Why JIO Is Gaining Because of IUC Reduction
TRAI (Telecom Regulatory Authority of India) is taking a decision on the IUC (interconnect usage Charge) reduction which can help JIO and will negatively impact other key operators like Idea, Airtel, and Vodafone.
The IUC charge is currently 14 p/min for all operators and it is going to reduce as per a recent report by ET.
What is an IUC Charge?
IUC charge is basically what operator A pays to operator B when a calling happens from operator A to operator B.
These are the interconnect charges which are settled among operators based on the call traffic that originates from One operator and lands on the network of another operator.
How IUC Reduction can Help JIO and Impact Airtel, Idea, Voda
Before the launch of JIO the interconnect charges was 18 p/min. Later after the launch of RJIO TRAI reduced it by 4 p/min, and it is currently at 14 p/min.
The proposal is to further reduce the IUC charge by another 5p/min so it becomes 9 p/min.
JIO pays currently 14p/min to the other operators based on the amount of voice calling that happens to the other networks.
Initially, at the time of launch, they had a huge volume of outgoing traffic and low incoming traffic. This caused a huge amount of payout to other operators on account of IUC charges.
Notably, JIO has a higher outgoing traffic in comparison to incoming traffic, as all voice calls are free from JIO.
With older operators like Airtel where there is a huge volume of incoming calls as well as outgoing calls, the OG/ IC ratio is more balanced rather than skewed like JIO.
So, in the case of the IUC reduction, the revenue which Airtel earns from incoming traffic will reduce. On the other hand, the payment that JIO makes to other operators will also reduce.
It is a double trouble for Operators like Idea, Vodafone and Airtel as their revenues will take a hit due to IUC reduction and a positive policy change for JIO which stand to gain greatly due to this minor policy change.
But How Much Can JIO Gain From This Move?
JIO network generates millions of outgoing minutes to other networks every day. This move could mean millions of rupees saved for the company. On the other hand, it is a question of loss of millions by other operators.
At a time when Idea and Vodafone are broke and pushed for a merger and other smaller telecom operators like Docomo and Aircel are packing their bags to get acquired by others, this move will make JIO more strong.