Announcing the internet service providers policy, minister of state for communications Kabindra Purkayastha told reporters that the licences would be issued for a period of 15 years, with foreign equity being capped at 49 per cent. ISPs will not have to pay any licence fee for the first five years and thereafter pay a token fee of Re 1 per year. The licence period can be extended beyond 15 years for a period of five years or more by the telecom authority on suitable terms and conditions. Companies will have to commence operations within 18 months from the date of signing the licence.

Though the policy allows freedom to ISPs to fix tariffs, the Telecom Regulatory Authority of India (TRAI) can review and fix a tariff at any time during the validity of the licence which would be binding on the providers.

Keeping inview the need for proliferation of the Internet, the government has decided to that service provider need not have any prior experience in information technology to get the licence. ISPs will not be allowed to provide telephone services over the net. Besides using DoT lines, private ISPs can obtain transmission links on lease from basic service operators, railways, state electricity boards, National Power Grid Corporation etc. The ISPs can also use television cable networks for transmission. ISPs can also establish their own transmission links after taking the government's approval.

Purkayastha said separate licences would be given for each service area. The country has been divided into three areas. Category A will be all India basis while Category B would include 20 territorial telecom circles and four metro telephone systems of Delhi, Mumbai, Calcutta and Chennai of telecom department. Ahmedabad, Bangalore, Hyderabad and Pune will also be treated as a category B service area. Category C will onlycomprise secondary switching areas of DoT.

Insight

Basically, computer-based data, text and graphics transmission have been opened up to private internet service providers; telephony is not permitted. There are not limits to the number of licences -- which are free of cost -- that can be granted to a particular service area. There is no rationale for limits -- which would assure business to a small bunch of licencees -- because fixed investment requirements are small. The 49 per cent ceiling on foreign equity is a concession to swadeshi. Though the policy allows freedom to fix tariffs, effectively internet service providers will be subject to Trai clearance.

Bank guarantees have been prescribed to ensure that service providers do not leave subscribers in the lurch. The prescribed implementation time of 18 months will be presumably enforced by invoking the power to cancel a licence. Though private ISPs are allowed to establish their gateways, they will have to obtain security clearance. Thisproviso will require them to establish international connectivity through DoT and VSNL.