Companies & Sectors
Game of phones: Interconnect charge emerges as new battleground among operators
Should interconnection charges -- or the payment made for mobile phone calls from the network of one operator to another -- be scrapped?
The industry watchdog and some players appear to be in its favour, even as some others feel it can impact future investments and quality of service. At stake is an estimated Rs25,000 crore in annual revenues.
The Telecom Regulatory Authority of India (TRAI) floated a consultation paper titled "Review of Interconnection Usage Charges" last month, seeking the views of stakeholders on whether interconnection usage charges applied by service providers should stay or be removed. The responses, including counter-comments, have to be furnished by October 10.
At present, such charges for wireless to wireless calls stand at 14 paise per minute -- paid by the mobile operator on whose network the call originates. Bringing it down to zero could potentially cut mobile phone tariffs by a third -- or more.
The issue takes on significance in view of the announcement made by Reliance Jio Infocomm that it will not charge for voice calls. If it has to pay the interconnection charges, it would have to subsidise each such call. Reliance Jio already has some 1.5 million subscribers. 
The watchdog also asked whether termination charges between different networks -- from fixed-line network to wireless and vice versa -- should be symmetric.
"It is true players who are already in the market would like to monetise their investment in infrastructure. They would want those who wish to access their network to pay for it. This is the norm internationally too," said Mahesh Uppal, Director of independent consultancy Com First.
"Abolishing interconnection usage charges in India will reduce the incentive to expand networks. It will especially hurt rural areas. Voice and data connectivity is still poor there and they need significant investment in infrastructure," Uppal told IANS.
The TRAI, in its paper, has asked stakeholders several questions. These include: What will be the impact of zero interconnection usage charges for calls from wireline networks on the growth of the telecom industry?
The regulator also asked: "Which approach should be used for prescribing international termination charge in the country? Should it be kept uniform for all terminating networks?"
According to a source in the regulatory authority, around Rs 25,000 crore of revenue is generated every year from interconnection usage charges.
Bharti Airtel is the biggest recipient of such charges.
"Companies with smaller networks, like Videocon, Aircel and now, Reliance Jio, have fewer subscribers. Hence, they have more calls terminating in other networks. So, their payments for interconnection are higher. They would benefit if the interconnection charge is reduced to zero," Uppal said.
"The watchdog's suggestion of zero interconnection usage charges seems irrational. It will hurt those who have invested in infrastructure at a time when we need to increase, not decrease, infrastructure investment," he asserted.
Nonetheless, several countries have drastically slashed interconnection usage charges over the past year keeping customer welfare in mind, including Australia, Norway, Portugal, South Africa, Saudi Arabia and the United Kingdom.
The Indian watchdog's consultation paper quotes the OECD Digital Economy Outlook as saying that mobile termination charges were on a constant decline. "The OECD average of mobile termination charges fell by 65 per cent in 3.5 years from $0.0561 per minute in May 2011 to $0.0197 per minute in November 2014."
According to Rajan S. Mathews, Director General, Cellular Operators' Association of India, zero interconnection usage charges can cost the industry Rs 8,000-Rs 10,000 crore annually.
"Industry will be impacted in several ways," Rajan said. "When the the revenue stream is curtailed, industry players will rethink on how much to bid for spectrum. Infrastructure spending will take a big hit. Rural roll out of network will get retarded," he said.
"Industry as a whole invests around $8 billion-$10 billion every year for infrastructure roll out, out of which 30-40 per cent goes to the rural sector. As of now, around 85 per cent of the country has coverage for voice. But more investment is required for fibre connectivity. If this flow of revenue stops then in the longer run it will impact quality of service," he said.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.



N.Hanumanta Rao

8 months ago

The inter-connection charges must be nil or zero charges so that the general public will benefit. The telecom companies have looted the public and amassed thousands of crores.

Aqeel Qureshi

8 months ago

Well, didn't you see this coming?
How else would you expect the Big R to enter a new sector? Did you think they would slog it out and create space for themselves in the already saturated market?

