Earlier, TRAI has lowered domestic termination charges as well.
The illegal VoIP business in India would become unviable and grey market for ILD incoming traffic would disappear because, according to TRAI, the downward revision in termination charge for international incoming call will reduce the arbitrage opportunity between ITC and domestic call tariffs.
International termination charges (ITC) are the charges payable by an International Long Distance Operator (ILDO), which is carrying calls from outside the country, to the access provider in the country in whose network the call terminates.
At present, the domestic termination charges are Rs 0.06 per minute for wireless to wireless calls and zero for wireline to wireless, wireless to wireline and wireline to wireline calls.
During the TRAI consultation process, some stakeholders has sought an upward revision of ITC claiming that it would help Indian access providers to offer more affordable domestic tariffs as well as ISD tariffs to their customers, and it would help generate more forex to the country as well more revenue to the exchequer.
Some stakeholders sought a downward revision of ITC to the level of domestic termination charge claiming that it would facilitate shift of international incoming traffic from OTT services to ILD carrier, and it would curb the menace of grey market.
The ITC of Rs 0.30 per minute prescribed by TRAI is substantially lower than the world average of International Settlement Charge (ISC) which is about Rs 3.00 to 3.50 per minute.
ILD carrier traffic in India which was rising in the past has now started showing a declining trend. The main reason for this decline is competition from OTT VoIP services. In 2016-17 in India, total ILD traffic through ILDO carrier route was about 92 billion minutes; however, as per the projections of Ovum for 2017, International OTT traffic was more than 100 billion minutes.
Globally, OTT services are cannibalizing carrier traffic. As per the estimates of TeleGeography in the year 2015, carrier plus OTT combined international global traffic was 970 billion with OTT contributing 520 billion minutes. Impact of OTT traffic could be seen from the fact that international carrier traffic which was growing at 7 percent CAGR 3 from 2007 to 2014 declined by about 1 percent in each of the past two years.
Propensity of substitution of carrier traffic with OTT traffic is directly related to penetration of high-speed Internet as well as availability of devices, both of which have been increased rapidly in India in the last couple of years. Continuation of high ITC will accelerate migration of traffic to OTT, which will impact revenues of Indian access service providers and ILDOs, nullifying any possible short-term gains.
At present, about 20 percent international incoming calls terminate in India via grey routes. Lowering of ITC to the cost level will facilitate shift of international incoming traffic from OTT services to ILD carrier and curb the menace of grey market, which will be in the interest of all stakeholders including security agencies.