TRAI suggests new revenue definition for ISPs

The Telecom Regulatory Authority of India (TRAI) has suggested a new definition of revenue for internet service providers (ISPs), under which the government could levy up to 8 per cent annual fee.

The TRAI definition, if approved would end up boosting service charges by up to 30 per cent and hit efforts to increase penetration in the country.

''The authority recommends that a uniform licence fee of 8 per cent of the AGR (adjusted gross revenue) shall be applicable for all ISP and ISP-Internet Telephony licences,'' TRAI said on Wednesday.

The licence fee would be levied by the government on AGR of some telecom companies after deduction of some components not earned from telecom services.

TRAI said: ''Revenue for the purpose of licence fee for ISP and ISP-IT category shall include all types of revenue from internet services, allowing only those deductions available for pass through charges and taxes and levies as in the case of access services, without any set-off for expenses.''

TRAI had earlier recommended that the government levy 8 per cent licence fee from 1 April 2013, but raised some questions on revenue items that would need to be considered for calculation of final charges.

According to commentators, broadband customers might soon be paying 6 per cent higher tariffs for basic services, if the new TRAI proposals were accepted.

However, for BWA licence-holders who had not yet rolled out services, TRAI had proposed levy of a presumptive AGR of 5 per cent of sum of the total bid amount by the spectrum holder for the respective service area where they held BWA spectrum, as applicable to the licensees who obtained spectrum in the auctions conducted in November 2012 and March 2013.

The recommendation would now go to the Department of Telecom (DoT), which in turn would pass it on to the Telecom Commission for final passing.

DNA newspaper quoted Jagjit Singh Kohli, managing director and CEO of Digicable, as saying, on one hand, the government wanted to promote broadband penetration, and on the other, it was levying such provisions and taxes. He added this showed the government had not got its priorities right, especially given the tax holidays they had provided in other areas of public interest.