Foreign outfits may invest in Indian Internet providers

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BOMBAY -- Foreign marketers have been allowed to own a maximum of 49% in local Internet service providers, according to the new Internet policy announced this week by the Government of India.

The government's revolutionary decision to permit Indian and foreign private- sector companies to offer Internet access also includes the incentive of a ten- year operating license. Potential ISPs will be required to pay license fees only after five years, Telecoms Secretary A.V. Gokak told reporters. The move is expected to increase usage of the Net through low subscription fees charged by access providers.

India last month withdrew the exclusive monopoly of Bombay-based Videsh Sanchar Nigam, whose Gateway Internet Access services debuted August 15, 1995. So far, the country of 17 million phone connections boasts only 45,000 to 50,000 Internet subscribers.

Though Gateway will continue to offer Internet access, it may be taken over by Videsh Sanchar's parent, the New Delhi- based Department of Telecommunications. Videsh Sanchar has been heavily criticized for the shoddy standard of its Gateway service, mainly because of dial-up problems and steep fees.

But the government said all Internet traffic will have to be routed through Videsh Sanchar, which is the international telecoms traffic monopoly in India.

Marketers like AT&T Corp., IBM Corp., Sprint Corp., CompuServe Corp. and Wipro are among 16 applicants keen to become ISPs. Gokak expects many of them to commence work by yearend.

Copyright October 1997, Crain Communications Inc.

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