Is Jio going to loot you?

One of the promises Mukesh Ambani gave while launching Jio was, “You’ll never have to pay for voice calls”. On Wednesday, Jio took a step back and announced that it will start charging for calls made to other operators. So, is this the classic start-up case of acquiring users with freebies and looting them once there is a monopoly? Let’s get the facts sorted.

What is IUC?

When you make a call from network A to network B, both the network incurs charges to connect your call. Network A will collect the amount from you as a call charge (think of the time when you had to pay ₹1/min). But what about network B?

There was a time when networks were charging for incoming calls. But then TRAI (the big boss of telecom in India) stepped in and said incoming calls should always be free. So to compensate the cost incurred by the receiving network B, TRAI said network A should pay a certain amount to network B as an Interconnect Usage Charge (IUC). So the one who makes the call pays for both the networks. This charge has undergone multiple revisions and currently stays at ₹0.06/min. Jio wants this charge to be completely abolished while other operators like Airtel and Vodafone want to increase this. Why?

The magic behind Jio’s free calls!

Unlike startups like Uber and Ola which gives you free rides by burning the investors’ money, Jio actually has a magic trick to give you free calls without spending from their pockets. The magic work is called VoLTE.

A key difference between Jio and other operators is, Jio is a4G only network and all its calls are made through Voice over LTE (VoLTE). All the calls that you make in Jio are actually carried as data packets very similar to how you make calls through Whatsapp or Skype! And carrying data costs very little compared to carrying voice. So when you make a Jio to Jio call, the cost incurred on that call is very miniscule, that is almost non-existent.

The problem starts when you call from Jio to other networks (lets take Airtel as example). Let’s assume you make a call from Jio to Airtel, the call is taken over data by Jio and handed over to Airtel. But Airtel still uses conventional techniques to connect this call (considering VoLTE is not available for the Airtel user). Airtel still incurs charge and wants Jio to pay for that.

Wait! If carrying data is very cheap, why were we paying ₹250/GB before Jio?

Carrying data is cheap, but also carrying voice calls are costly. And so is the infrastructure for voice calls. 2G & 3G networks have lesser area of coverage than 4G networks. So they need more towers to cover the same area. Due to competition created by Reliance (the old one) and other small players, networks had to decrease the call rates to very minimum. And to offset that cost, they chose to price the data packs at terrible rates. To sum up, before Jio, network subsidized voice calls, and collected that cost from data users.

And if voice is carried over data, why my data balance is not decreasing for voice calls?

Well, Jio could have charged your voice calls against your data pack, but they chose not to. Since the costs are so less and manageable with existing finances, Jio waived it off for the users.

So, what has changed now?

Remember how in the previous example, Jio has to pay Airtel a cost for every call its subscribers make to Airtel. This cost was borne by Jio so far. But the equation has now skewed so much that the majority of the calls originate from Jio and ends on other networks. Now look around to see how many of us, have a Jio SIM to make calls and another SIM where you receive most of your calls.

Until now, Jio was waiting for TRAI to get rid of the IUC charges — which after a lot of postponement — is now set to Jan 1, 2020. But TRAI is already reconsidering the date given that Airtel and Vodafone are slow in implementing their VoLTE networks. But now, it has decided it quits and pass the charges to the customers.

Will Jio increase the rates futher?

I would say highly unlikely. Given that India has the world’s cheapest data costs, it is understandable that Jio is running on cut throat margins. But voice calls are not an area where they are losing money. As we seen above, the voice calls in Jio network are carried at a very miniscule cost. And there is no reason for Jio to increase voice call tarriff further.