ISP LICENSE

UL UNO / VNO

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Starting an ISP is not as complicated as many thinks, but expanding the same and building an ecosystem do need a lot of patience and efforts. Mumbai Internet Exchange ( Previously Mumbai Convergence Hub or Mumbai CH ) is committed to helping Indian ISP’s and Networks not only to save 85-90% of their bandwidth but also to guide you to kick-start your own ISP.

Before Starting the essential Elements, you need to have your own License to operate. The government of India has introduced Unified License system which provides single License for almost all licensing requirement. You can take Class A ( All India), Class B ( State Wise) or Class C License. The most popular model followed by incumbent Internet service providers with cash shortage is to take a franchise of existing License providers and then to start the business and then scale up and apply for own ASN and Unified License.

 Irrespective of Shared License as well as Own license, a Network should need the following:

 Dedicated NOC

NOC (Network Operations Center) is the most important location for any ISP. This is ideally done by following Data Center design and running model (Raised Floor, UPS, and Generator Backup).

Carrier Neutral Data Centers are ideal choice considering the fact that there is no CAPEX for infrastructure and 24*7 NOC and monitoring is provided by default.

The UPS and diesel power generators are needed when city power is interrupted by a power outage. The HVAC units are needed to keep the data center cool because the equipment running the ISP’s generates heat which can damage equipment.

 Dedicated Routers and Specialist Network Engineers

Purchase, install and configure enterprise-grade routers, switches, and computers. Do not go the cheap route on the equipment or the customers will complain early and often about your ISP’s slow performance. All these equipment forms the backbone of the ISP’s network and concentration should be given to make wise long-term decisions. Industry trend says 60% of incumbent ISP’s end up using Mikrotik Routers if they only have few routes and loads to handle.

Bandwidth Procurement

Most ISP’s use more than 2 upstream providers to ensure speed, connectivity and reliability. You can buy 1:1 Bandwidth from Tata Communications, Reliance Com, Bharti Airtel, Idea Cellular, Vodafone, PowerGrid etc.

Peering In India

Peering helps to save the huge amount of Internet Bandwidth, the best way is to Peer at an Internet exchange and Offload traffic. We are grateful to our customers for making us India’s largest Internet Exchange Hub. Along with us, we have NIXI also which is an ideal location for peering in India. Be aware that NIXI does have regional content restrictions and have X-Y commercial pricing in Place. But if you have an ISP license we suggest you peer at NIXI along with our Hub where you need not have a License and what we require is your AS Number.

Advanced Steps

  • Google Caching Server
    • Google provides it GCC (Caching) server based on multiple criteria, the major one is having a traffic of 1G or more, else based on the location and its traffic. This will help you in Saving Data.
  • Akamai Caching Server
    • Akamai is the global leader in Content Delivery Network (CDN) services, making the Internet fast, reliable and secure for its customers. They also provide EDGE Servers to customers after analyzing their traffic.
  • Content Caching Servers
    • Peer APP, Extreme Peering, X Cache, TorBox etc are some of the solutions used by ISP industry in India to cache the content and provide an easy access to customers at higher speeds. This helps consumer broadband networks in saving traffic between 10-20% based on the customer profile.

ELIGIBILITY CRITERIA FOR INTERNET SERVICE PROVIDERS APPLICATION FORM AND LICENSE AGREEMENT FINALIZED THREE-TIER LICENSE FOR INTERNET SERVICES

 

The Department of Telecommunications (DoT) has finalized the standard Application Form and License Agreement for Internet Service Providers (ISPs). This is a follow-up to the announcement of the New Internet Policy Guidelines by the Government in November 1997, based on the report of the committee headed by Dr. Bimal Jalan to give a boost to Internet use in India. The Government had decided to freely permit private operators to provide Internet service.
The licensees will be issued to all eligible applicants upon submission of completed applications in a prescribed form. The application forms containing the guidelines, general information and the details of the license agreement will be available on sale at the Headquarters of Telecom Commission, Delhi, and the Telecom Circles outside Delhi, from 18th February 1998 onward. The broad guidelines and terms and conditions of the ISP license are:

ELIGIBILITY CRITERIA: A company registered in India under the Companies Act, 1956 will be eligible to submit the proposal for providing Internet Service. Foreign equity shall be as per the Government policy and guidelines issued from time to time. At present, the foreign equity is permitted to the extent of 49 percent. There is no requirement for the applicant-company to have any prior experience in information technology or telecommunication services.

SERVICE AREA: The Internet service areas have been grouped into three categories. Separate licenses would be granted to any company for each service area.

