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Our Bureau

New Delhi , May 3

IN a blow to Internet Service Providers (ISPs), the Telecom Dispute Settlement Appellate Tribunal (TDSAT) on Tuesday refused to stay the Government's decision to impose entry fee and licence fee on virtual private network (VPN) services.

The telecom tribunal has, however, asked the Department of Telecom (DoT) to seek the recommendations of the Telecom Regulatory Authority of India (TRAI) on the quantum of fee to be charged. DoT had imposed an entry fee ranging from Rs 1 crore to Rs 10 crore and a licence fee of 8 per cent of the annual revenue on ISPs offering VPN services. TDSAT said that VPN is a separate service and cannot become part of the ISP licence.

"As rightly contended by DoT, VPN was not allowed as part of ISP licence. Therefore, it becomes a separate service. The quantum of entry fee and revenue share to be charged for a separate service would require recommendations of TRAI," Mr Justice D.P. Wadhwa, Chairperson, TDSAT, said while pronouncing the order.

The tribunal directed that until TRAI decides on the quantum of the fee, the decision taken by the DoT would be in effect. TRAI has been given four months time to bring out its recommendations. If TRAI fixes a lower entry fee, then ISPs will be entitled to refund of excess entry and licence fee paid along with interest depending upon the final determinations.

"Once the matter goes to TRAI, a proper procedure will have to be followed by the issuance of a consultation paper and the hearing of the parties. We believe the four-month period will be enough for the Government to take a final decision on the matter. Till then, the impugned guidelines (of December 16, 2004) and directive (of January 17, 2005) will have to be treated as ad-hoc and will remain in operation."

Though the move to seek TRAI's recommendations are in line with the demands raised by ISPs, the TDSAT order means service providers who wish to provide VPN services will have to pay up the fee for now. The tribunal's recognition of VPN as a separate service may affect ISPs who have been offering the service for the last five years. Most of the ISPs, including Spectranet and Asianet, have already stopped offering VPN services, while others who are well entrenched in the business, like Sify, HCL Infinet and Hughes Escorts Commmunication, have paid up the entry fee.

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