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70 ISPs surrender licences in 15 days

Bipin Chandran & Thomas K Thomas

The hype over the great Indian Internet bazaar seems to be over. Of the 350 Internet service provider licence-holders who had not started services, 105 have surrendered licences.

Besides, two months after the government allowed the ISPs to offer Internet telephony, only 15 of the 350 have sought a Net telephony licence.

The number of ISPs that have surrendered their licences has gone up to 105 from 35 in the last 15 days.

"Extreme competition is driving ISPs out of business. I hope the trend is not repeated in the Internet telephony business," said Shyamal Ghosh, chairman of the Telecom Commission.

The rush to surrender licences is prompted by the exit package offered by the government. As per the offer, the ISPs that have not started services can surrender licences by paying 5 per cent of the performance bank guarantee amount.

The earlier agreement between the government and the ISPs had a condition that if service-providers did not start services within 18 months of getting licences, their bank guarantees would be forfeited followed by a cancellation of the licences.

Around 350 ISPs that had not started services despite obtaining the licences were on the verge of losing the bank guarantees estimated at around Rs 1.2 billion.

As regards the Net telephony, of the 15 companies that have received licences, only five have started commercial services.

But the government hopes that the business will pick up momentum gradually. "Fifteen companies have received licences for offering Internet telephony services. We think that more will be opting for it soon," said a government official.

The companies that have got the licences include Satyam Infoway, Data Access, Icenet, Dishnet DSL, Track Online, Worldphone Internet Services, HCL Infinet, Estel Communications, Patriot Automation, Surana Telecom, Comsat Max, iServ India, Data Infosys, Primus Telecommunications and Direct Internet.

Most of the ISPs have realised that Internet telephony is not the jackpot they were waiting for, because customers can make free phone calls using the Internet.

"Initially, companies thought that Internet telephony will be a great revenue opportunity. But, the way the rules have been framed, companies are finding it difficult to do business," said Amitabh Singhal, president, Internet Service Providers Association of India.

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