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August 14, 1997


Industry not entirely happy with new Net policy

While the Telecom Commission's decision not to charge private Internet service providers any licence fees for the first two years has been widely welcomed, other clauses in the policy and subsequent pronouncements by the Department of Telecom have upset several would-be private players.

Uncertainty surrounding DoT's plans to provide Internet services across the country is one major source of anxiety.

Reports which suggest that the Videsh Sanchar Nigam Limited has been asked to hand over its existing Internet customer base in the metros, Bangalore and Pune to DoT, has only served to fuel the concern among the would-be private ISPs.

While DoT already provides commercial Internet access in a few cities, it is believed to be planning to expand its presence in this business by setting up a countrywide Internet backbone network.

It reportedly plans to use this network to position itself as a 'super ISP' from whom private ISPs can lease out capacity.

The would-be private ISPs are uncertain on what terms DoT would allow them access to the infrastructure. "While we welcome the setting up of an Internet backbone, our fear is that DoT might want to have a monopoly over the network and treat private ISPs as its agents. We would simply not be interested in running a public call offices-type operation," says an executive at a would-be private ISP.

While VSNL has been asked to form a separate subsidiary to offer Internet access and other value-added services, it is not yet clear whether DoT plans to create a similar offshoot.

However, the private players are not entirely convinced that asking the government-run companies to set up subsidiaries will ensure a level playing field.

"On the face of it, we can't complain about VSNL or DoT offering competing Internet services through subsidiaries. They can explain by saying that the subsidiaries will be treated on a par with private ISPs. However, the reality might be very different," said the executive.

The private ISPs, however, see a silver lining in the fact that the Telecom Regulatory Authority of India will be asked to oversee the ISP segment too.

There has been hectic activity (accompanied by confusion) on the Internet services front ever since the Telecom Commission made known early last month that it intends to allow private players into the field.

In fact, the sudden urgency that the commission has displayed - after letting the issue hang fire for more than a year - has taken the industry by surprise.

The commission reportedly expects to formally announce the policy within the next few weeks. Several would-be private ISPs (including existing value-added service providers like Sprint-RPG and Wipro-BT, as well as overseas firms such as AT&T) have come together to form a common forum, dubbed the 'Email and ISP Association of India.

The association will be involved in raising issues affecting the industry with the government and the TRAI.

Interestingly, the Confederation of Indian Industry is said to have agreed to help communicate the reservations of the association to the Government. Last week, the various aspects relating to Internet privatisation were discussed at a meeting organised by the CII in Delhi.

According to industry sources, a CII representative will meet Telecom Commission Chairman A V Gokak (who is also the DoT secretary), shortly to hand over a set of recommendations.

The would-be private ISPs have already won a small concession through their lobbying by getting the Telecom Commission to review the Internet gateway issue after one year instead of after two years, as envisaged originally.

The larger among the would-be private ISPs are in favour of direct connections to the Net by leasing high-speed lines from VSNL, instead of having to go through VSNL's Internet gateway.

However, they are still apprehensive about the pricing that VSNL will adopt for providing access to the gateway.

Meanwhile, the existing email licensees - most of whom are making losses - are as yet unsure about their status vis-a-vis the other entrants.

While these companies have been demanding that their licences be automatically 'enhanced' to cover Internet services, they have found to their chagrin that the new policy is silent on their status.

"Though we welcome decision not to impose licence fees on ISPs, we are still in the dark about the status of our exiting licence fees. Also, we don't know whether DoT will refund our licence fees," said an executive at an email licensee.

Email service providers feel threatened by ISPs since Internet connections automatically provide subscribers with email access. Local email operators say their businesses took a downturn ever since VSNL began offering its Internet service in August 1995.

- Compiled from the Indian media

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