ISPs: Trai for lowering FDI

Concerned over poor track record of Internet service providers, Telecom Regulatory Authority of India recommended on Thursday lowering of foreign direct investment on par with telecom sector at 74 per cent from the existing 100 per cent.

ISPs having 100 per cent foreign direct investment equity should be given two years for reducing foreign holding to 74 per cent, it said. In its recommendations to department of telecom, Trai has also suggested major changes in financial and regulatory levies.

Instead of free entry, it recommended levying an entry fee of up to Rs 20 lakh (Rs 2 million) along with a uniform licence fee of six per cent of gross revenue.

ISPs seeking licence at national level will have to pay Rs 20 lakh as entry fee while it will be Rs 10 lakh (Rs 1 million) for state level ISPs.

The minimum annual licence fee has been pegged at Rs 5,000 for district level ISP, Rs 10,000 for state level and Rs 50,000

for national level ISP.

Trai's suggestions, if accepted, could make increase the cost of Internet and broadband services in the country. The regulator has taken a tough stand as the objective of competition and growth of Internet have not been met.

"Out of 700 licences issued within three years of opening of ISP sector to private service providers, only 389 licensees exist. As per the performance monitoring report with Trai, only 135 Internet service licensees are functionally active," Trai said.

The key message from the recommendations is that Internet services in India should be at par with global standards and the interest of consumers in terms of affordability and reliability should be uppermost in the revised plans of ISPs, it added.