Jio recently introduced tariff rates for calls and that sent shock waves across the
India. But why? what made them take this surprise decision which leads to planting an idea in middle-class man’s brain to switch networks?
IUC(Interconnection Usage charge) as we all know is a charge paid by one mobile telecom operator to another when mobile customers makes calls to another network.
For example, If a Jio customer makes a call to airtel customer, jio has to pay some amount to airtel and it is applicable to each and every call. It is 14 paise/minute till 2017 and the government decides to reduce that cost to 6 paise/minute and ultimately to free (No charge) by end of January 2020. These rates will be decided by the government. So, Jio is paying 6 paise/minute to all other networks from 2017 itself when made an outgoing call without charging us extra.
There are 3 different reasons for this sudden decision :
1. The government postponed the date of Jan 2020 and no clarification provided yet on the final date and also Jio initially assumed that if they attracted more customers and make them use jio network, this IUC charge will not affect much but second reason disturbed the actual idea.
2. The scenario is still 2019-August, 50% of the mobile users are using 2G,3G
which means they are not using JIO. So, users of other networks placing missed calls to jio users and in return jio users making outgoing calls.
The end result is Outcoming calls >>>> incoming calls which will ultimately increase IUC charges for Jio and Jio almost paid 13,500 crores to other networks as IUC.
3. Jio recently came up with another experiment which reduces the ringing time to 25 secs from 45 secs. The idea is that if ringing time is less, it will be as a missed call in receivers mobile if they don’t pick up quickly and they will make an outgoing call to jio which neutralizes the IUC but that didn’t work out and results are not that great. So, it didn’t work out well for Jio and finally, they came up with 6paise/minute for outgoing calls.
Why government charging as IUC?
Initially, when jio is not introduced, Airtel, Idea, Vodafone are the leading mobile operators in India. They constructed the infrastructure for 2G& 3G and also the separate infrastructure for both calls and internet data. They even charge for calls and internet separately because of separate maintenance. They invested a huge amount for this and to create infrastructure for 4G it costs even more and they are not ready to invest very soon. (This is the reason why we are lagging behind on internet compared to other countries because foreign countries came up with 4G technology long ago) The government introduced IUC to maintain this infrastructure all over India for all networks. Jio came up directly with 4G infrastructure and the benefit is there is no requirement of separate maintenance and infrastructure for calls and data separately and that is why jio always used to club the charges of calls and data. Later on, Airtel and all other networks also installed 4G infrastructure all over India and providing services to customers.
Is this the end of JIO era?
Absolutely, No. Jio will revise the rates and comes back to the original once government implements the Zero IUC charge. And also there is a possibility of an increase in rates in other networks also.