The Hindu Business Line : Entry fee mooted for ISPs offering VPN services

THE special committee under the Department of Telecom has suggested a one-time entry fee ranging between Rs 2 crore and Rs 25 crore on Internet Service Providers (ISP) wanting to offer leased line based Virtual Private Network (VPN) services.

The committee, which was set up to study afresh the issue of allowing Internet Service Providers to offer VPN services, has also suggested imposing a licence fee on ISPs at the rate of 15 per cent of the annual revenues.

The committee was set up after the ISPs demanded a review of the order given by the Telecom Regulatory Authority of India (TRAI) asking Internet operators to stop offering VPN services.

The committee in its report to the DoT has said that the Government would do well to bar ISPs from offering VPN services since it encroached upon the NLD (National Long Distance) operator's turf.

The four-member committee has pointed out that the Government would lose Rs 150 crore in revenues annually if ISPs were allowed to continue with the service.

The committee has however pointed out that if the Government decides to allow ISPs to offer VPN services then it must either impose an entry fee on them or reduce the licence fee for long distance operators to maintain the level playing field.

The committee said that while ISPs do not pay any entry fee or licence fee, NLD operators pay 15 per cent of the annual revenues as licence fee apart from Rs 100 crore entry fee. The report also says that the committee favoured the first option of imposing an entry fee on ISPs rather than reducing the costs for NLD operators since it would lead to increase in revenue for the Government.

The committee observed that if the Government reduces the licence fee for NLD operators to compensate for allowing VPN services to ISPs, then it stands to lose revenues worth Rs 650 crore. "With this option there is a decrease in the revenue of the Government and therefore not desirable," the report said.

VPN services are used by corporates to connect their offices, retail network, distributors across the country. ISPs take leased line capacity from NLD operators like Bharat sanchar Nigam Ltd (BSNL) and then offer it as a managed network to large corporates.

Of the Rs 5000-crore VPN market in the country, ISPs account for Rs 1000 crore which makes it a significant revenue earner for the ailing Internet industry.

The controversy had erupted after BSNL, which also offers VPN services on its own, refused leased line connectivity to ISPs on grounds that the licence conditions of Internet operators did not permit VPN services.

More Stories on : ISPs | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
i-flex Q2 net down 28.7 pc

i2 Tech Q3 income down to $111 m

VSNL ties up with AMD to launch new Net communicator

Microsoft-Sonet tech education pact

Safeguard Scientifics acquires Mensamind

Satyam plans Brazil centre

i-flex to open office in China

Entry fee mooted for ISPs offering VPN services

Bangalore IT.COM from November 1

Intel outside