ISP License Requirements for Broadband Companies in India

In India, the rapid growth of the internet and the increasing demand for high-speed broadband services have led to a surge in the number of Internet Service Providers (ISPs). To operate legally, ISPs must obtain an ISP license from the Department of Telecommunications (DoT) under the Ministry of Communications. This article provides a comprehensive overview of the ISP license requirements for broadband companies in India, covering the types of licenses, eligibility criteria, application process, and compliance obligations.

Types of ISP Licenses

The DoT issues three types of ISP licenses based on the area of operation:

1. Category A (National Level): This license allows ISPs to provide services across the entire country.

2. Category B (Telecom Circle/Metro Area Level): This license is for ISPs operating within a specific telecom circle or metropolitan area.

3. Category C (Secondary Switching Area Level): This license is for ISPs serving a smaller, more localized area within a telecom circle.

Eligibility Criteria

To apply for an ISP license in India, a company must meet the following criteria:

1. Incorporation: The applicant must be an Indian company registered under the Companies Act, 2013.

2. Foreign Equity Cap: Foreign Direct Investment (FDI) in the telecom sector is permitted up to 100%, subject to licensing and security conditions.

3. Net Worth and Paid-up Capital: The company must have a minimum net worth and paid-up capital as specified by the DoT, varying based on the license category:

• Category A: Minimum net worth of ₹2.5 crores and paid-up capital of ₹2.5 crores.

• Category B: Minimum net worth of ₹50 lakhs and paid-up capital of ₹50 lakhs.

• Category C: Minimum net worth of ₹5 lakhs and paid-up capital of ₹5 lakhs.

Application Process

The application process for obtaining an ISP license involves several steps:

1. Preparation of Documents: The applicant must prepare and compile all necessary documents, including:

• Certificate of Incorporation.

• Memorandum of Association (MoA) and Articles of Association (AoA).

• Audited financial statements.

• Business plan outlining the proposed services and coverage area.

1. Submission of Application: The applicant must submit the application form along with the required documents to the DoT.

2. Application Fee: The applicant must pay a non-refundable application fee, which varies based on the license category:

• Category A: ₹15 lakhs.

• Category B: ₹1 lakh.

• Category C: ₹10,000.

1. Security Clearance: The DoT will seek security clearance from the Ministry of Home Affairs (MHA) for the applicant and its key personnel.

2. Letter of Intent (LoI): If the application is found to be in order, the DoT will issue a Letter of Intent (LoI) to the applicant.

3. Performance Bank Guarantee (PBG): The applicant must submit a PBG, the amount of which varies based on the license category:

• Category A: ₹2 crores.

• Category B: ₹10 lakhs.

• Category C: ₹1 lakh.

1. Signing of License Agreement: After fulfilling the LoI conditions and submitting the PBG, the applicant will sign the license agreement with the DoT.

Compliance Obligations

Once the ISP license is granted, the licensee must comply with several regulatory and operational requirements:

1. Service Rollout Obligations: The licensee must start rolling out services within a stipulated time frame, typically one year from the date of signing the license agreement.

2. Annual License Fee: The licensee must pay an annual license fee based on a percentage of Adjusted Gross Revenue (AGR), subject to a minimum amount.

3. Quality of Service (QoS): The licensee must adhere to the QoS standards prescribed by the Telecom Regulatory Authority of India (TRAI).

4. Security and Monitoring: The licensee must implement security measures and provide lawful interception and monitoring capabilities as required by the DoT and other security agencies.

5. Reporting Obligations: The licensee must submit periodic reports on various operational aspects, including subscriber numbers, network performance, and financials.

Conclusion

Obtaining an ISP license in India involves navigating a complex regulatory framework and meeting stringent eligibility and compliance requirements. However, with the increasing demand for broadband services and the government's push towards digital inclusion, the opportunities for ISPs are substantial. By adhering to the guidelines and maintaining high standards of service quality and security, broadband companies can successfully operate and thrive in the Indian market.