TRAI mandates shift to IP-based telecom interconnection, LSA-level traffic exchange by 2029

NEW DELHI: The Telecom Regulatory Authority of India (TRAI) has mandated a transition to IP-based interconnection across telecom networks and a shift towards Licensed Service Area (LSA)-level points of interconnection (POIs), seeking to improve network efficiency, call quality and service reliability.

Under the Telecommunication Interconnection (Third Amendment) Regulations, 2026, all new interconnections established after the regulations come into force on January 1, 2027, must be IP-based. Existing points of interconnection operating on E1/TDM-based technology must migrate to IP-based interconnection within three years, in a phased manner.

The amendment also provides for a transition from the existing Long Distance Charging Area (LDCA) and Short Distance Charging Area (SDCA)-level interconnection arrangements to the LSA or Service Area level. Existing traffic, measured in Minutes of Usage (MoUs), at LDCA/SDCA-level POIs must be migrated to LSA-level POIs within three years. Subsequently, all telecom traffic will be handed over or taken over at the LSA-level POIs.

Modernising telecom network interconnection

The shift to LSA-level interconnection is intended to simplify traffic routing and improve the management of scarce numbering resources. TRAI expects the transition to deliver benefits such as lower latency and enhanced service reliability.

The regulations allow interconnection providers and seekers to mutually agree on the locations for handing over or taking over telecom traffic, aligning the framework with contemporary network architectures.

Migration to IP-based interconnection is expected to improve bandwidth efficiency, call quality and end-to-end call performance. The amendment also introduces a capacity augmentation framework for IP-based interconnection, under which the maximum call-handling capacity at a POI will be determined based on concurrent session-handling capability and link bandwidth, while maintaining the prescribed Quality of Service requirements.

New provisions for POI management and financial arrangements

The amendment introduces a specific procedure for the voluntary surrender of points of interconnection by service providers. This is distinct from the existing provision for disconnection, which relates to the stoppage of traffic exchange in exceptional circumstances arising from differences between service providers.

Voluntary surrender may be undertaken for operational reasons, including a reduction in traffic, withdrawal of services from an area or rerouting of traffic. The provision is intended to improve operational and financial efficiency.

TRAI has also rationalised the bank guarantee framework. While the existing framework has been retained, the validity of bank guarantees furnished following reassessment, as well as the interval for reassessment, has been extended from six months to twelve months. A revised methodology has also been introduced for determining the ceiling on bank guarantees for POIs, including IP-based interconnection.

For delayed payments of interconnection charges or interconnection usage charges, the amendment introduces a provision for interest at a rate mutually agreed upon by the service providers, subject to a ceiling of the State Bank of India’s one-year Marginal Cost of Funds-based Lending Rate (MCLR) plus two percentage points.

Monitoring and regulatory enforcement

The amended regulations prescribe reporting requirements to monitor the migration of traffic from LDCA/SDCA-level POIs to LSA-level POIs and the transition from E1/TDM-based to IP-based interconnection.

A graded financial disincentive framework has also been introduced for violations of the regulations. The revised approach is intended to make enforcement more proportionate to the nature and seriousness of the contraventions.

TRAI said the amendments were finalised following a review of the existing interconnection regulatory framework. The process began with a pre-consultation paper issued on April 3, 2025, followed by a consultation paper on November 10, 2025. The consultation received comments from 17 stakeholders and counter-comments from nine stakeholders. An Open House Discussion was held on January 28, 2026.

The amendments seek to align telecom interconnection regulations with technological advancements and developments in the sector, while providing greater regulatory certainty to service providers and upholding transparency, non-discrimination and fair competition.

The full text of the Telecommunication Interconnection (Third Amendment) Regulations, 2026, and its Explanatory Memorandum are available on the TRAI website: https://www.trai.gov.in/