TRAI to Improve SI Track Record

by CXOtoday Staff    May 10, 2007

In a bid to improve track record of Internet Service Providers (ISPs), Telecom Regulatory Authority of India (TRAI) on Thursday recommended reduction in foreign direct investment to 74% from the existing 100%. The recommendations were dispatched to department of telecommunications in New Delhi.

It also suggested structural changes regarding functional area of ISP license to ensure viable business models, besides a liberal exit policy for non-functional ISPs.
ISPs having 100% FDI equity should be given 2 years to reduce foreign holding to 74%, it said.

The regulator also suggested an entry fee of up to Rs.20 lakh, along with a uniform license fee of 6% of gross revenue. At present, there is not entry fee.

ISPs seeking license at national levels will have to pay Rs.20 lakh as entry fee while it will be Rs.10 lakh for state level ISPs. The minimum annual licence fee has been pegged at Rs.5, 000 for district level ISP, Rs.10,000 for state level and Rs.50,000 for national level ISPs.

The suggestions, if accepted, could increase the cost of internet and broadband services in India. The key message from the recommendations is that internet services in India should be at par with global standards, and the interest of consumers in terms of affordability and reliability should be uppermost in the revised plans of ISPs, TRAI maintained.

“Out of 700 licenses issued within 3 years of the opening of the ISP sector to private service providers, only 389 licensees exist today. As per the performance monitoring report, only 135 internet service licensees are functionally active,” it said.

The regulator suggested that ISPs should have a license to operate at a national and state level. ISPs operating in smaller areas like districts have been recommended to migrate to a national or state level license.

Tags: TRAI, DoT