India finally opens up Internet access market

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BANGALORE, India -- After years of procrastination, the Indian government is to allow private-sector competition to offer Internet access - a monopoly so far held by India's state-run long- distance telecoms company.

Foreign investment up to 49% of the Internet service provider's equity and a rebate on license fees for five years are the main points in the policy announced November 1 by India's Prime Minister Atal Behari Vajpayee. The policy is effective November 7.

"The aim of the new ISP policy is to achieve the fastest possible proliferation of quality Internet service all over India at an affordable price," Mr. Vajpayee told an audience of information technology professionals in Bangalore, Karnataka. "Guided by this objective, we have drawn up a license agreement which is customer - and investor - friendly."

India gained access to the Internet August 15, 1995, when Bombay-based Videsh Sanchar Nigam launched its Gateway Internet Access Service. The state-run telecoms marketer so far has managed to rope in only 150,000 subscribers.

Joint ventures of IBM Corp., Sprint Corp. and AT&T Corp. are among the first 16 applicants that applied for permission to offer Internet access to Indians. But stiff resistance from Videsh Sanchar and an unclear government policy on Internet access delayed privatization for more than a year since the state said it was relinquishing its monopoly.

Copyright November 1998, Crain Communications Inc.

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