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Introduction

The TRAI recently ordered a 57% reduction in IUCs for wireless-to-wireless communication services. The interconnect rates will be reduced to INR0.06 ($0.001) per minute from the present rate of INR0.14 per minute with a view to completely abolish IUCs by 2020.

Highlights

  • Ovum believes the issues arising out of the steep reductions in interconnection rates are short lived as Indian operators quickly move toward 4G and VoLTE services. In a fully converged environment, voice will consume a fraction of the network resources, compared to when it is delivered over circuit-switched 2G networks.
  • The reduction in termination charges is set to decrease the revenue from call termination services for the incumbents, and further impact their EBITDA margins. However, regulators generally aim to provide a level playing field for all operators, especially for any new entrant. In many markets regulators have dealt by introducing asymmetric termination rates to help new entrants and smaller operators become more established.

Features and Benefits

  • Details interconnect regulations and interconnect usage models in India.
  • Discusses the basis of the recent decision on interconnection usage charge cuts and the move to bill and keep (B&K) by 2020.

Key questions answered

  • What is the current Interconnect regulation in India?
  • What are the cost models used for IUC and why did where charges reduced?
  • What is the rational behind interconnect reforms in India?

Table of contents

Ovum view

  • Summary
  • TRAI's decision is forward looking, and fosters convergence of voice and data networks
  • Incumbents believe the near-zero rates would hurt network investments

Appendix

  • Further reading
  • Author

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