India Business
TRAI proposes lower FDI for Internet service providers
May 10, 2007 - 6:53:42 PM

New Delhi, May 10 - In a move that could make Internet and broadband services costlier, the Telecom Regulatory Authority of India - Thursday proposed to lower foreign direct investment - for Internet service providers - from 100 to 74 percent.

ISPs having 100 percent FDI cap equity have been given two years for reduction to 74 percent.

TRAI, in its recommendations to the Department of Telecommunications -, has also put forward certain major changes concerning financial and regulatory levies.

The body has recommended for those ISPs seeking a national license to pay up Rs.2 million as entry fee, which was earlier free, and for those seeking state level license to pay Rs.1 million.

It has further recommended a uniform licence fee of six percent of their gross revenue along with minimum annual licence fee of Rs.50,000, Rs.10,000 and Rs.5,000 for national, state and district level service providers respectively.

Among its other significant recommendations, it has asked the ISPs to obtain a license to operate at a national and state level. ISPs operating in smaller areas like districts have been recommended to migrate to national or state level licence.

It has also asked the DoT's Vigilance Monitoring Wing to immediately inspect the existence of several ISPs who have obtained licenses but have not contributed at all towards the growth of Internet in the country.

'The authority is concerned with the activities of such companies, as they do not fall within the framework of discipline of telecom sector in India,' TRAI said in a statement here.

'Apart from security considerations there is also an apprehension that the Indian subscriber is misled by such service providers,' it added.

According to TRAI, if these recommendations are accepted by the DoT then it will contribute towards greater Internet penetration in the country.

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