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Summary:

The Department of Telecommunications (DoT) has terminated the licenses of 35 companies which never launched ISP services. Some of these incl…

The Department of Telecommunications (DoT) has terminated the licenses of 35 companies which never launched ISP services. Some of these include Discovery Infoways, Q-Net Infosystems, Netconnect (India), Infinity.com, KTV Net. As per the Hindu, over 100 other license holders are yet to offer services after five years of being given the license.

As far as my reading of this news goes – it does absolutely nothing to improve the situation in the market: these ISPs weren’t preventing others from launching services. They also weren’t hoarding licenses, since as as many as 770 licenses. Perhaps the mistake was made on the policy front – a gross underestimation of the scale of operations required for a profitable ISP business – only 275 ISPs launched services, and 397 license holders quit.

What compounds the issue is the new policy of having an entry fee, and an annual license fee. Yeah, right – that’s exactly what we need to support a sector that isn’t really taking off. This ends up reducing the possibility of competition in a market that is dominated by government companies – BSNL and MTNL because of their legacy ownership of the last mile. There was a school of thought that the India might well take the wireless route to broadband due to the expense involved with fixed-line deployment. However, there have been quality issues with wireless broadband (wired as well, but that’s another story). If the government was serious about broadband in this country, they’d open up the last mile. Scrapping non-performing ISP licenses is just an eyewash.

  1. Hi Nikhil,

    Nice article. Considering the meager 10 million internet population we have, this is indeed a bad move by DoT.
    After the release of the Broadband Policy in 2004 by the DoT, the department estimated an approx 18 Million internet subscribers and 9 million broadband subs by end of 2007, which till now we havent achieved.
    Doing some research , i also came across an interesting fact that India just has about 3.13 million broadband users in Dec 2007, while China adds 3.23 Million broadband subs every quarter. This is not a marginal difference. Another important question is apart from all these bumps on the path , is the Indian population really ready to accept the wave that will come when the government does open the last mile??

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