All stakeholders – the government, the regulator and India’s telecom operators – need to remember that the interests of the consumer need to be placed above all else.
New Delhi: India’s telecom regulator will convene a meeting of representatives from Airtel, Vodafone, Reliance Jio and the Cellular Operator’s Association of India today and possibly next Monday, according to people with direct knowledge of the matter.
This ‘peace’ meeting comes after weeks of the Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (TRAI) dithering over a number of competition and regulatory concerns that have pitted Reliance Jio against Airtel, Vodafone and other incumbent operators.
“Some representatives have been called today [Friday]. But it is curious because TRAI chairman R S Sharma is currently out of the country and will only return on Sunday. Today’s meeting will be spearheaded by TRAI secretary Sudhir Gupta. There may be another meeting on Monday, where decisions are taken to restore proper network connectivity for Reliance Jio users as well as hash out other issues,” a senior telecom executive, who declined to be identified, told The Wire.
Over the last four days, since Reliance Jio’s official commercial launch on Monday, the fight between Jio and incumbent telecom operators has intensified; this time over a rather technical but significant issue called points of interconnect.
“Interconnect points are crucial because it is the mechanism by which Reliance Jio users terminate their calls on other operator networks. When a Reliance Jio user calls an Airtel user, the call, whether the call is VoLTE or normal, originates on a Reliance network and terminates on an Airtel network through a physical point of interconnection,” said Romal Shetty, Head – Telecom Practice, KPMG India.
The COAI, led by Airtel and Vodafone, claim that they can’t physically or financially sustainably provide these interconnect points. In a sharply worded letter to the prime minister’s office (PMO) two days ago, the lobby’s director general Rajan Mathews pointed out that Reliance Jio planned on exploiting the interconnect usage charge (IUC) regime and “offload tsunamis of asymmetric voice traffic that will choke and financially destroy competition”.
The consequences of this dispute have quickly become visible: a great number of Reliance Jio users have reported that they simply can’t make calls to users of other networks.
“It is worse for Reliance Jio users right now because over 90% of India’s telephone users are most likely on some other network,” said Shetty.
The TRAI meeting with industry representatives hopes to settle these interconnectivity issues: sources told The Wire that point of interconnect issues generally have to be solved circle-wise and that a comprehensive audit of the country’s interconnect ports needed to be undertaken as well.
Right and wrong
Interconnect points are only the tip of the iceberg when it comes to the very many issues that have been raised in the run-up to Reliance Jio’s launch. And yet, who is to blame in this latest dispute? Industry experts and insiders The Wire spoke to pointed emphasized that there’s more than enough blame to pass around: Starting with the telecom operators and stretching up to the DoT and TRAI.
The COAI side – Incumbents
Most experts The Wire spoke with pointed out that it would be difficult to to immediately ascertain the legitimacy of Airtel and Vodafone’s primary grievance — that both companies dont have the “network or financial resources” to deal with Jio’s immense incoming traffic and provide the required interconnect points.
“The simple fact is that without an audit being undertaken, we can’t say for sure whether incumbent operators are incapable of providing these points of interconnect. This will be an important point of discussion today and over the next few days,” one DoT official told The Wire.
The telecom industry lobby’s argument is simple: Reliance Jio has made voice calls for its users free by betting big on VoLTE (Voice over LTE) technology. This massive rush for free voice calls will place unprecedented strain on the incumbent operator’s networks and interconnect points. While Reliance Jio may make up their free voice calls by banking on 4G data revenues, Airtel says, it will choke the pipes of existing operators.
While COAI and Airtel’s concerns come with a logical basis, their argument crucially leaves out the fact that Reliance Jio will still pay for all calls that originate from its network and terminate on the network of other operators. These termination charges, which are pegged to volume, are likely to be “a substantial sum”, according to industry insiders The Wire spoke with.
“It’s a bit ironical. In the past, Airtel has argued that BSNL wasn’t providing it with points of interconnection. The termination charges that Reliance Jio will somewhat mitigate new investments that Airtel or Vodafone may have to make,” said a former telecom executive.
Where COAI’s argument rings more true is when it comes to smaller operators like Idea: While Airtel could feasibly mimic Reliance Jio’s strategy, other smaller operators simply don’t have the required spectrum to adopt a ‘free-voice, low data” market plan. It is for these smaller players, according to experts, that the interconnect point issue is a massive pain point.
“If a level-playing and competitive field is to be ensured, perhaps smaller operators have to be looked at specifically by TRAI with regards to the Reliance Jio burden,” said the former telecom executive quoted above.
The Reliance Jio side
Many of Jio’s concerns regarding interconnection points are valid, if they are found to be true by TRAI. If Airtel or Vodafone is purposefully closing these ports or not terminating Reliance Jio calls as a means of blunting Jio’s strategy, this would be an anti-competitive move. Where Jio on less solid ground, however, according to industry experts, is the manner in by which it embarked on field trials and the manner in which it moved onto commercial launches.
“Generally when it comes to points of interconnection, when you shift from a test or trial launch to a commercial launch, it takes time to open up these ports around the country and integrate them properly. When an operator launches a new service for instance, they do it in a phased manner, starting with a couple of circles. With Reliance Jio’s commercial launch, they flipped on the switch for the whole country, which could have caused an issue for other operators,” said Shetty.
Going by this, a phased Reliance Jio commercial launch could have allowed the telecom regulator and other existing operators to put their heads together over the interconnection issue. What further complicates matters is the uncertain nature of Reliance Jio’s extended field trials: a tactic that COAI claims was used by Reliance to gain nearly 2 million users without having to formally and commercially commence operations.
The TRAI and DoT side
The Wire has reported and published analysis on three major issues leading up to the launch of Reliance Jio: The first is the question of a uniform spectrum usage charge, the second are the controversial test trials Reliance Jio undertook, and the last is the current issue of interconnection points.
In these three issues, the Department of Telecommunications (initially headed by Ravi Shankar Prasad and then handed over to Manoj Sinha after the cabinet shuffle) has been reluctant to step in and take a strong position. The earlier spectrum usage charge regime primarily benefited the participants of the broadband wireless access spectrum auctions in 2010. While the Telecom Commission sought to change this, a compromise was eventually struck by the attorney general.
When it comes to field trials and interconnection points, the DoT has not confidently taken a stand and instead lobbed both issues onto TRAI’s court. As The Wire reported earlier, the DoT hesitated over the issue of test trials for nearly two months before asking TRAI to lay down norms.
“It is completely right for the DoT to do so, especially when it comes to interconnection which is a regulatory issue. However, the limitations on TRAI have to be taken into account. When Manoj Sinha was brought in, people and media claimed that he would mend relations with the industry. It was thought that Prasad had done some damage to industry relationships, after he got the tag of call drop minister. But Sinha doesn’t seem to be ready to take quick decisions either,” said a former DoT official told The Wire.