"Policy Arbitrage" is something that the Big R has survived on and what is on display is a classic example of the same.
While the arbitrage itself can not at all be termed as illegal, I am not sure if it can even be called unethical.
So is it that the Big R has been plain lucky and these huge arbitrage opportunities appear to them out of the blue? There's the catch!!!!

Use of CDMA technology with 'roaming' facility for WLL services. Deja Vu?

Apple and Others Help Customers Donate to the Red Cross, And Only the Red Cross

This month's epic flooding in Louisiana, which destroyed roughly 60,000 homes, is the worst natural disaster in the United States since Superstorm Sandy in 2012. And just like after Sandy and other disasters, local officials have been troubled by the Red Cross' response.


Louisiana's governor has been so concerned by the charity's relief work that a spokesman said even amidst improvements, the state plans to "reevaluate its partnership" with the organization.


But that hasn't dissuaded Apple, Amazon and T-Mobile from soliciting flood relief donations on behalf of the charity, and, indeed, making the charity the exclusive conduit for giving.


Apple has links on its website, iTunes and App Store allowing users to directly donate to the Red Cross. U.S. Bank has a similar set-up for direct donation using its nearly 5,000 ATMs in two dozen states. T-Mobile allows its customers to donate by texting the word "LAFLOODS" to a five-digit number called a shortcode. Brooks Brothers promises to match customers' donations to the Red Cross, using the clothier's Golden Fleece Foundation.


In each case, the Red Cross is the only charity offered as a way to help.


The exclusive solicitations are problematic, said Doug White, the former director of the nonprofit management program at Columbia University. "They promote the idea that the Red Cross is America's charity and the go-to place for disasters despite its history of fumbles."


None of the companies gets any money from the arrangements. But they do benefit by being seen as companies that care. The Red Cross is one of the country's most recognized and venerable charities. "It speaks to what type of message these corporations want to convey," said White. "It's about branding and image."


Apple and others have long-standing relationships with the Red Cross. Apple, for instance, deployed one-click donation buttons after several disasters, such as last year's earthquake in Nepal.


Apple's exclusive arrangement with the Red Cross is particularly notable since the world's largest tech company has strict guidelines barring nonprofits from collecting donations inside iOS apps. All donations must be handled in a web browser outside the app or via text messages. This is part of Apple's "required user experience," it tells developers. (The latest version of ProPublica's iOS app was initially rejected by Apple's App Store review team earlier this year because it had a native button allowing people to donate to us.)


Apple declined to comment on the special status it gives the Red Cross.


Other companies said they're proud of the work they're doing with the Red Cross. "We've worked with the Red Cross for a number of years because they are trusted and they're able to provide timely emergency relief around the globe," said T-Mobile in a statement. (See each company's response below.)


The Red Cross said in a statement: "Cause marketing partners have a long history of generously supporting the Red Cross." The charity also said 3,200 Red Cross workers and volunteers "have tirelessly supported relief efforts in Louisiana." (Read the Red Cross' full statement.)


The Red Cross has suffered steep declines in charitable giving over the past year. A joint investigation by ProPublica and NPR starting in 2014 showed the charity has bungled relief efforts after major disasters, failing to deliver on promises made after the 2010 earthquake in Haiti and again after Sandy. In some cases, the Red Cross lacked basic supplies, even while championing its own work, and ended up giving donated money to other relief groups.


Similar problems have surfaced in its more recent disaster relief efforts. In the first 10 days after flooding began, it received roughly $7.8 million in donations and pledges, according to the Red Cross, far short of its $35 million to $40 million estimate for its ongoing relief efforts.


And new crowdsourced upstarts have eaten into its pool of potential donors. The New Orleans Times-Picayune is offering several options for donations on its website and GoFundMe, the world's largest online fundraising website, which allows users to create individual donation pages, has raised $10 million for Louisiana flood victims, a record for disaster relief in the platform's six-year history.


The Red Cross sent out an urgent call for donations to help fill the gap. It got quick support from its vast network of corporate sponsors to encourage donations. But after two weeks, the total donations are still less than half what the Red Cross says it needs.