CATEGORY ‘A’ SERVICE AREA: This includes the whole of India.
CATEGORY ‘B’ SERVICE AREA: This consists of each one of the 20 Territorial Telecom Circles and the four Metro Telephone Systems of Delhi, Mumbai, Calcutta, and Chennai of the DoT. However, if a license for the Telephone Systems of four major cities of Ahmadabad, Bangalore, Hyderabad, and Pune are required, these will also be treated as Category ‘B’ Service Area on a par with the Telecom Circles.
CATEGORY ‘C’ SERVICE AREA: This includes any Secondary Switching Area (SSA) with their geographical boundaries defined by DoT as on 1.4.1997. The SSA’s of each of the four Metro Telephone Systems of Delhi, Mumbai, Calcutta and Chennai and Telephone Systems of four major cities of Ahmadabad, Bangalore, Hyderabad and Pune with their geographical boundaries defined as on 1.4.1997, however, stand excluded from Category ‘C’ as they already form a separate Category ‘B’ Service Area.

PERFORMANCE BANK GUARANTEE (PBG): A performance bank guarantee of Rs.2 Crore for each Category ‘A’ Service Area, Rs.20 Lakh for each Category ‘B’ Service Area and Rs.3 Lakhs for each category ‘C’ Service Area valid for two years from any Scheduled Bank in the prescribed proforma shall be submitted along with the application for each Service Area.

LICENSE FEE: The license fee shall be waived for a period of five years up-to 31.3.2003.The license fee to be paid relating to the period starting from 1.4.2003 by the Licensee company will be intimated on or before 1.4.2001 and shall be payable to the Telecom Authority irrespective of the time of entry of an ISP.

PERIOD OF VALIDITY OF THE LICENSE AND ITS EXTENSION: The license shall be valid for an initial period of ten years unless otherwise terminated. If requested by the Licensee, the extension may be granted by the Telecom Authority on suitable terms and conditions for a period of five years or more at a time.

TARIFF: ISP’s will be free to fix their own tariff. The tariff will be left open to be decided by market forces. However, the Telecom Regulatory Authority of India (TRAI) may review and fix a tariff at any time during the validity of the license which shall be binding on the Licensee.

NUMBER OF LICENSES FOR ISP’s: Applicants will be required to submit the separate application for each Service Area. An applicant company may be granted any number of licenses. There will also be no limit on the number of licenses that can be granted in a particular Service Area. The leased-line subscribers of the Service will be from within the Service Area but the dial-up-access subscribers could be located anywhere in the country.

TECHNICAL REQUIREMENTS: The ISP’s will be required to set up their nodes/servers within the geographical limits of the Service Area. They shall use Internet Protocol (IP) and shall meet the technical requirements of the ISP’s (DoT/MTNL/VSNL/other ISP’s) to which they are connected. The equipment used by the private ISP’s shall be in conformity with the Interface/Protocol requirements as applicable.

E-MAIL AND VSAT SERVICE Licensees: Existing E-Mail and VSAT Service Licensees may also obtain separate ISP License for any number of the above-mentioned Service Areas subject to the fulfillment of the eligibility criteria and shall implement the service independent of their existing network. An ISP may provide Internet service to any VSAT customer (who could be served by a Licensed VSAT service provider or captive private VSAT network) if the VSAT is located within the Service Area of the ISP.

INTER-CONNECTIVITY: Direct interconnectivity between two separately Licensed ISP’s shall be permitted. International traffic shall flow only through DoT’s Internet Node, i.e. DoT’s Internet Access Services (DIAS) or Videsh Sanchar Nigam Limited (VSNL)’s Internet gateway, i.e. Gateway Internet Access Services (GIAS). The ISPs shall have the option to connect their Internet node either to DoT’s node or VSNL’s gateway directly for the purpose of delivery of international traffic.
The Licensee may obtain the transmission links on lease from DoT, Licensed Basic Service Operator or any other operator specially authorized to lease such lines to the ISP’s. The  Licensee may also establish its own transmission links within its Service Area for carrying traffic related to his service only provided that such capacities are not available from any other authorized agencies and subject to the permission Telecom Authority.
Resources required for operation of the services for extending them over to the network of the upstream service provider (DoT/VSNL etc.) or any other service provider Licensed by the Authority, including the timeframe for provision of the same, will be mutually agreed between the parties.

VOICE OVER INTERNET: Voice over the Internet is not permitted.

