Stricter licence norms for Internet service providers

The department of telecommunications is likely to impose stringent licence conditions and rollout obligations on Internet service providers (ISPs).

Under the proposed norms, companies involved in illegal operations will not get permission to operate in new circles.

Companies will also have to roll out services soon after getting the licence. At present, they have two years' time for the rollout. ISPs can also surrender their licence after paying 5 per cent of the bank guarantee, which varies from Rs 3 lakh to Rs 2 crore, depending on the area of operation.

According to senior DoT officials, the new norms are aimed at curbing routing of international telephone calls by ISPs.

On incentives given to promote Internet services earlier, the government thinks the market has since matured, with over 400 ISPs licence-holders in the country. The Internet market is growing at about 180 per cent year-on year and has about 8 million subscribers now.

However, ISPs are of the view that the new norms will prevent new companies from starting operations.

"With such inconsistency in licence regulations, over 250 operators that have got the licence have not started operations, while new operators will be reluctant to apply for licence," said Rajesh Chharia, president, Internet Service Providers' Association of India.

As for ISPs offering Internet telephone service, the DoT is of the view that companies can get such a licence by paying an additional bank guarantee. At present, companies like MSN, Yahoo, Skype, net-to-phone, and DialPad offer voice calls over the Internet in India.

The department also proposes to get telecom service providers offering Internet services to pay six per cent of their adjusted gross revenue (AGR) from ISP services and level the field for independent ISPs. Independent ISPs pay 12.5 per cent as service tax and 6 per cent of their AGR to the government.