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Operators oppose India's proposed license fee for Internet services

Reliance Infotel, Bharti Airtel, and Vodafone say the proposal to collect a percentage of Internet service revenue as licence fee will affect plans to increase broadband penetration and add cost to subscribers.
Written by Ellyne Phneah, Contributor

Indian telecom operators Reliance Infotel, Bharti Airtel, and Vodafone India have opposed the government's proposal to impose a licence fee on Internet services.

According to The Hindu Business Line on Tuesday, the Indian government proposed collecting a percentage of operators' revenue from Internet services as part of the country's to-be-launched unified licence regime. Under the proposal, Internet service providers (ISPs) may have to pay 6 percent of their annual revenues. They currently do not pay any licensing fee. 

However, telecom companies told the Telecom Regulatory Authority of India (TRAI) that Internet penetration in the country was still low. Imposing a fee would be detrimental to the government's plan to have broadband reach the masses, they said.

Reliance Infotel said charging a licence fee on pure Internet services may be counter-productive since all charges will ultimately be paid by end-subscribers who may not opt for the services if they become costly.

"The Government of India as sovereign has called for tenders for auction of broadband spectrum with a clear understanding that there will not be any licence fee on pure Internet services, and only spectrum usage charges at the rate of 1 percent will be recovered from the successful bidders," the telco said in its submission to TRAI. "Changing the same at this stage will give a wrong signal to world."

Currently, companies with the ISP licence are allowed to deduct revenues from pure Internet services while calculating the licence fee payable to the Indian government. Pure Internet refers to providing both Internet access and content.

However, Internet services provided by mobile players through 3G and 4G technologies come under the purview of the licence fee, and mobile operators say this discrepancy should be removed to level the playing field with broadband operators such as Reliance Infotel.

Airtel added mobile and wireless Internet access is a key driver of change in the Indian economy, but Internet access provided under a unified access licence is subject to a revenue share of 11 to 16 percent. To provide an impetus to the growth of Internet and broadband, the revenue from pure Internet services should be excluded for cellular operators as well, the telco said.

Vodafone India supported the demand for exempting Internet services from the scope of licence, but said Internet players should not be allowed to offer voice services. This is because the move creates a non-level playing field and the revenue loss to the government is unrelated to some ISPs which have broadband spectrum, the company explained.


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