The Hindu Business Line : Many ISPs discontinue VPN services

A LARGE number of ISPs including Spectranet, GTL Ltd and Asianet have told the Government that they are discontinuing virtual private network (VPN) services.

The move comes after the Department of Telecom imposed a licence fee and an entry fee on ISPs wanting to offer the service.

Company sources said that it did not make sense for the ISPs to pay the entry fee of Rs 10 crore over and above the eight per cent of annual revenues as licence fee for offering VPN services which by itself does not account for more than a few crores of rupees in revenue.

Only a few ISPs including Sify, HCL Infinet and Hughes Escorts Communications have applied for the new licence.

VPN services are primarily used by corporates to link their branch offices, sales team, or point of presence across the country.

The link, either through leased line or through satellite, is used for internal communication purposes and for transmitting data within an organisation.

Meanwhile, the Internet Service Providers Association of India (ISPAI) has filed an appeal against the DoT policy with the Telecom Dispute Settlement Appellate Tribunal (TDSAT).

The case is slated to come up for hearing on April 6.

The TDSAT had earlier refused to stay the DoT order and asked the ISPs to pay up the entry fee till it had heard the matter.

With ISPs withdrawing from the VPN segment, integrated telecom players such as Bharti and BSNL will benefit from less competition.

BSNL has also announced discounts on VPN services to pull away the customers of the ISPs.

In fact, BSNL had pushed the case for imposing an entry fee on ISPs claiming that there was no level playing field.

It had said that while long-distance operators were paying 15 per cent of the revenues as licence fee for offering VPN services, ISPs were not paying anything.

More than 10 ISPs were offering VPN services over the last five years at much lower cost than what BSNL was offering.

The disruption in VPN service by the ISPs has caused some difficulty for their customers.

Mr K.V. Thomas, Director of the Kochi Stock Exchange, said: "We have had to change our network, which has caused some difficulty. The new system is also not as efficient as the earlier one." The exchange was using VPN service from Asianet for internal connectivity.

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