India's Telecom Interconnection Rules Undergo Major Overhaul

Telecom interconnection rules are under a major overhaul, with industry bodies saying that the changes could significantly alter operator costs, foreign exchange flows, legacy network revenues and spam control mechanisms, in their submissions to Telecom Regulatory Authority of India (TRAI) . Submissions by the Cellular Operators Association of India (COAI) and the Broadband India Forum (BIF) reveal broad agreement on moving to IP-based interconnection, with differences on how aggressively the transition should be enforced and how financial burdens should be redistributed across operators. COAI has sought a mandatory shift to IP-based interconnection at the Licensed Service Area (LSA) level, arguing that this would eliminate redundant infrastructure, lower operating costs and prevent public sector operators from delaying modernisation. In simple terms, it means that telcos connect their networks using modern internet-based (IP) technology at the level of an entire telecom circle, instead of multiple city- or exchange-level connections. BIF agrees that LSA-level interconnection should be the default but has argued for flexibility, allowing sub-LSA interconnection by mutual agreement to manage traffic loads, latency and redundancy. Another key financial flashpoint is International Termination Charges (ITC) that is the wholesale fees paid by foreign telecom operators to Indian carriers for terminating incoming international calls. At present, ITC in India is capped at ₹0.35–₹0.65 per minute, among the lowest globally. COAI has argued that low ITC creates multiple distortions. According to the industry body, cheap termination rates make India an attractive destination for international robocalls and scam traffic, while Indian operators end up paying significantly higher charges to foreign carriers for outbound calls, resulting in net forex outflows. To address this, COAI has proposed raising ITC sharply to ₹4.5 per minute, contending that higher charges would deter fraud, improve foreign exchange inflows and have no impact on domestic tariffs. Another emerging theme is the use of interconnection as a tool to curb spam and fraud. BIF said that existing anti-spam frameworks largely focus on access networks, while abuse often occurs at inter-operator gateways. It has proposed stronger interconnection-level controls, such as authentication, analytics and rate-limiting. COAI has linked spam control more directly to economic deterrence through higher ITC.