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The federal government of India ended the monopoly
of VSNL over provision
of Internet services with effect from October 7, 1998. Today, there
are more than 200 private sector ISPs (Internet Service Providers)
either already active or about to start operations. Satyam
Infoway Ltd. is the first private sector ISP in India.
There
is no bar on the number of companies which will be given licences
and licence fees is virtually non-existent – none for the first
five years and a mere Rs. 10 for the next 10 years. The equity for
foreign investment has been kept at 49 per cent as is the norm with
other telecom services opened to the private sector.
The interested companies are free to fix their tariff and there is
no insistence on coverage. E-mail companies have been allowed to automatically
become Internet Service Providers (ISPs). However, pending a more
defined policy, 'conditional licences' will be given to companies
which have defaulted on licence fees in other services such as cellular,
radio paging and basic phone services.
The present policy is not very different from the previous one prepared
by a committee headed by Dr. Bimal Jalan and announced by a previous
government. The policy based on Dr. Jalan Committee recommendations
was announced on January 15, 1998. But barely a month later, the Telecom
Regulatory Authority of India (TRAI) invalidated the Internet licensing
policy on grounds that its recommendations on the terms and conditions
of licences were not obtained. The DoT filed an appeal in the Delhi
High Court, which on July 16 upheld its appeal. The case is now (as
at November 29, 1998) pending before a multi-member bench, but its
verdit is unlikely to affect the overall progress of matters in this
field.
The few points of departure from the Dr. Jalan report are a result
of inputs provided by the national task force on information technology,
the TRAI and the Law Ministry where the policy was held up for seven
weeks. As compared to the previous policy, the licence period has
been extended from 10 years to 15 years and the fees to be paid from
the sixth year onwards has been fixed at Re. 1 per year per licensee.
The Government was in favour of waiving licence fees altogether instead
of the initial period of five years but was compelled to fix a token
amount of Re. 1 following objections from the Law Ministry.
Three categories of ISPs have been specified. In the category A, licences
are given on an all-India basis, under the second category fall the
20 territorial circles and the four metro telephone systems of Delhi,
Mumbai, Chennai and Calcutta as well as Bangalore, Hyderabad, Ahmedabad
and Pune. Any secondary switching area (equivalent to a district)
form a separate category C service area with the exception of the
eight cities defined in B category. The security deposit has been
fixed at Rs. 2 crores, Rs. 20 lakhs and Rs. 3 lakhs (note: 1 lakh=100,000,
1 crore=100 lakhs) respectively.
Private companies have been allowed to establish their own gateways
in addition to using the gateways of DoT, VSNL or authorised public/government
organisations. But this concept is only in principle because the Government
has set up an inter-ministerial committee which will first go into
security-related issues before granting permission to ISPs to set
up alternate international gateways. Till then subscribers to ISPs
will have to grapple with the problem of congestion facing existing
Internet subscribers unless the VSNL dramatically increases the number
of access nodes.
In addition to leasing transmission links from the DoT, ISPs are also
allowed to utilise the infrastructure planned to be set up by the
railways, State Electricity Boards, Power Grid Corporation etc. A
point of discord might arise over the lease charges with the DoT likely
to insist that these organisations should charge the same amount as
DoT. The railways is planning two optical fibre-based networks between
Chennai and Mumbai and Delhi and Mumbai with branches at a number
of places.
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