The Indian government came out with a single license for every telecom related services and it is called Unified License. As for Unified License, the license holder must apply for ISP license for various areas. You have to get a Unified License in which you will obtain authorization for offering ISP services for a particular area. So, it has to be remembered that there is no different ISP license as such. One must rather acquire ISP Authorization under the Unified License.
As for Unified License only one can be held by a single company, however, one can apply for several ISP authorizations of diverse areas. But the validity of such authorizations will be similar to that of the Unified License.
The procedures for obtaining the ISP License in India
Suitability Aspects
To obtain an ISP license, you require a registered company under the Companies Act, 1956. In case you don’t have one then just visit the website of registrar of companies for the same.
Choose an apt ISP License category to apply under
After obtaining an ISP license, the person has to decide the category of license required – category A, B or C. In India, 3 separate types of licenses are needed to be an internet service provider. Also, it depends upon the City/State/Town/District/Village you want to launch your ISP business in.
The 3 categories of ISP licenses are:
- Class A (National Area)
- Class B (Telecom Circle/Metro Area)
- Class C (Secondary Switching Area)
- The Class A ISP license can be a costly affair, followed by Class B & C respectively.
Fiscal Criteria
In order to popularize internet access in smaller towns, cities & villages, the Government of India has brought in a cost-effective Class C license compared to a Class A or B.
So let us get into the financial nitty gritty of acquiring the various licenses.
| Service | Minimum Equity | Minimum Net worth | Entry Fee (Rs.) | Performance BG (Rs.) | Financial BG (Rs.) | Application Processing Fee (Rs.) | Total Capital Required (Rs.) |
| ISP “A” (National Area) | Nil | Nil | 30 Lakh | 2 Crores | 10 Lakh | 50 Thousand | 2,40,50,000 |
| ISP “B” (Telecom circle/Metro Area) | Nil | Nil | 2 Lakh | 10 Lakh | 1 Lakh | 15 Thousand | 13,15,000 |
| ISP “C” (SSA) | Nil | Nil | 20 Thousand | 50 Thousand | 10 Thousand | 10 Thousand | 90,000 |
The total capital needed for a Class C license is INR 90,000/. For Class A license the amount is INR 2.50 crores.
So, to be a Class C ISP license holder, you need something around Rs. 3-4 lakhs, subject to the lawyer / ISP consultant fees.
Upon choosing the category of the ISP license you require, it is pertinent to know the whole application process.
Application Method to begin with
Post choosing the ISP license category, you have to fill an application form. Along with the form, a non-refundable Processing Fee of INR 15,000/- should be given by the applicant via DD/Pay Order from a Schedule Bank payable at New Delhi issued in the name of Pay & Accounts Officer(Headquarter) DOT. You are also required to submit the requisite documents as well:
Company-specific documents
An attested copy of the Certificate of Incorporation of the company issued by the Registrar of Companies.
A certified copy of Memorandum of Association and Article of Association underlining the provisions, which includes Internet Services in the chief objects of the company.
Written permission of the company’s board related to the decision of the company to apply for a new ISP License and particulars of the authorized signatory including name and designation along with the specimen signature.This disclosure needs to be signed and stamped by a Company Secretary.
Certified copy of Form-18 and the copy of challan form i.e. GAR-7 case registered.(If office address is not given in Certificate of incorporation or the address shown in Certificate of incorporation varies from that of in the application form).
Document for Foreign Investment
A copy of FIPB Approval in the name of Applicant Company, certified by the Company Secretary is required if the cumulative FDI (direct and indirect equity) in the applicant company is in excess of 49%.
Document Assessment
After this, the Department of Telecom will scrutinize your application and contact you within 60 days. In the event of any problem regarding your application, there might be a hitch when it comes to issuing a response from the DOT.
If your application is satisfactory, then the DOT will issue a ‘Letter of Intent’ in your favor. However, your application might be rejected or delayed due to dishonoring legal, security, hardware, commercial and contractual compliance, and human follies such as incomplete form submission.
Grant of Letter of Intent
In case there are no problems in your application form to acquire the ISP authorization under the Unified License, the DOT will issue a ‘Letter of Intent’ in your favor. Once the same is given you need to give the one-time entry fee along with the required bank guarantees. The total of both for Category A is 2.4 crores, for category B is 13 lakh & for category C is 80,000/-. Also, you need to give a signed license agreement with the DOT and any other documents needed, including the documents mentioned in the Letter of Intent.
The one-time entry fee is non-refundable. Further, once the Letter of Intent is issued, all the other formalities have to be performed within a specific period as prescribed in the Letter of Intent.
Confirmation
If all conditions are satisfied, you will be given an ISP authorization under the Unified License for a period of 20 years. The DOT will either contact you through mail or directly to intimate you about the status of your ISP License.
Last but not the…..
It has come to light by now that the methods regarding ISP licensing is technical and protracted for an ordinary person to fulfill. If these procedures are not adhered to then the application can be disapproved as well. So, it would be better on your part to get your documents & forms analyzed by a professional ISP consultant or lawyer to ensure you don’t face any objections or heartbreaks due to delay or rejection.