India's restricted Internet market to open up, finally

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BOMBAY -- The Government of India on September 16 renounced its national monopoly over Internet access and invited the participation of private companies in a move that promises to revolutionize communications in the subcontinent.

An official statement said the cabinet of ministers in New Delhi approved a new policy that allowed the operation of Internet service providers, ending the two-year-old monopoly of Bombay-based Videsh Sanchar Nigam.

A state-owned long-distance telecoms marketer, Videsh Sanchar currently has 50,000 subscribers for its Gateway Internet Access Services. The Internet access function now will be transferred to the Department of Telecommunications (DoT).

"In addition to providing Internet service, DoT should also provide a national backbone to facilitate the inter-connection of ISPs," the government statement said. In a gesture of magnanimity, the government has decided to waive for two years the annual $85,000 license fee proposed to be levied on ISPs.

The new policy, which was neglected for two months by a government troubled by other political-survival issues, will come in force by month's end. However, it was made clear that all overseas Internet traffic will be routed through international lines leased from Videsh Sanchar.

AT&T Corp., CompuServe Corp., British Telecommunications, Wipro, Sprint Corp. and their local partners are among the leading applicants for ISP status and have been lobbying the government intensively.

Some companies such as Sprint's New Delhi-based Sprint RPG India debuted over two years ago with an e-mail service as a prelude to full-fledged Net access. Private e-mail services in India have been unable to make a profit due to high costs of leasing lines from Videsh Sanchar and a small base of subscribers daunted by stiff charges for a service as limited as e-mail.

Copyright September 1997, Crain Communications Inc.

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