The Hindu Business Line : VPN services by ISPs: TRAI for zero licence, Rs 30 lakh entry fee

THE Telecom Regulatory Authority of India (TRAI) has recommended to the Government that the Internet Service Providers (ISP) should be asked to pay an entry fee of Rs 30 lakh and zero licence fee for offering Virtual Private Network (VPN) services. The TRAI recommendation comes as a breather to the ISPs, as they were earlier asked by the Department of Telecom (DoT) to cough up between Rs 1 crore and Rs 10 crore as entry fee and 8 per cent of the revenues as licence fee for offering VPN services.

Barring a few ISPs, including Sify, HCL Infinet and Hughes, most of the other operators had to exit the VPN business because of this decision. Most of the 700 ISP licence holders are loss-making entities and did not have the resources to pay the Rs 10-crore entry fee.

The TRAI's recommendations could bring the ISPs back in business. The Internet Service Providers' Association of India welcomed the recommendations, but said that it was too soon to gauge the impact on consumers and various ISPs, because the final decision on the matter will still be taken by DoT. In the past, there have been instances when DoT as a policy maker had moved away from TRAI recommendations. The VPN is a leased-line based service used by large corporate houses and retail chains to link up their offices across the country on a common network.

TRAI said that the Government should not look at mopping revenues by imposing high entry fee and licence fees on telecom service providers. "The purpose of the entry fee is to discourage non-serious players on one hand and on the other, entry fee should not become a barrier for new players to enter the market," TRAI said in its recommendations.

TRAI was asked by the Government to give its recommendations on the issue after the Telecom Dispute Settlement Appellate Tribunal ordered DoT to go through the process of consultation before finalising the quantum of the fees. The regulatory authority pointed out that only a few large ISPs have taken the licence for offering VPN services after a high entry fee was imposed by DoT and this was detrimental to the functioning of a competitive market.

On the concerns of level playing field raised by long-distance operators, who claimed that they have paid Rs 100 crore as entry fee, TRAI said that long-distance players essentially carried voice traffic, and VPN services was only a small part of their business. It pointed out that the ISPs were adding to the long-distance operators' business by taking leased line capacity for offering VPN services.

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