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January 2, 1998


180 degrees

DoT takes a U-turn. Says Net tariff is best left to market forces.

The Department of Telecommunications, in its draft paper on licensing of Internet services, has recommended that Internet tariffs be left open to be decided by market forces with as little restrictions as possible on Internet service providers.

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In a departure from its earlier policies, the core group on Internet has suggested that Internet service providers be left free to fix their own tariffs unlike in the cellular services model where a minimum tariff ceiling has been prescribed.

The DoT is expected to spell out a detailed Internet policy in mid-January.

Inter and intra-ISP network interconnectivity has also been recommended using leased lines from DoT, the basic service provider or any other organisation specially authorised to lease such lines to ISPs or by using VSAT links hired from licensed shared hub VSAT service providers.

It has been suggested that separate licences may be granted to any applicant company for each service area because ISPs will be tempted to set up their own nodes in major business and commercial cities.

For an ISP, owning a node would mean a larger customer base and a lower cost on leased lines to the DoT/VSNL Internet backbone gateway.

Category 'A' will comprise of the territorial telecom circles and metro telephone districts (Delhi, Bombay, Calcutta and Madras) of DoT. Any secondary switching area will form a separate category 'B' service area. Category 'C' will comprise any city locality covered by a local exchange system of DoT.

Significantly, international traffic will flow only through DoT's Internet node or VSNL's gateway. The ISPs will have the option to connect their Internet node either to DoT's node or VSNL's gateway directly for the purpose of delivery of international traffic.

In addition, inter-ISP traffic flow will be only provided if the interconnecting ISPs have the licences for the same service area.

At present, the core group has not given any indication of the quantum of licence fees but has stated that the fees to be paid shall be intimated before January 2001.

Following the recommendations by the Cabinet, the licence fee is to be waived for five years starting January 1998 to December 2002.

The ISP will be expected to submit a performance bank guarantee of Rs 2.5 million for the category 'A' service area, Rs 1 million for the category 'B' service area and Rs 500,000 for the category 'C' service area. The guarantee would have to be valid for two years and must be from a scheduled bank.

The draft paper also states that any company registered in India under the Companies Act 1956 will be eligible to submit the proposal for the grant of an ISP licence. No conditions have been specified for the applicant company or qualifying criteria such as prior experience in information technology or telecommunications.

Moreover, foreign equity, if any, shall be to the extent of 49 per cent.

- Compiled from the Indian media

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