DELIVERY OF THE SERVICE: The Licensee shall be responsible for installation, testing and commissioning of all the equipment to provide the service including connectivity to DoT’s DIAS or VSNL’s GIAS for delivery of Internet traffic. The period of implementation of the license will be 18 months from the grant of.

OBSCENE MATERIAL AND CYBER LAWS: Flow of obscene, objectionable, unauthorized or any other content infringing copyrights, intellectual property right and against international and domestic Cyber laws (as and when established ) in any form over the ISP’s network is not permitted.

What is VNO?

 

A Virtual Network Operator or Mobile Virtual Network Operator is an internet service reseller extending high-quality network and management services to other networking companies that do not possess their own telecom setup.

A VNO (Virtual Network Operator) License is a miniature version of an ISP license. With an ISP license, you can run internet services on a larger domain. ISPs who wish to operate small level internet service only in a particular territory can choose a VNO license instead of an ISP license. VNO is affordable, less complicated, convenient and ideal for small level ISPs.

Benefits of VNO

  • Comparatively cost-effective
  • Reduced network complexity
  • Reduced time to market
  • Reduced CAPEX
  • Increased flexibility

Limitations of VNO

  • Limited scope
  • More competition
  • Dependency on owners of the underlying infrastructure
  • Less control over downtime
  • No ownership

How is it Different from Normal ISP License?

  • VNO license is issued for a term of 10 years without bank guarantee whereas ISP license is issued for 20 years and with a bank guarantee.
  • ISPs can provide ISP franchisee to other telecom companies, but VNOs cannot give franchisees.
  • ISPs have the liberty to buy and use the bandwidth of other ISP, VNOs cannot do this.

The process of  getting a VNO License

 

  1. Check Eligibility

To get the approval of VNO license you should be a company registered under Companies Act, 1956. Preference is given to Pvt. Ltd. Companies over sole proprietorship/partnership companies. To know more about company registration you can log on to the Registrar of Companies’ website.

2.Category Selection

Select the category in which you want to apply for the VNO License, opt between A, B or C category. The three different categories of VNO license in India are bifurcated geographically based on the city, state, village, town where you will operate your business. VNO license is cheapest for class C.

Categories:

  • Class A ISP(PAN India)
  • Class B ISP(Telecom Circle/Metro Area)
  • Class C ISP(Secondary Switching Area)
  1. Cost analysis and setting budget

To grow internet services in rural Indian towns and villages our government has kept prices extremely lower for category C compared to category A and B.

You can browse the following table to understand costing requirements to obtain a VNO license:

ServiceMinimum EquityMinimum Net worthEntry Fee (Rs.)Performance BG (Rs.)Financial BG (Rs.)Application Processing Fee (Rs.)Total Capital Required (Rs.)
ISP “A” (PAN India)NilNil15 LakhNilNil50 Thousand15,50,000
ISP “B” (Telecom circle/Metro Area)NilNil1 LakhNilNil15 Thousand1,15,000
ISP “C” (SSA)NilNil10,000NilNil10 Thousand20,000

 

As per the above table, a Class C VNO license cab be acquired at 50,000 rupees approximately varying on the basis of lawyer and ISP consultant fee.

  1. Application filling

You are required to fill a VNO license form to acquire the license. Every applicant needs to pay a non-refundable amount of Rs. 15,000 towards processing fee, provide all mandatory documents, and 2 copies of the application form. Send all this with pay order or demand draft payable at headquarter in New Delhi in the name of Pay & Accounts Officer (Headquarter) DOT.

  1. Document Verification

The next step in the process is document verification, it is conducted by Department of Telecom. The verification process may take about 60 days depending on the issues arising during verification.

If everything is fine and your application is approved, you will receive a ‘Letter of Intent’ by DOT. If your documents do not comply with the application guideline there are chances that your application may be rejected. Before submitting you should get your application reviewed by a professional ISP consultant/lawyer.

  1. Letter of Intent

Once your application for VNO License has been approved, DOT will issue a ‘Letter of Intent’ in your favor. After receiving the ‘Letter of Intent’  you are required to submit a non- refundable one-time entry fee, the signed license agreement and other requisite documents mentioned in the letter within the time mentioned in it.

  1. Confirmation

If everything falls into place you will receive the VNO License for ISP under the Unified License for a period of 10 years. The information related to confirmation of license issue will be communicated directly to you via DOT.

The VNO licensing process is pretty complicated for a common man. There have been incidents where applications were rejected on the grounds of lack of information, non-compliance, incomplete submission, the inappropriateness of documents, etc. Thus, in order to save your valuable time and money, get all your documents duly verified by law experts and ISP consultant before filling the application form.