Why telcos are crying foul over Ringo

Mobile handset makers square off for 4G battle

Bhavin Turakhia, CEO and founder of Ringo, stirred a hornet’s last month when his company decided to “revolutionise the domestic calling space” with his ingenuous peer-to-peer calling app. The app promised voice calls at a throwaway price of 19 paisa a minute. The service was disruptive for sure: calls on Ringo would be 90 per cent cheaper than what telecom companies were charging and 25 per cent cheaper than other popular calling apps.

The Ringo app did not require wi-fi, data access or local carrier minutes. So long as a consumer had a mobile phone with a valid SIM card, calls could be made using the app.

In a country where bargain hunting is almost a religion, such a service would have been an instant hit. But within days of launch, Ringo withdrew its service, even though it maintained that there was no violation at all.

Why telcos are crying foul over Ringo

How was Ringo offering rock bottom rates? In order to avail of the cheap call, consumers had to be willing to take a rather circuitous route to call. So instead of directly calling your contacts from your phone book, you would have to select a number on the app and Ringo would call you back on the number and simultaneously call your contact and conference the two numbers using “technology”.

In its launch release, Ringo explained its complex yet cheap service in the following way: “When a user makes a call using Ringo, the app sends a callback request to our server. Upon receipt, our servers immediately place a call back to the user, as well as to the contact and connect both the calls via our technology. The recipient of the call need not even have Ringo installed on his or her phone!”

The company refused to share its technology when Business Standard wanted to know how it worked. According to mobile operators, there is a loophole in regulation that Ringo managed to exploit to its advantage.

For every call originating from one network to another, there is an interconnect charge of 14 paisa. But this charge is not levied when a call is made between two landlines. Effectively, what Ringo does is provide audio conferencing service by linking two numbers using a landline to avoid paying these standard charges to operators. Since the service uses a fixed line to connect two telephone numbers, there is no charge.

Explains Rajan Mathews, director general of Cellular Operators Association of India (COAI): “If a company creates a platform where two parties are connected through a landline then the interconnect charge is not payable. As a result, mobile operators cannot compete with them because under the law, they have to pay the 14 paisa interconnect charge if a call lands on their network from another mobile carrier.”

A day after Ringo launched its service, COAI shot off a letter to the Telecom Regulator Authority of India that Ringo was misusing the arbitrage that was created by specifying different interconnect charges for calls originating from fixed (landline) and mobile lines.

Circumventing rules?

The innovative technology that Ringo claims to be using to offer cheap calls is based on audio conferencing facility. Telecom experts claim that Ringo is offering the calling services under the Audiotex Licence and its service violates the licensing terms. Ringo is offering point-to-point conferencing, which are clearly outside the ambit of the Audiotex Licence as stated in clause 30.6. Under this licence, point-to-point conferencing and calling card facility cannot be provided by licensees.

This point-to-point conferencing is also extended by Ringo to the international bridges by directly interconnecting at international locations. Ringo’s press release says: “Once you download and install Ringo, you can make calls to all of your contacts, both mobiles and landlines, whether they are in your city or anywhere in India.” “This activity is also ultra-vires as the Audiotext Licence specifies for them to obtain services from other telecom operators,” claim industry experts.

One of the clauses of the licence also says that dial out facility shall not be used in whatsoever manner for any illegal bypass of STD/ISD traffic of any licensed access service providers.

However, it is not clear if Ringo is operating under the Audiotex Licence because the company refused to share the licence or technology it was using to offer cheap calls.

In an email response, Ringo’s Turakhia said: “We are currently investigating the matter and working towards resolving the issues. We will get back to you with updates as soon as we have confirmation on the details. Meanwhile, we would like to reiterate that the service provided by Ringo is fully legal, compliant, and follows all aspects of the Department of Telecom and TRAI regulations.”

A service like this also comes with some security risks. If Ringo is conferencing two calls through a landline, as is being alleged, then call detail record will not show up when the recipient gets a call. The number that will flash on the receiver’s phone will be a different number and there will be no record of A talking to B.

COAI in its letter to TRAI says: “This also raises security issues since the call detail records generated will capture all such calls as mobile terminating calls from person ‘Ç’ (Ringo), while communication would practically happen between person A and person B. Hence, it would not be possible to link these two calls together on the basis of generated call detail records to conclusively establish that actual conversation took place between person A and person B.”