TRAI (Telecom Regulatory Authority of India) has finally announced that it’s in favor of increasing license fee up to 8% from ISPs’ (Internet Service Providers) Adjusted Gross Revenue (AGR). The announcement is in reply to a letter by DoT (Department of Telecommunication) dated September 22, 2012, which requested the body for recommendations on the same and a couple of related issues.
DoT had asked TRAI for explanation on how AGR is defined in the License Agreements for provision of Internet Services with regards to the 1998, 2002 and 2007 guidelines. It had sought clarification on the applicability of minimum presumptive AGR and value for BWA Spectrum holders under Internet Service.
DoT has also requested for TRAI’s views on the revision in the ‘Format of Statement of Revenue and License Fee’ that is to be disclosed by ISPs. The latter sent out a consultation paper on December 28, 2012, asking stakeholders to present their opinions on the aforesaid matters.
ISP licenses must cover all kinds of revenue from Internet services, allowing for only deductions available for pass through charges and taxes/levies like in the case of access services, without any set-off for expenses. A standard license fee which is 8% of the reported AGR is expected to be levied. Minimum presumptive AGR for the purpose of the licensing fee shall be applicable on the existing ISPs holding BWA spectrum.
For ISPs who own BWA spectrum won from the 2010 auction, the value of presumptive AGR shall be equal to 5% of the total bid amount by the licensee for the relevant service area, as applicable to the licensees who bid for and obtained spectrum in the auctions conducted in November 2012 as well as March 2013.