INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

MICROSOFT,SKYPE SEEK REMOVAL OF LICENSING CURBS ON NET TELEPHONY

GLOBAL internet telephony major Skype has demanded that India remove all rigid applicationspecific licensing requirements for internet service providers and replace them with a light-touch regulatory regime. It has also said that ISPs should offer full-fledged internet telephony services. In its communication to telecom regulator Trai on the review of internet services in India, Skype has said that any revenue loss to the government on account of allowing full-fledged internet services, including internet telephony would be "more than compensated for by revenues generated by overall economic gains, taxes on new broadband and e-commerce services, efficiency savings and by eenabling government departments".

Right now, India allows internet telephony between PC and PC within the country and abroad, from PC in India to telephones outside the country and between internet protocolbased terminals connected to ISP nodes, both in India and abroad. But internet telephony from PC to telephones within the country are not allowed. The government has not issued fresh ISP licences since June 2006 as it feels that ISPs are indulging in illegal internet telephony. More than 50 ISP applications are pending with the Department of Telecom (DoT).

Endorsing a similar view, MicroSoft India and US-based Verizon Business have all asked India to lift the existing restrictions on ISPs, especially with regard to internet telephony. In fact, Microsoft has also told Trai that the ban of ISPs connecting to public switched telephone network stifles innovation of technology and deployment of new services to Indian customers. "Rather, such ISPs who wish to offer unrestricted internet telephony should be allowed to connect to licensed access providers to terminate their calls," Microsoft said.

Microsoft also pointed out that what is considered as gray telephony services in India was legal in many other countries. It has said that the real root cause (for gray telephony) stems from the access deficit charge (ADC), which was an economic distortion, while adding that the review of this levy was already overdue. At present all incoming calls to India attract an ADC of Rs 1.60 per minute, while all outgoing calls are charged Rs 0.80 per minute towards this levy.

Going a step further, Skype has also warned that countries which have so far either not adapted their regulatory framework or decided to protect their incumbent telecom companies for the sake of short-term gains have suffered slower broadband pick-up, less innovation in start-ups and at SME level.

"Evidence suggests that a light-touch regulatory framework for non-replacement communications products and services leads also to greater economic benefits accruing more widely as all sectors of the economy reap productivity rewards from lower costs and new, more efficient forms of communication (for example, video calling, IM chatting, conference calling and nomadicity)," it added.