Telecom operators spoke in different voices on Friday as the regulator Trai called them for an open house to discuss network connection charges that impacts mobile rates.
The regulator organised a discussion on Interconnect User Charge (IUC), which one telecom operator pays to another for completing calls and SMSes. Telecos were split on Bill and Keep (BAK), long Run Incremental Cost (lRIC) and Fully Allocated Cost (FAC) methods for calculating mobile termination costs. State-run BSNl and Reliance Communication were in favour of using BAK for calculations.
Bharti Airtel said that the fully allocated cost (FAC) model assures recovery of full cost, including historical costs, as it relies on actual data furnished by operators. On the other hand Vodafone said that cost based approach on work done principle is the most appropriate method. Under BAK, a service provider does not have to pay termination charges to its interconnecting operator and the service provider bills its own customers for outgoing traffic.
While lRIC involves determining the incremental cost of providing an additional unit of service over current levels and over a defined future period of time. FAC involves allocation of all historical costs incurred to date for individual services based on a set of criteria like relative capacity utilisation, minutes of usage or proportional revenue generated. It considers costs that are both forward looking and incremental, which would generate a credible charge that reflects real economic cost for providing interconnection.