India: VSNL Loses cyber-supremacy

Last Updated: 12 November 1998
VSNL Loses cyber-supremacy

The Government of India, as a follow-up to its earlier announcement to end the monopoly of Videsh Sanchar Nigam Limited (VSNL) as the sole Internet Service Provider, has now granted licenses to private parties.

The salient features of the press release in this regard are as follows:
  • Indian Private ISPs are allowed to set up gateways for international connectivity.
  • There will be no restriction on the number of licenses issued.
  • Licenses are to be issued for a period of 15 years.
  • There is no license fee for the first five years, and a fee of Rupee 1 per annum for subsequent years.
  • ISPs are allowed to fix their own tariff.
  • Foreign equity is allowed upto 49%.

Three categories of licenses are to be issued depending on the territorial area:
  • a)Category'A' - performance bank guarantee of Rs. 2 crores (US$ 250,000/-)to be furnished for this category
  • b)Category'B' - performance bank guarantee of 20 lakhs (US$ 50,000/-) to be furnished for this category
  • c)Category'C' - performance bank guarantee of 3 lakhs (US$ 7,500/-) to be furnished for this category

Category 'A' includes the whole of India

Category 'B' consists of each one of the 20 Territorial Telecom Circles and the four Metro Telephone Systems of Delhi, Mumbai, Calcutta and Chennai of the DoT. However, if a licence for Telephone Systems of four major cities of Ahmedabad, Bangalore, Hyderabad and Pune is required, these will also be treated as category 'B' Service Area on par with the Telecom Circles.

Category 'C' includes any Secondary Switching Area (SSA)with their geographical boundaries defined by DoT as on April 1, 1997.

The SSAs if Delhi, Mumbai, Calcutta and Chennai and telephone systems of four major cities of Ahmedabad, Bangalore, Hyderabad and Pune have been excluded from Category 'C'. )

Telecom Regulatory Authority of India (TRAI) to have power to review and fix the tariff during the validity of the license and the same shall be binding on the licensee.

Not mandatory for the applicant to have a prior experience in telecommunications and IT.

It is reported that four companies have already signed license agreements.

Earlier the Government had announced certain policy guidelines based on the report of the Committee headed by Dr.Bimal Jalan on October 20th, 1997 to give a boost to Internet use. While most of the recommendations have to do with the privatization of the Internet, the few not covered above are as below:
  • Department of Telecommunications (DoT) to continue to provide Internet services.
  • Interconnectivity between the ISPs will be permitted.
  • Internet data traffic over VSATs will be permitted.
  • The Internet service can be provided by any Indian company with foreign equity participation limited to 49 percent.
  • DoT will build a 2.5 GB backbone for National Information Infrastructure with an investment of Rs 1,200 crore (US$ 300,000,000/-)
  • The VSNL will continue to provide Internet services at existing centers (Delhi, Mumbai, Calcutta, Chennai, Bangalore and Pune).
  • The Implementation Committee will review VSNL's expansion plans.

The new policy is not only expected to increase the number of Internet subscribers to 2 million by the year 2000 (from the present 150,000 in 42 cities), but should lead to considerably cheaper access rates. Moreover, if cable operators take advantage of this policy, the reach that the Internet would have to Indian households will be staggering.
[QQ]Indian users hitherto were prone to access information about India available on servers located in other countries, purely because information available from India was so scarce. This curious situation should now change, as the privatization of Internet services is going to increase the content and quality of information available in India.

Needless to say, IN domain registrations and e-commerce will increase by leaps and bounds. Internet access will also, as a result, cease to be one-way, and there will be a lot more traffic coming in to India.

Lastly, it is expected that laws governing cyber-space, which are sadly lacking in India, will be given a shot in the arm and lead to their rapid development, in pace with the rest of the world.

Anand & Anand
1, Jaipur Estate
Nizamuddin East
New Delhi- 110013

Tel:(91 11) 4619639; (91 11) 4615833; (91 11) 4623148;(91 11) 4641749; (91 11) 4645067; (91 11) 4645078

Fax:(91 11) 4624243; (91 11) 4642060; (91 11) 3325045

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