revenue-generating services negatively. Instead, the net gain of a company rises if the number of incoming calls to its network increases over time.
While this is good news for Jio users and for Jio itself because it already has a huge base of customers in India and can capitalise on its network even with the IUC repeal. For Jio’s competitor Airtel, the effect of IUC repeal will be neutral as it also has a strong customer base that will cushion the company against any immediate losses due to the TRAI decision. The Vodafone Idea group will be at a loss because it is already seeing a decline in number of users across the country. Vodafone Idea’s net revenue was from the IUC and its repeal will have a bad impact on its already dwindling revenue generation. Vodafone Idea’s loss has been Reliance Jio and Airtel’s gain till now and this trend is expected to be seen this year as well.
While Jio made its stance on the repeal of IUC clear, Vodafone Idea issued a statement that indicates that it might still choose to levy charges on domestic calls in certain plans. The telecom service provider has said that the users of unlimited packs will continue to make free calls to any network. It is not yet clear if this feature will be extended to the users of other packs from Vodafone Idea.
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