NEW DELHI: The Telecom Regulatory Authority of India (TRAI) on Thursday recommended an entry fee for issuing ISP (Internet service provider) licences and reduction in the foreign direct investment (FDI) limit to 74 per cent from the existing 100 per cent.

In its recommendations on Internet services forwarded to the Department of Telecommunications (DoT) to enable the department to finalise the ISP licensing regime, which is now under review, TRAI said free entry of ISPs should be replaced by an entry fee of Rs. 20 lakh for national level ISPs and Rs. 10 lakh for state-level ISPs.

The telecom regulator has also recommended a uniform licence fee of six per cent of gross revenue along with a 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, respectively.

Similarly, TRAI has suggested that the financial bank guarantee amount should be reduced. ISPs having 100 per cent FDI equity should reduce it to 74 per cent within two years.

Addressing the issue of unlicenced foreign entities providing Internet telephony at cheaper costs to lure Indian subscribers, TRAI has expressed its concern over the activities of such companies, as they do not fall within the framework of discipline of the telecom sector in India.

TRAI has noted that there are as many as 254 ISP licensees who have made nearly zero contribution to the growth of Internet, while 85 such licensees do not even have the correct address on which the licence was issued. Taking a serious view of this, TRAI has recommended that these ISPs be immediately inspected by the DoT Vigilance Monitoring Wing to ascertain their presence, nature of activities and financial viability. It also recommended a liberal exit policy for non-functional ISPs.

TRAI has further said out of 700 licences issued within three years of opening of ISP sector to private service providers, only 389 licensees exist today. And as per its performance monitoring report, only 135 Internet service licensees are functionally active.

Hoping that the recommendations would make Internet services in India on a par with global standards, contribute to Internet penetration and help curb grey market, TRAI said, as on December 31, 2006, there were 85.5-lakh Internet subscribers and 18.2-lakh broadband subscribers.

The DoT target of 90-lakh broadband Internet subscribers by 2007 is an up-hill task, it added.

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