Internet Charges May Rise 30% As TRAI Suggests 8% Licensing Fees

There is some bad news for Indian Internet users. TRAI has suggested a new 8% licensing fee which may cause the existing internet charges to increase by 30%.

“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 licenses,” Telecom Regulatory Authority of India mentioned in their Release.

TRAI has actually suggested a new revenue stream for Internet Service Providers (ISP), on which the government ‘should’ levy a 8% licensing fee to be charges annually.

Currently, TRAI levies license fee on the annual gross revenue of telecom companies, which are charged after deducting some revenues which are not charged from core telecom services.

Earlier as well, TRAI had recommended this 8% license fee and had suggested to be levied from April, 2013 onwards. But that was put on hold in the past as some discussions and questions remained unanswered. This issue has again cropped up now.

Internet Service Providers Association of India has opposed this decision and has clearly informed that this will impact their efforts of higher penetration of Internet in rural areas. They have planned out a blueprint to achieve 175 million broadband connections by 2017 and 600 million by 2020. But these plans cannot be achieved if TRAI decided to hike Internet charges.

ISPAI President Rajesh Chharia said, “If government includes deduction of bandwidth and lease line charges in pass through than Internet rates will rise only 8 percent. If not, then cascading effect will be to the tune of 25-30 percent,”

According to him, TRAI had earlier allowed discount of charges from Internet services but still there remains some issues regarding the service charges.

TRAI further 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.”

As of now, TRAI charges 6% licensing fee and had first proposed increasing this fees to 8% in 2007.