The Telecom Regulatory Authority of India’s (Trai) recommendations on Internet services will not help customers or independent Internet service providers (ISPs). However, they will definitely usher a level playing field between telecom service providers and ISPs. In order to bring parity between unified access service licence (UASL) providers and ISPs, the regulator has imposed on ISPs an annual licence fee of 6 per cent of the adjusted gross revenue (AGR). This will increase the cost of services for independent ISPs. In those areas where only independent ISPs are present, prices of services may increase.

At present, all the leading UASL service providers, including Bharat Sanchar Nigam Ltd (BSNL), Mahanagar Telephone Nigam Ltd (MTNL), Reliance Communications and Tata Teleservices, offer Internet services. They have state-of-the-art telecom networks, which help them offer good quality services. Independent ISPs have to depend on telcos for telecom infrastructure. There are 389 ISP licensees in the country, of which only 135 are operational. According to Trai estimates, the top 20 ISPs account for 98 per cent of total Internet connections.

If the Department of Telecom (DoT) imposes 6 per cent of the AGR as licence fee, the business of independent ISPs may be directly effected. Trai’s argument in imposing this licence fee is that UASL service providers already have to pay 6 per cent of their revenues as licence fees to the government. UASL service providers pay a similar licence fee on Internet services too.

Trai has recommended that all ISPs should be allowed to offer Internet telephony. Earlier, there were two categories of ISP licences — one with Internet telephony and another without it. The technology has now improved and so has the quality of voice-on-Internet. Therefore, Trai wants to impose a 6 per cent licence fee on both. However, this condition will certainly have an adverse impact on independent ISPs.

For services like Skype, Yahoo, MSN, Mediaring, Packet8, Dialpad, Amazon and Net2phone that are offered by foreign operators, Trai has no suggestions for a level playing field. However, it has recommended that they should be registered in India and that their websites should be hosted on Indian territory. This would take care of the security issues.

Trai has also recommended that the cap on foreign direct investment (FDI) on telecom services be brought down to 74 per cent from the existing 100 per cent. In order to deter non-serious players from entering the field, Trai has recommended a licence fee of Rs 20 lakh on ISPs for national licences and a Rs 10 lakh fee at the state level.

Regime change?

• Trai recommendation will ensure level playing field between UASLs and ISPs

• Skype-type services would continue but would have to host websites in India

• Rs 20 lakh entry fee suggested for national ISPs

• Rs 10 lakh entry fee proposed for state ISPs

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