Is USOF Administration Supporting BSNL to Retain its Broadband Marketshare?



ISPAI (Internet Service Providers Association of India) announced that the USOF Administration is continuing its discrimination against ISPs.




ISPAI is constrained to observe that draft Notice Inviting Tender (NIT) released by USOF is likely to oust major ISPs with large subscription base and over 12 years experience.




These major wireless broadband services companies are likely to be ousted from participating” in favor of those who may have lesser experience, but just because they have opted to renew/amend their ISP licenses as per the guidelines of 24.08.2007.




In addition, the eligibility criteria of minimum 5 years of experience disqualify even those ISP’s having license on or after August 2007. It becomes mockery of the draft tender.




BSNL, the largest broadband player, will be the visible beneficiary of the current NIT process.




This exclusion has a direct impact on the legitimate business expectations of the ailing category C ISPs’ (already operating in Tier II cities and small towns near rural areas), besides ISPs of category A and B.




They will be denied complete market access to rural areas in the vicinity of their present areas of license. They will be ousted because they have not got their licenses amended/renewed.




ISPs, which are present in almost every small town and city, have small overhead costs in its operation but strong local hold. Further, since ISPs are paying 6 percent AGR on Internet Telephony since 2006, their contribution should yield a quid pro quo benefit from the DoT / USOF.




iSPAI wants the government to ensure the following:




1.      Fair competition amongst bidding players leading to lower prices and better quality of Service for the rural customer barred due to restriction of License Conditions thereby eliminating major ISPs



2.      There is hardly any justification of this mandatory reservation” for the BSNL, (largest ISP with a market share of over 59 percent), at the cost of other smaller players.



3.      This reservation in favor of BSNL is also likely to be viewed as an abuse of dominance”  by BSNL as being a 100 percent subsidiary of DoT which is likely to result in denial of market access” to particularly the ISPs’ belonging to C category, besides category A and B, as well as an attempt by BSNL to enter the other market for broadband services may attract violation of Section 4 of the Competition Act, 2002. 




Elimination of ISPs as per above is per se discriminatory and irrational.




The restriction with such foreclosure of otherwise capable players may be seen as anti competitive conduct by the Competition Commission of India. 




The restriction is  clearly not related to the capacity of the excluded categories ISPs’ to provide services for broadband services in rural areas and violates the CVC guidelines on Prequalification Criteria & Unfair Tender Conditions dt.17.12.2002.



ISPAI  would like to draw the attention of the USFO to  the  recent TRAI’s Recommendations to DOT on National Broadband Plan dated May 4, 2011 in which TRAI, in Annexure -E’ of the said Recommendations stated as under:



  DOT would need to consider whether the Public Sector Undertaking, given its autonomous status, can be controlled in terms of decisions and supervision by the HLC or USO fund. The possibility of severe criticism in this regard is to be considered.


BSNL is currently one of the service providers.



If it is the executing agency including the maintenance of the network, there is a serious problem of the lack of level playing field viz-a-viz other service providers.



This would be critical since the optic fiber network is envisaged as providing non-discriminatory access.



There is a serious risk of anticompetitive behavior setting into the network management.



In the light of the above, the DoT would be well advised to review its proposal to make BSNL the executing agency.



It would be worthwhile setting up a special purpose vehicle for execution of the program”.





  1. In addition, the association also feels that the minimum bidding area should be changed to District instead of the telecom circles at state level to enable ISP belonging to ‘C’ category to be eligible to participate in the tender.




The association, therefore, requests to review the restrictions proposed to be imposed on ISPs in the draft Tender Document/ NIT for the rural wireless broadband scheme in the specified rural and remote areas and remove them in the interest of equity, good conscience, fair play and transparency.





It may be noted that in case the restrictions are not removed from the draft NIT, none of the ISPs’ will be eligible, thereby leaving the huge majority of 156 operating ISPs in India, which will cause strong resentment in our members.





By Rajesh Chharia, president of ISPAI


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