A 57% cut in the interconnect usage charge (IUC), the fees telecom companies originating calls pay those receiving calls, has divided the industry between incumbents like Airtel and Vodafone-Idea, and Reliance Jio. The solution is not to restore IUC but for the government to scrap or slash its excessive claims on telecom revenue. Revenue shares in lieu of licence and spectrum-use fees and IUC have been rendered obsolete by spectrum auctions and packetised data that have replaced closed circuits between the calling and called parties.
Revenue sharing and spectrum-use fees made sense when bandwidth was bundled with operating licences. Today , spectrum is auctioned separately , with reserve prices set unrealistically high by a government gouging companies for revenue. Now that telcos pay upfront for spectrum, it is a travesty to demand revenue shares and bandwid th-use charges. Similarly , the IUC is a re lic of the era before telecom moved to packet data technology and relied on plat forms where chunks of bandwidth were blocked when calls were made. Packet data use a fraction of the network capacity used up earlier. Networks do not get clogged, making IUC charges redundant. IUC is a tiny part of the dwindling share of call revenues in total revenues, driven by ever-growing data traffic.
Today , incumbents are milked multiple times by the government: through high spectrum auction rates, usage charges, revenue sharing and corporate tax on profits. This will cripple our data-driven telecom revolution, unless the government scraps most legacy fees, auctions spectrum at reasonable rates, and scraps revenue sharing, spectrum-use fees and IUC altogether. This will let companies get along with their job and dispel charges of favouring Jio over other players.