Thomas K. Thomas

New Delhi, June 29

INTERNET Service Providers (ISPs) are crying foul over the recent consultation paper floated by the telecom regulator to determine the licence fee for offering Virtual Private Network (VPN) services.

Internet operators are upset with the paper on the grounds that the Telecom Regulatory Authority of India (TRAI) has already concluded that there will be an entry fee for the service even before the consultation process had begun.

The Internet Service Providers Association of India (ISPAI) is expected to give a representation to TRAI over the next few days expressing disappointment with the consultation paper. "The consultation has lost its meaning with the TRAI not debating the question of whether an entry fee was required or not for VPN services. The telecom tribunal's order is very clear in saying that the industry view has to be heard on the issue. Instead, the TRAI has chosen to debate on the quantum of the entry fee," said an ISPAI official.

ISPs said that usually when TRAI issues a consultation paper on any matter it starts with the basic question whether the policy was required or not. But in this instance TRAI has sought industry view on the amount of the entry fee. ISPs are against paying an entry fee on the grounds that VPN service was part of their licence.

However, the Department of Telecom issued a directive, which asked ISPs wanting to offer VPN services to pay between Rs 1 crore and Rs 10 crore as entry fee and 8 per cent of their annual revenues as licence fee. The entry fee was imposed to maintain the playing field between ISPs and long distance operators who also offer similar services after paying a licence fee and an entry fee of Rs 100 crore.

Internet operators then took the matter to the telecom tribunal, which upheld DoT's decision but at the same time asked the Government to go through the consultation process before fixing any fee. The DoT officials said the TRAI was right in not discussing the need for an entry fee because the tribunal's order did not question the fee itself but only the amount fixed.

(This article was published in the Business Line print edition dated June 30, 2005)
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