Reliance Jio Call Failures: Telecom Lobby Offers Up Three-Pronged Argument as Penal Action Looms

With TRAI siding with Reliance Jio over the points of interconnect issue, incumbent telecom operators will have to prove they didn't violate terms of their licence agreement.

The telecom regulator has sided with Reliance Jio over the issue of failed calls.: Reuters

The telecom regulator has sided with Reliance Jio over the issue of failed calls.: Reuters

New Delhi: India’s incumbent telecom operators, led by Airtel chief Sunil Mittal, are banking on three major arguments to help sway the country’s telecom regulator over the controversial points-of-interconnect (PoI) issue that has divided new entrant Reliance Jio and other players.

Over the last two weeks, the relationship between Reliance Jio and other telecom operators has rapidly deteriorated, with both parties accusing the other of anti-competitive behaviour. One particular point of contention is whether existing players are providing the legally required amount of interconnect points or the specific infrastructure needed for Reliance Jio users to call users of other networks such as Airtel and Vodafone.

The Telecom Regulatory Authority of India (TRAI), however, according to conversations The Wire had with senior officials, has largely sided with Reliance Jio on the matter of PoI after probing the allegations raised by both parties.

“The PoI issue has resulted in an obscene amount of call failures on Reliance Jio’s network. We had asked each telecom operator to provide their own data on the call failure rates for Reliance Jio users and in some circles, the call failure rate is as high as 80%-90%. We have issued show-cause notices and depending on the response, penal action will be taken,” a senior TRAI official told The Wire.

“What it looks like is simple anti-competitive behaviour. Although it may not be proven, it appears as if other telecom operators are currently stalling in providing interconnect points to prevent losing customers to Reliance Jio and give them breathing room to come out with similar tariffs,” the official added.

TRAI’s stance — and the Department of Telecommunications (DoT)’ hesitance to intervene in what is essentially a quality of service issue — doesn’t bode well for Airtel, Vodafone and Idea who have until next week to reply to the regulator’s show-cause notice.

Over the last week though, Cellular Operators Association of India (COAI) officials and Mittal have visited a number of DoT and TRAI officials, in an effort to present their grievances. The incumbent telecom industry arguments build on letters they have sent to telecom minister Manoj Sinha, TRAI Chairman RS Sharma and the Prime Minister’s Office over the last month.

DoT and TRAI officials, according to sources, are divided over the justifications that India’s incumbent telecom operators are offering. While two objections raised by the telecom lobby have been rejected by TRAI, the other grievance arises out of an issue that both the telecom regulator and the DoT did not want to solve in the run-up to Reliance Jio’s launch.

Argument #1:  Asymmetric Volumes of Call Traffic

The issue of asymmetric voice traffic has been the telecom lobby’s primary grievance since Reliance Jio launched commercial operations. When it first raised concerns over the PoI issue, COAI issued a public letter that stated that the amount of outgoing voice traffic that Reliance Jio users would create constituted an unfair advantage and exploited the existing interconnect usage charge framework.

Put simply, Airtel and Vodafone believed that the sudden number of new Reliance Jio users, who would come on-board almost immediately because of Reliance’s three-month free offer, would clog their own networks. More specifically, they also believe that this outgoing Reliance Jio voice traffic would far trump Reliance’s incoming traffic (i.e, calls made from an Airtel or Vodafone number to a Reliance number.)

This argument, according to sources, has not convincedTRAI or the DoT. Firstly because, incumbent telecom operators stand to make money off this asymmetric traffic.  As TRAI Chairman R S Sharma told The Wire, outgoing voice traffic is charged through a termination charge.

“Reliance has to pay 14 paise for any mobile call that terminates on a local Airtel or Vodafone network. The whole purpose of termination charges is to deal with potential cases of asymmetry. The more calls a telecom operator ‘A’ funnels through and terminates on telecom operator B’s network, the more revenue telecom operator B earns,” Sharma says.

Furthermore, another point that works against Mittal’s grievances is that the vast majority of new Reliance Jio users are most likely users of another network as well. A new study shows how most Reliance Jio users are likely to use the Reliance Jio as a secondary SIM in order to take advantage of the company’s 4G data tariffs.

“It would be difficult to say that Reliance Jio at the moment is creating a whole new market, although that is no doubt its medium and long-term goal. A good portion of its user base is likely to be people who use dual sims or have migrated from any other major telecom operator,” said a senior telecom analyst. 

In this case — as both TRAI and DoT officials state — Reliance Jio’s asymmetric voice traffic comes from existing Airtel and Vodafone users; Reliance’s three-month free offer is not currently sparking a phenomenon that takes advantage of the existing interconnect charge framework.

Argument #2: Asymmetric Voice Traffic Should Result in a Higher Termination Charge

In the last two weeks, as the number of failed Reliance Jio calls have mounted, the telecom lobby has added an extra wrinkle to the asymmetric voice traffic argument. Incumbent telecom operators essentially believe that if outgoing voice traffic crosses a certain threshold, traffic passed that should attract a termination charge higher than the existing 40 paise per minute.

This was initially raised by COAI and apparently also referenced by Mittal during recent meetings with TRAI and DoT officials.

Curiously, according to people with direct knowledge of the matter, TRAI and DoT are divided over whether this argument should be taken seriously. TRAI officials believe that any revision of termination charges — for asymmetric traffic — would be wrong because the history of India’s telecom market has always been marked by asymmetric traffic with smaller players challenging larger ones.

A handful of DoT officials The Wire spoke to, however believe that there could be a case for an asymmetric termination charge. “ While some of the telecom operators have a decent rationale, it is essentially a moot argument right now. There is no current provision for this to happen and even if one is created, it will not solve the Reliance Jio PoI issue at hand,” said a senior DoT official.

Argument #3: Poor Testing and Scaling Up

Another argument the telecom lobby and Mital have raised — an argument that The Wire has reported on extensively — concerns the manner in which Reliance Jio conducted its extended field trials and the manner in which the company went about its pan-India commercial launch.

The COAI has alleged that Reliance Jio essentially carried out a commercial launch in the guise of a field trial, garnering a little over 2 million customers without having to pay the required licence fees or termination charges.

There are two aspects to this, according to industry experts. The first is that adequate time was not given to incumbent telecom operators to free up existing points of interconnection and allocate new interconnect points.

“The other problem is that Reliance Jio did not carry out a phased commercial launch. They opened the doors to customers all over the country. Normally when one smaller telecom operator launches or rolls out a new service, they launch in specific circles to work out potential issues and also give breathing room to other operators for reasons such as PoI. This did not happen here,” said a senior executive at Idea, who declined to be identified.

When it comes to this argument, TRAI has its hands tied, according to sources. The telecom regulator and the DoT went back-and-forth over the last three months trying to decide whose responsibility it was to lay down guidelines on extended field trials and the requirements for a specific commercial launch.

“The DoT was being evasive and after a number of months asked TRAI to finally frame guidelines. By this time Reliance had already gone in for a proper commercial launch. TRAI officials are well aware of this, but it’s unclear how much it will weight it will carry for the regulator when it decides whether Airtel, Vodafone and Idea have violated terms of their TSP licence agreement,” said an industry executive with direct knowledge of the matter.

*Note: An earlier version of this article incorrectly stated that termination charges for wireless-to-wireless calls was 40 paise. 

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