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COAI writes to PMO over inability to entertain Reliance Jio’s request for PoIs

The war of words among top telecos and new entrant Reliance Jio Infocomm has now reached the Prime Minister’s Office (PMO).

India TV Business Desk, New Delhi [ Published on: September 07, 2016 11:02 IST ]
Reliance Jio
Reliance Jio

The war of words among top telecos and new entrant Reliance Jio Infocomm has now reached the Prime Minister’s Office (PMO).

Majority members of Cellular Operators' Association of India (COAI) has written a letter to the PMO expressing their  inability to entertain the Mukesh Ambani owned venture’s requests for points of interconnect (PoIs), essential to connect subscribers of two different networks to complete a call.

In its letter addressed to Nripendra Misra, principal secretary at PMO, COAI of which all top four leading telecos -- Airtel, Vodafone, Idea and Reliance -- are members but is dominated by the first three, mentioned that they do not have either the network or the financial resources to terminate the latter’s humongous volumes of potentially asymmetric voice traffic.

“Unloading tsunamis of asymmetric incoming voice traffic from a (potential) 100 million Reliance Jio customers can lead to the weighted average voice realisation of existing operators plunging from 30-40 paise per voice minute to 22-25 paise per voice minute or even lower,” The Economic Times quotes the COAI’s letter saying.

The COAI letter, dated September 2, is the second letter to Misra in less than a month.

This comes a day after Mukesh Ambani had announced Jio’s September 5 commercial launch date.

The COAI also warned that existing telecom companies ‘would go into liquidation’ long before this reduced weighted average voice realisation is reached.

"Reliance Jio may well make up some part of this massive voice cross-subsidy by way of data revenue realisations, by way of customer acquisitions/churn, but it becomes abundantly clear that the overwhelming burden of this free lunch is sought to be passed on to rival operators through tariff manipulations, which exploit the Interconnect Usage Charge (IUC) regime, and offload tsunamis of asymmetric voice traffic that will choke and financially destroy competition," said Rajan Mathews, director general of the COAI.

Existing operators, he said, would be compelled to handle voice traffic that is double their total present levels.

According to the COAI, the incoming-to-outgoing traffic ratio in India is normally 1:1, but Jio's beta tests had tended to veer it towards an asymmetric 10:1, and this would undoubtedly lead it to a 15:1ratio once its (potential) 100 million subscribers grow accustomed to unlimited free voice service.

The latest development holds significance as it comes in the backdrop of Mukesh Ambani’s announcement of free voice calls from Jio to any operator and request asking other operators not to disrupt the common touch point.

Last month, the COAI had in its first letter to the PMO had alleged that the telecom regulator was biased against incumbent players.

Jio’s entry to the telecom sector has triggered a tariff war with existing players working hard to slash their rates to retain present customer base.

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