Move disastrous for broadband, will hurt rural consumers most, say ISPs

Three days after The Hindu reported that the government had arbitrarily hiked the cost for Internet users by imposing a 7 per cent levy on services in 2012 and to 8 per cent starting April 2013, the Internet Services Providers Association of India (ISPAI) on Saturday filed a petition before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), saying the government’s decision is “arbitrary and illegal.”

“This 8 per cent levy will have a cascading effect, raising costs by 25 to 60 per cent for different ISPs, says ISPAI president, Rajesh Chharia.

The 155-member strong community of ISPs has argued that this will increase the cost for Internet users and defeat some of the key objectives of the National Telecom Policy, 2012, which was approved by the Cabinet just last month.

The NTP 2012’s thrust is on provision of affordable and on-demand Internet and Broadband to citizens, particularly in rural India.

The ISPs say the government has no right to unilaterally and arbitrarily amend licence terms — it hikes the cost of operators, who, in turn, will be forced to raise Internet tariffs.

While the government does have the right to amend licence conditions, this right comes with riders to ensure adequate application of mind. In this case, none of the three factors which can prompt a change in licence terms — the public interest, proper conduct of telecom or national security concerns — can be legitimately invoked to justify hiking the cost for Internet users.

The ISPs contended that the allegation against certain large companies of commercially exploiting the arbitrage opportunity presented through multiple licences with differential levies cannot be the reason for penalising every ISP and millions of Internet users. There were several other more acceptable ways in which arbitrage could be controlled to stop underreporting of revenues under a certain licence with a higher levy but shown under an ISP licence that attracted a lower levy.

The petition said the government had violated several sections of law, including the TRAI Act, and subverted the due process of consultation that was necessary before changing the terms of licence such as the definition of Aggregate Gross Revenue (AGR). This was important, as a change in definition — even though provisional — would have an adverse impact on the ability of stand-alone operators to compete, especially with large telecos.

Limited jurisdiction

The TDSAT seems to have limited jurisdiction, at least where the consumer’s ability to oppose the government’s decisions are concerned.

The Act only allows groups of consumers to litigate against service providers. In this case, the service providers and the consumers are on the same side.

This is perhaps the worst start for the government’s attempts to bring the telecom sector back on track with the NTP 2012, which has itself been delayed by over a year.

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