Applications For Internet Licence Exceed Expectations

The department of telecommunications (DoT) has sold 230-250 Internet service provider (ISP) licence applications since early March this year. Officials in the department believe these are genuine sales and reflective of the underlying potential for ISPs in the country.

The sale of applications on this scale is surprising since there are only 16 proposals to start ISPs. Even the more optimistic projections by telecom sources never put the number of potential ISPs in the country more than 50-60.

Explained an official: This is clearly indicative of the underlying market demand for Internet services in the country. We feel those who have bought the application forms are genuinely interested in the business. Anybody who is just curious and wants to know the contents of the application can pick it of from the governments website.

 

Over 50 companies have expressed interest in being ISPs in the country. However, only 16 of them have actually applied to DoT for an ISP licence. These include telecom majors like AT&T, British Telecom, MCI, Motorola and Compuserve. Others in the fray are Bharti BT, Sprint RPG, Datapro, Icnet, HCL, Fujitsu ICIM, Satyam Infohighway, Allent Technologies, Bharti Telecom and the state-owned CMC.

Other companies like Microsoft, PCL, IBM, Infosys and Tata Unisys have also reportedly evinced interest in setting up ISPs. According to sources, it costs some Rs 20 crore to set up a nation-wide network capable of handling 100,000 subscribers. This excludes the proposed licence fee and cost of leased lines from DoT or Videsh Sanchar Nigam Ltd (VSNL).

Currently, only VSNL and DoT offer Internet access services in the country. The former offers services in Mumbai, Delhi, Bangalore, Calcutta, Chennai and Ahmedabad, while DoTs service is operational in seven cites, which it intends to expand to 20.

The entry of private service providers into the Internet market in India has been stalled after an order by the Telecom Regulatory Authority of India (TRAI) in February this year that the Internet policy of the government was invalid since it (the regulator) was not consulted while framing guidelines. DoT has challenged this order in the Delhi High Court.

It is not yet clear how many of the ISP applicants will operate at different service-area levels in the country. The Internet policy of the government specifies three types of service areas. An ISP wanting to offer internet services in the country can bid for a Category A service area, which is the whole of India.

Telecom circles (geographically analogous to states in most cases) and the four metropolitan cities Mumbai, Delhi, Chennai and Calcutta have been classified as Category B service areas. Four other cities Ahmedabad, Bangalore, Hyderabad and Pune will also be classified as Category B service areas.

ISPs with plans for provision of Internet services in other cities and towns will have the option of applying for a licence in Category C service area, which will be geographically equivalent to a secondary switching area, which is mostly similar to revenue districts in states.