Telecommunication Interconnection Usage Charges Amendment

TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART III, SECTION 4

THE TELECOMMUNICATION INTERCONNECTION USAGE CHARGES (FIFTEENTH AMENDMENT) REGULATIONS, 2019 (10 of 2019)

TELECOM REGULATORY AUTHORITY OF INDIA NOTIFICATION New Delhi, the 17th December, 2019

File No. 6-14/2019-BB&PA --- In exercise of the powers conferred upon it under section 36, read with sub-clauses (ii), (iii) and (iv) of clause (b) of sub-section (1) of section 11, of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997), the Telecom Regulatory Authority of India hereby makes the following regulations further to amend the Telecommunication Interconnection Usage Charges Regulation, 2003 (4 of 2003), namely:-

(S.K. Gupta) Secretary

Note 1. The principal regulations were published vide F.No. 409-5/2003-FN dated 29.10.2003 (4 of 2003) and subsequently amended vide notifications Nos. -- (i) 409-5/2003-FN dated 25.11.2003 (5 of 2003) (First Amendment); (ii) 409-5/2003-FN dated 12.12.2003 (6 of 2003) (Second Amendment); (iii) 409-5/2003-FN dated 31.12.2003 (7 of 2003) (Third Amendment);

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(iv) 409-8/2004-FN dated 06.01.2005 (1 of 2005) (Fourth Amendment); (v) 409-8/2004-FN dated 11.04.2005 (7 of 2005) (Fifth Amendment), which has been set aside by Hon’ble TDSAT vide its Order dated the 21.09.2005 in appeal No. 7 of 2005; (vi) 409-5/2005-FN dated 23.02.2006 (1 of 2006) (Sixth Amendment); (vii) 409-5-2005-FN dated 10.03.2006 (2 of 2006) (Seventh Amendment); (viii) 409-2-2007-FN dated 21.03.2007 (2 of 2007) (Eighth Amendment); (ix) 409-22/2007-FN dated 27.03.2008 (2 of 2008) (Ninth Amendment); (x) 409-12/2008-FN dated 09.03.2009 (2 of 2009) (Tenth Amendment); (xi) 409-8/2014-NSL-1 dated 23.02.2015 (1 of 2015) (Eleventh Amendment); (xii) 409-8/2014-NSL-1 dated 24.02.2015 (2 of 2015) (Twelfth Amendment); (xiii) 10-8/2016-BB&PA dated 19.09.2017 (5 of 2017) (Thirteenth Amendment); (xiv) 10-8/2016-BB&PA dated 12.01.2018 (2 of 2018) (Fourteenth Amendment);

Note 2. The Explanatory Memorandum explains the objects and reasons of “the Telecommunication Interconnection Usage Charges (Fifteenth Amendment) Regulations, 2019 (10 of 2019)”.

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Explanatory Memorandum to the “The Telecommunication Interconnection Usage Charges (Fifteenth Amendment) Regulations, 2019”

A. Interconnection

1. Interconnection is extremely important from customers as well as service providers perspective. It allows the customers, services, and networks of one service provider to access the customers, services, and networks of other service providers. For effective competition and orderly growth of the telecom sector, it is essential that customers, services, and networks of one service provider are able to access the customers, services, and networks of other service providers optimally.

2. In a broader sense, the term Interconnection deals with the commercial and technical arrangements under which Telecom Service Providers (TSPs) connect their equipment, networks and services to enable their customers to have access to the customers, services and networks of other TSPs. Interconnection is one of the foundations of viable competition which in turn is the main driver for orderly growth and innovation in the telecommunications sector.

B. Regimes for retail charging of telecommunication services

3. For retail charging of telecommunication services, there are predominantly two regimes as outlined below:

(i) Receiving Party Pays (RPP) Regime: Under RPP regime, the called party also pays for the call. (ii) Calling Party Pays (CPP) Regime: Under CPP regime, the calling party pays to his/her service provider for the call, while the called party does not have to pay for the call.

4. In CPP regime, either of the following two regimes can be used for wholesale settlement between TSPs:

(i) Calling-Party-Network-Pays (CPNP) regime: Under CPNP regime, at wholesale level, the originating subscriber’s TSP pays termination charges to the terminating subscriber TSP; and (ii) Bill-and-Keep (BAK) regime: Under BAK regime, TSPs do not have to pay termination charges to each other i.e. zero termination charge.

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C. Interconnection Usage charges (IUC)

5. Interconnection Usage charges (IUC) plays vital role in enabling an optimal Interconnection. It refers to the wholesale charges payable by a TSP to another TSP for origination, termination, transiting, and carrying the calls. Various components of IUC viz. termination, carriage, transit, and origination charges are briefly described below:

(1) Termination Charges

6. Termination charges are the wholesale charges payable by the service provider of an originating subscriber to the service provider in whose network the call terminates. In the calling-party-pays (CPP) regime, generally, as per the retail tariff, the calling subscriber pays for a call to his service provider, and the calling subscriber’s service provider pays termination charge, if any, on wholesale basis to the called subscriber’s service provider to cover the interconnection/ network usage cost.

(2) Carriage Charges

7. Access Service providers in India can offer their services within the authorized Licensed Service Area (LSA), also known as Circle. As per the License conditions, the inter-circle traffic is routed through a National Long-Distance Operator (NLDO). The charges to be paid by an Access Service provider to the NLDO, to cover the cost of carrying the inter-circle calls, are called carriage charges.

(3) Transit Charges

8. When two telecom networks are not directly connected, an intermediate network is used to transit the calls to the terminating network. Such an intermediate network is known as a transit network, and the wholesale charges payable to the transit network to cover the interconnection/ network usage costs are called transit charges.

(4) Origination Charges

9. Generally, the calling subscriber pays call charges to its own service provider as per the applicable tariff. From the amount so collected, the originating subscriber’s service provider pays termination charges to the called party’s service provider and carriage (in case of an inter-circle call)/ transit charges to the NLDO/ transit service provider. The balance amount retained by the calling subscriber’s service provider, which covers the cost of originating the call, is known as origination charges. In India, origination charges have not been regulated and hence are under forbearance.

D. Evolution of IUC Framework for domestic termination charges in India

10. Initially in India, when Department of Telecommunications (DoT) was the sole provider of telecommunication services, revenue sharing between TSPs was not required. Subsequently, when the telecom market was opened for licensees, more

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than one service providers could have got involved in completion of a call. It paved the way for revenue share regime, wherein a methodology was required to be prescribed to share the revenue derived from telecommunication services among the TSPs. Therefore, a revenue share regime was put in place by the Telecom Regulatory Authority of India (TRAI) vide “The Telecommunication Interconnection (Charges on Revenue Sharing) Regulation 1999”. Through these regulations, revenue sharing arrangements for calls originated from a mobile service provider’s network terminating in a basic service provider’s network were specified. Revenue sharing arrangements were also prescribed between access service providers (both mobile and fixed) and long distance/international long-distance service providers for carrying long distance/international long-distance calls. At that time, mobile subscribers were required to pay for receiving calls also i.e. RPP regime was in place for mobile services.