The government has decided to debar Internet Service Providers from offering end-to-end services like Internet protocol-based Virtual Private Network.
"We don't want to destroy the system. In no case, will they be allowed to provide VPN services," a senior department of telecommunications official told Business Standard.
This comes as a blow to the ISPs which earn around Rs 1,000 crore (Rs 10 billion) from these corporate services in a market estimated at Rs 5,000 crore (Rs 50 billion).
The DoT had set up a four-member committee comprising member (technology) K L Jain, senior deputy director general J R Gupta, deputy director general (licensing regulation) H K Gupta and deputy director general (basic services) P K Mittal.
The committee had said the government was losing around Rs 150 crore (Rs 1.5 billion) as licence revenue annually due to the end-to-end services offered by ISPs, which pay a licence fee of Re 1. "As ISPs are paying Re 1 as licence fee, there is an issue of level playing field," the committee report had said.
State-owned Bharat Sanchar Nigam Ltd had complained to the DoT against the ISPs saying services by the latter were resulting in significant revenue loss.
On their part, ISPs said the services were not barred in the licence documents. They also said the government had allowed the services to function freely for the past six years.
In a letter to the Telecom Regulatory Authority of India on September 1, the DoT had said that ISPs could not be permitted to provide any end-to-end services under the present licence norms.
"Such facilities change the character and scope of the ISP licence and encroach upon licences of other telecom service providers," DoT said.
The department had cited the example of leased line services under these end-to-end services, which are provided by national and international long distance operators and ISPs using VPN over Internet.
It had mentioned that scope of the ISP licence agreement was confined to providing Internet access or content services with a ban on Internet telephony. At a later stage, restricted Internet telephony was permitted.
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