August 28, 2007
The new guidelines for operating Internet services in the country is detrimental to the growth of the industry and is likely to sound the death knell of small and medium players in the country. This would also affect bandwidth-dependant sectors including the corporates and business process outsourcing (BPO) sectors hard. According to Internet Services Providers Association of India (ISPAI) Director-General Amitabh Singhal, "this policy is good to kill the industry".
"The policy is bad in intention and spirit for internet providers and users in the country, including the corporates. The government is transporting the rules of the telecom sector industry to the internet sector, with out knowing that this is a relatively young segment," he added. Stating that internet sector was not geographically bound, Singhal sought that it should be left to the market forces.
The Department of Telecommunications had decided to do away the district level operators (category `C' licence) will result in the small and medium players becoming soft targets for the major companies in the country. A proposal that these companies may move to next level (category `B' or state-level) might not really work due to huge financial and operational constraints.
To begin with, the policy will sound the death knell of the small and medium players in the country. Additionally, most of the players would not be able to rake in the Rs 100-crore entry fee for offering IPTV services. The policy has not brought in national voice over Internet protocol (VoIP), which, in turn, will only favour the major telecom players in the country. He, however, ruled out a possibility of caterlisation in the sector that could lead to increase in prices, stating that the prices were already at a nadir.
The government has also reduced FDI in internet services to 74 per cent from the earlier 100 per cent and introduced a 6 per cent revenue share clause that may spell costlier internet services for consumers. "This will kill whatever the little interest global majors like AT&T, British Telecom, Verizon and Skype among others had in investing in the Indian internet sector," Singhal said, adding, this will be sending "send wrong signals" to the world.
In the internet service policy unveiled on Saturday, the government had also introduced a higher entry fee of Rs 20 lakh for category A (national-level) licence and Rs 10 lakh for Category B (state-level) licence, against a flat fee of Re 1 earlier. It has done away with the Category C (local-level) licence altogether.
Policies that are favourable for the industry is the need of the hour, he added. |
