TRAI recommends lowering FDI in Internet services

New Delhi, May 10 (UNI) The telecom regulator today recommended to the government to lower foreign direct investment in Internet Services from the current 100 per cent to 74 per cent and said an entry fee of Rs 20 lakh has to be put in place for ISP providers.

TRAI said the ISPs having 100 per cent FDI equity should be given two years for reducing foreign holding to 74 per cent.

In its recommendations to Department of Telecom (DoT), the Regulator suggested levying an entry fee of up to Rs 20 lakh along with a uniform licence fee of six per cent of gross revenue.

TRAI has recommended replacing the free entry fee by Rs 20 lakh for national level ISPs and Rs 10 lakh for state level ISPs licenses.

A uniform licence fee of six per cent of AGR has been recommended along with minimum annual licence fee of Rs 50,000, Rs 10,000 and Rs 5,000 for national level, state level and district level service providers. This could increase the cost of internet and broadband services if the Regulator's suggestions are accepted.

"Out of 700 licences issued within three years of opening of ISP sector to private service providers, only 389 licensees exist on Thursday. As per the performance monitoring report with TRAI, only 135 Internet service licensees are functionally active," TRAI said.

Internet services in India should be at par with global standards and the interest of consumers in terms of affordability and reliability should be uppermost in the revised plans of ISPs, it added.

TRAI has asked for a financial bank guarantee amount and sought a maximum FDI cap/equity of 74 per cent at par with other services of telecom sector. ISPs having 100 per cent FDI cap/equity have been given two years time for reduction to 74 per cent.

The Authority has also addressed the issue of unlicensed foreign entities providing Internet telephony at cheaper costs to lure Indian subscriber.

''TRAI is concerned with the activities of such companies, as they do not fall within the framework of discipline of telecom sector in India. Apart from security considerations there is also an apprehension that Indian subscriber is misled by such service providers.'' TRAI hopes that the recommendations if accepted by the DoT will contribute to Internet penetration, curb grey market, effectively provide level playing field and above all serve the consumers interest.

UNI