The Hindu Business Line : DoT imposes licence, entry fees on ISPs

INTERNET services are expected to become more expensive as the Department of Telecommunications (DoT) has imposed a licence fee on ISPs amounting to eight per cent of their annual gross revenue.

The Government has also set a one-time entry fee ranging between Rs 1 crore and Rs 10 crore on ISPs, depending on the category of their licence.

However, ISPs have been allowed to offer leased line-based virtual private network (VPN) services as part of the licence.

VPN services provide a platform for utilisation of bandwidth in a very cost-effective and efficient manner. This facility is necessary for the corporate world in meeting their growing communication needs of inter-office connectivity to send data securely.

Until now, ISPs did not pay any licence fee and were required to pay a token amount of Re 1 only as entry fee.

Terming the decision as retrograde, the Internet Service Providers Association of India (ISPAI) said that the additional fees would increase the cost of operations for ISPs, which will have to be passed on to the consumers.

"ISPs have been offering VPN services for the last five years. So it is surprising that the DoT has now said that it is being included in our licence. The announcements will surely kill stand-alone ISPs," said an ISPAI official.

Internet operators are exploring legal options to challenge the DoT's decision. Companies such as Sify, HCL Infinet, Spectranet and Net4India are expected to meet next week to decide on the future course of action.

On the other hand, a DoT statement said: "The above decision will help as many 388 ISP licensees, particularly 61 all-India (Category A) ISP licensees, to offer VPN services to their customers, thus adding to their revenue stream from Internet access services."

The ISPs said that since 40-50 per cent of their revenues come from offering VPN services, there would not be any additional income than what they are already earning.

The Government has also allowed ISPs to lay optical fibre cable or use radio links for provision of the services under their licence in the entire service area. Until now, ISPs were allowed to lay cables only in local areas.

But ISPAI said that the move did not mean much since none of the ISPs would want to lay their own cables across an entire service area.

The ISPs had demanded that they be allowed to offer VPN services under the existing licence conditions.

However, long distance operators like BSNL objected to this demand on the grounds that the level playing field was being disturbed since they were paying a licence fee of 15 per cent of the annual revenues and an entry fee of Rs 100 crore. BSNL had even disconnected leased lines being used by ISPs to offer VPN services.

Adopting a technologically neutral stand, the DoT has said that the services which are technologically possible should be allowed while, at the same time, ensuring level playing field to all the service providers.

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