Revenue Sharing Plan For Internet Service Providers

The government is planning to introduce a revenue-sharing system for Internet service providers (ISPs) against the present policy of the service providers paying a one-time licence fee of Re 1. The present system would come to an end on March 31, 2003.

As per the new model, ISPs will be required to pay a part of their revenue as licence fee to the government after March 31, 2003.

The government may ask the Telecom Regulatory Authority of India (Trai) to work out the percentage of the revenue-share. "The details are being worked out. We will come out with the proposal before March 31, 2003 after consulting service providers," said a senior government official.

 

On the rationale of introducing the revenue-sharing system after a virtually free licence operations, he said, the easier norms were to attract players into the sector. "Besides, it also provided companies the time to build their operations without being under any pressure," he added. "The companies have built a fairly large business and are in a condition to share the revenue with the government now," a government official said.

The opening of the ISP sector had generated great interest among companies. Over 486 companies acquired license for starting services. However, only 160 ISPs actually started their services.

The Internet subscriber base had grown to 4 million on March 31, 2002 against 3.3 million a year ago.

Changes have also been made in the ISP policy to allow the companies, who are yet to launch their services, an easier exit option.

The earlier licence agreement between government and the companies provided for forfeiture of the bank guarantee and later cancellation of the licence, if the ISP failed to start service within 18 months of the awarding of licence.

Now, the companies can surrender their licence by paying 5 per cent of the bank guarantee.