Licence condition for Internet service providers amended

Firms offering Net telephony will be charged 6% of their AGR as fee.

The government has amended the licence for Internet Service Providers (ISPs), where companies providing internet telephony are required to furnish bank guarantees up to Rs 20 lakh.

The amended licence states that the bank guarantees will be Rs 20 lakh, Rs 2 lakh and Rs 50,000 respectively for category A, B or C Internet Service Providers. The amendments were made earlier this week.

The amendments also state that ISPs offering internet telephony will be charged 6 per cent of their Adjusted Gross Revenue (AGR) as licence fee, in line with Communications and IT Minister Dayanidhi Maran's announcement in November, 2005. They will have to pay spectrum charges in addition to the licence fee.

However, charges from internet access, content, and internet access related installation charges, service tax and sales tax would be excluded for the purpose of arriving at the AGR.

The amendments also impose a condition to pay the annual licence fee on a quarterly basis (within 15 days of the end of a quarter) except for the January-March period, when it must be paid by March 25 on the basis of expected revenue. Delays would attract an interest, compounded monthly, at 5 per cent above the Prime Lending Rate of the State Bank of India.

It also mandates ISPs to maintain independent accounts for internet telephony. Besides, ISPs must furnish a report by their auditors in the format prescribed by the department of telecom not later than three months at the end of the accounting period to which they relate.

Also, both the DoT and Trai have the authority to call for books of accounts at any time without recording any reasons, the amendments added.