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Net telephony licence fee `ill-conceived', say ISPs

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`Yahoo, Google, Net2Phone offer services without paying anything'

New Delhi , March 15

Internet Service Providers have told the Department of Telecom that the decision to impose licence fee on Internet telephony was ill-conceived and irrational. The Internet Service Providers Association of India (ISPAI) said that the move would make the business, which was in nascent stage, unviable.

"Imposition of the revenue share on the `Internet telephony' service being provided under the ISP license is a solitary and unique case under the prevailing licensing of telecommunication services within the country wherein only one particular service is singularly and specifically targeted for the ad valorem licence fee amongst all the possible and permissible services under a particular license, viz. the ISP license," ISPAI said in its letter.

DoT, earlier this month, notified that all ISPs have to pay 6 per cent of their annual revenues as licence fee. Until now, ISPs had to pay only Re 1 as licence fee.

The association pointed out that the imposition of licence fee was absurd because companies such as Yahoo, Google and Net2Phone were offering Internet-based services without paying anything to the Government. "It is well recognised that "Internet telephony" service provided by the ISPs has been particularly useful in enabling Indian subscribers call phone numbers abroad at a lower cost, albeit often coupled with poorer quality as well as compared to the regular PSTN telephony. In fact, it will not be out of place to mention herein that aggressively competitive pricing for Internet telephony service offered by the ISPs has been hugely responsible for continuous drop in the regular ISD tariffs as well," said the ISPAI letter.

There are around 150 ISPs who have been permitted to offer the Internet telephony service under their respective ISP licenses. Though it has been almost four years since the Internet telephony service was permitted total usage during the financial year 2004-05 was 43 million minutes and the annual revenues add up to Rs 100 crore. "The imposition of revenue share as prescribed in the amendment would surely result in the demise of this customer-friendly service still in its nebulous stage, thereby adversely impacting the competitive choice available to the customers," ISPAI said.

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