Home World Economy Trai cuts ISD incoming call termination rate to 30 paise

Trai cuts ISD incoming call termination rate to 30 paise

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NEW DELHI: India’s telecom regulator has reduced the international termination rate – a charge paid by international operators to local networks that receive calls – to 30 paise a minute, from 53 paise a minute.

The move, that ET reported on Friday and was announced by the regulator today, would deal a further blow to India’s top telcos Bharti Airtel, Vodafone India and Idea Cellular who receive a bulk of the international calls on their network. The companies had also been seeking an increase in this charge to Re 1 and then to Rs 3.50.

Trai has argued that reduction in termination charge would reduce arbitrage with domestic call tariffs, therefore plugging the illegal VOIP gateway business in India, which will in turn lead to the eradication of the grey market for international incoming traffic. It added that the move would address the issue of ‘serious security threat’ that the grey route poses to national security, besides the leakage in revenue due to the country and its carriers.

“Essentially, the players engaged in carrying international incoming voice traffic to India through grey route thrive on the significant arbitrage opportunity presently available between the ITC, on one hand, and, tariff for domestic voice call in India plus the cost of running illegal VoIP Gateway, on the other,” the Telecom Regulatory Authority of India said.

“The Authority has decided to revise the termination charge for international incoming call to wireline and wireless from Rs. 0.53 per minute to Rs.0.30 per minute. The Authority is of the view that, with this revision, the arbitrage opportunity between ITC and domestic call tariffs would become so insignificant that illegal VOIP gateway business in India would become unviable; in turn, the grey market for ILD incoming traffic would eventually cease to exist,” Trai said.

“It is expected that if the arbitrage opportunity is plugged or kept to a minimum, the attractiveness of the grey route for carrying international incoming voice traffic would be lost, and thereby, the carrier route for international incoming traffic would witness a legitimate growth. This would not only plug the leakages in the revenue accruable to the country and Indian TSPs, but would also ensure that India continues to earn precious Forex from the International incoming voice traffic business,” the regulator explained.

The move, however, would negatively impact incumbent carriers, as they would stand to lose a large chunk of Rs 5,000 crore of revenue that comes from incoming international calls.

Airtel, Vodafone and Idea Cellular had, consistently, wanted the international rate to be increased — to Re 1 initially and to Rs 3.50 later on the grounds that existing rates are very low for India when compared to global markets, which in turn hurt call volumes going out of India, and thus revenue.

The Cellular Association of Operators in India (COAI) had earlier submitted to Trai that about 4.5 billion calls originate from India to overseas markets, while 88 billion calls land in India from other countries. Countries such as the US, UK and Germany charge 67 paise, Rs 13.36 and Rs 10.69, respectively, as termination charge per minute for international incoming calls, far higher than India’s 53 paise a minute.

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