The Red Cross and its corporate partners declined to provide a breakdown of its contributions. But T-Mobile said it was "very pleased with the results."


Here's a full breakdown of the companies helping the Red Cross, what they're doing, and what the companies say about their work with the charity:




What it's doing: Apple is giving the Red Cross banner advertisements on its website, iTunes and App Store portals, a so-called "frictionless" system that allows users to donate money directly to the Red Cross


Apple's response: Apple declined to comment.




What it's doing: Exclusive banner advertisements on its website and a shopping list of needed supplies, such as globes, trash bags and shovels.


Amazon's response: None.


Wells Fargo


What it's doing: Exclusive advertisements on its ATMs in the Dallas and Houston metro areas and the state of Mississippi, allowing customers to donate directly to the Red Cross


Wells Fargo's response: Wells Fargo said it had no comment on the criticisms of the Red Cross beyond a statement by its commercial banking head, Doug Kilton, saying the company is "proud to support the hard work of the American Red Cross as it assists those in our community in need of recovery, cleanup and rebuilding."


U.S. Bank


What it's doing: Exclusive advertisements on its ATMs nationwide, allowing customers using its nearly 5,000 ATMs in two-dozen states to donate directly to the Red Cross


U.S. Bank's response: "The Red Cross is one of many organizations we support, including the United Way and other relief agencies."




What it's doing: Part of the "Text to Give" program, allowing customers to send the shortcode, LAFLOODS, to a five-digit number and donate $10 to the Red Cross by adding the money onto their phone bill.


T-Mobile's response: "We've worked with the Red Cross for a number of years because they are trusted and they're able to provide timely emergency relief around the globe."


Brooks Brothers


What it's doing: Donations made through Brooks Brothers go directly to the Red Cross and the clothier's nonprofit charity, the Golden Fleece Foundation, will match contributions, up to $50,000.


Brooks Brothers' response: None.


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Uneasy calm in Bengaluru over Cauvery water share
Uneasy calm prevailed on Tuesday in Bengaluru, where one person was killed in police firing on Monday night and curfew is in force in 16 sensitive localities after angry protests turned violent in southern Karnataka over releasing more Cauvery river water to Tamil Nadu.
"We have, however, relaxed curfew in many areas for Muslims to offer prayers on Eid at mosques and in open grounds," a police official told IANS.
Though schools, colleges, government and private offices and banks have holiday for Eid fest, several IT firms and back offices, which are working, advised their employees to work from homes in view of the simmering tension across the city.
Shops, markets, malls, hotels, eateries and commercial establishments are observing an undeclared shutdown across the city due to fear of being attacked by protesters.
Buses, taxis and three-wheeler auto-rickshaws are also off the roads, while metro rail service has been suspended till late evening.
Hundreds of passengers alighting at railway stations in the city and at the airport on the outskirts had a tough time in reaching homes or workplaces in the absence of taxis, autos and buses.
A Rapid Action Force platoon staged a flag-march in the city's north-west suburb to instil confidence in the people that the situation is under control.
One person - Umesh, 25, died when police fired to disperse a mob attempting to torch a patrolling vehicle after ransacking a provision shop in the city's northern suburb," said the police official.
Though police initially resorted to caning and lobbing tear gas shells to prevent the enraged mob of about 50 people from turning violent, 12 rounds were fired by a platoon of the Karnataka State Reserved Police to disperse it from the troubled spot.
According to preliminary inquiry, the victim, working at a petrol retail outlet, was unfortunately present at the spot where the mob gathered.
Umesh hailed from Kunigal in Tumakuru district, about 70km from Bengaluru.
"We have imposed curfew for three days from early Tuesday in the city's north-west, south-west, north east and central areas to maintain peace and prevent untoward incidents during the festival week, Bangalore police commissioner N.S. Megharikh told the media here on late Monday.
Onam festival for Malayalis on Wednesday and immersion of idols of Hindu god Ganesha on the 10th day of the festival falls on Thursday.
"We have also issued a ban order under section 144 of the CrPC across the city to prevent assembling of more than five persons in public places and populated areas and maintain law and order," asserted Megharikh.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.



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