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‘Not bound to give interconnect points to Jio’

India's top telecom companies tells PMO not to entertain Reliance Jio Infocomm's requests

Policy Pulse
Publish Date: Sep 7 2016 3:55PM | Updated Date: Sep 7 2016 3:58PM

‘Not bound to give interconnect points to Jio’

India's top incumbent carriers including Airtel, Vodafone India and Idea have told the Prime Minister's Office (PMO) they are in no way obliged or in any position to entertain Reliance Jio Infocomm's requests for interconnection points as they do not have either the network or the financial resources to terminate the latter's humongous volumes of potentially asymmetric voice traffic. 

 

"Unloading tsunamis of asymmetric incoming voice traffic from a (potential) 100 million Reliance Jio customers can lead to the weighted average voice realisation of existing operators plunging from 30-40 paise per voice minute to 22-25 paise per voice minute or even lower," said Cellular Operators Association of India (COAI) in its second letter to Nripendra Misra, principal secretary at PMO, in less than a month. 

 

The COAI letter, dated September 2, was sent to the PMO a day after the Reliance Industries AGM where Mukesh Ambani had announced Jio's September 5 launch date, according to a news in ET.

 

The lobby body, which represents India's biggest GSM carriers, further warned that existing telecom companies "would go into liquidation" long before this reduced weighted average voice realisation is reached. 

 

"Reliance Jio may well make up some part of this massive voice cross-subsidy by way of data revenue realisations, by way of customer acquisitions/churn, but it becomes abundantly clear that the overwhelming burden of this free lunch is sought to be passed on to rival operators through tariff manipulations, which exploit the Interconnect Usage Charge (IUC) regime, and offload tsunamis of asymmetric voice traffic that will choke and financially destroy competition," said Rajan Mathews, director general of the COAI. 

 

Existing operators, he said, would be compelled to handle voice traffic that is double their total present levels. 

 

The COAI's strongly worded letter to the PMO comes just days after Reliance Industries Chairman Mukesh Ambani had nudged rival incumbent carriers to provide enough points of interconnection (PoI) so that Jio's calls could go through smoothly. 

 

Jio officially launched 4G services on September 5 and has unleashed a disruptive welcome offer of free voice and data services till December 31, in its bid to grab 100 million customers soonest from incumbents. 

 

According to the COAI, the incoming-to-outgoing traffic ratio in India is normally 1:1, but Jio's beta tests had tended to veer it towards an asymmetric 10:1, and this would undoubtedly lead it to a 15:1ratio once its (potential) 100 million subscribers grow accustomed to unlimited free voice service. 

Meanwhile, Idea Cellular followed Airtel and Vodafone in communicating to its dealers how it's plans are better than Jio's plans and also how the latter's users will suffer from coverage gaps. "The voice services for Jio are experiencing high congestion. Since you are a high-value customer, this will impact your business," Idea told dealers in a presentation. It also added that Jio was offering data at around Rs 67 a GB, not Rs 50 as promised.