Bharti Airtel said rival Reliance Jio is aiming to build business by getting a free ride on rival operator networks.

Airtel, which is facing competition from Reliance Jio Infocomm, said India needs competition and not a monopoly in telecom.

In Calling Party Pays (CPP) regime, which came into effect in 2003, the tariff charged to the calling customer includes the cost of terminating the call on the receiving network. CPP regime has what is called Mobile Termination Charge (MTC). Think of MTC as a clearing house where one operator pays another for using its network to carry incoming calls.

Barring four countries, the CPP regime is the globally accepted norm. In these four countries where MTC is zero, the customer pays for incoming calls. We do not have a situation where incoming calls are free and MTC is also zero globally.

Since the spread of networks and the extent of incoming calls varies across operators, it is vital that MTC covers the full cost of terminating a call. If this does not happen then, in effect, one operator is subsidising the other.

By proposing a transition to the ‘Bill and Keep’ regime with zero MTC, Reliance Jio wants to simply transfer its cost to Airtel and other operators.
As per current estimates, this cost would be to the tune of Rs 15,000 – 20,000 crore per year for the industry and will only increase going forward. Such cost transfer will allow Reliance Jio to use its muscle power and price its services in a predatory manner to kill the rest of the industry and create a monopoly.

“Reliance Jio aims to build its business by getting a free ride on the highways built by Airtel and other operators. Their proposal to move to Bill and Keep will further burden other operators and make them weak,” Ravi Gandhi, chief regulatory officer of Bharti Airtel.

“At the same time, it allows Jio to continue with its strategy of predatory pricing and throttle all competition. This is the sinister design of Jio. The question to ask is does India want a monopoly situation in telecom?,” Ravi Gandhi said.

The allegations made by Reliance Jio regarding Airtel earning excess revenue from MTC are false. TRAI mandated MTC of 14 paisa is well below the cost of producing a minute, which is currently at 35 paisa.

With the tsunami of calls originating from Reliance Jio’s network, Airtel loses 21 paisa for every minute that is carried on its network. This has resulted in a loss of Rs 550 crore per quarter for Airtel alone.