TRAI Proposes Lower FDI For ISPs

Upset with poor quality Internet services despite a liberal regime, telecom regulator TRAI has proposed drastic steps, including reduction in FDI cap and imposition of licence fee, on Internet Service Providers.

The Authority has recommended lowering the FDI limit from the existing 100% to 74%, on par with telecom sector, and proposed imposing an annual license fee of 6% of gross revenue.

TRAI, in its recommendations to Department of Telecom, supported liberal licensing framework for ISPs to boost Internet penetration, but envisaged a framework which would enable "serious players" in this sector to offer services.

The ISPs, however, expressed apprehension on the proposal of annual licence fee, saying this would increase the cost of broadband service. But they felt lowering the FDI limit would bring in a level-playing field and improve services.

"The uniform license fee of 6% of Adjusted Gross Revenues (AGR) will affect the end consumers as the cost of broadband services will increase by 6-24%," said Rajesh Chharia, president, Internet Service Providers Association of India.

More from Biztech

TRAI’s tough recommendations stem from the fact that of the 700 ISP licenses given in the last three years, only 135 are functional today.

According to TRAI, the recommendations, if accepted by DoT will contribute to Internet penetration, curb grey market and effectively provide level playing field and above all serve consumers interest.

PTI