Things to keep in mind when starting an ISP in India

Internet service provider License | ISP License

With over 44 Crore Internet users, India is definitely at a point where the demand for internet is higher than the number of active ISPs. The good news is, because of the ease of getting the ISP License, there are many new ISPs that have started to emerge. However, there is also bad news: most of those emerging ISPs are bound to fail.
 

Why? 

It’s because there are some nuances to starting and maintaining an internet service providing center that many choose to ignore, either out of boredom of overexcitement.

That’s why, we present to you this little write-up. There are things to keep in mind when starting an ISP in India and this article would shine a light upon them. 

What is ISP License?

ISP License or Unified License for ISP is the registration mandatory for those companies that want to provide internet access to their customers. The Department of Telecommunication, the primary telecommunication body of India is responsible for issuing that license. 

Who is eligible to get the ISP License?

There are two eligibility criteria to get an the license to start an ISP in India, and they are as follows:

An ISP should only be a registered company: 

No proprietorship, LLP or a traditional partnership is allowed to have the authorization to provide internet services, it has to be a company. Thus, to get the authorization to provide internet access, you have to incorporate your business as a company.

The ISP company should have minimum foreign equity: 

Starting an ISP is a costly affair. Thus, we don’t blame you if you take the help of some foreign investors to jump start your business. However, that doesn’t mean that you can give them major access to your business. As per the DOT rules, foreign investors can only have up to 49 percent equity in an Indian ISP center. 

How to get ISP License in India

Once you’ve established a company with the objective to provide internet services to the subscribers, you have begin filing the application of DOT ISP License

Step 1 – Choose the category of ISP you want to establish: 

Based on the coverage area of your internet services, there are three categories of ISPs you can choose to establish:

a. Category A ISP: It’s an internet service provider that renders internet services to the entire country.

b. Category B ISP: It’s an internet service provider that renders internet services to one of the 20 major metropolitan states in India.

c. Category C ISP: It’s an internet service provider that renders internet services to a small region – a single circuit switched area.

Things to remember when choosing a category: 

The ISP License cost vary based upon the category of ISP you want to set up. Not only that, the variation is too large for you to ignore the need to setup a budget beforehand.

Step 2 - Furnish the documents and file the application: 

There is no online to file the application yet. You have to physically visit the center and submit the application along with the following documents:

a. A copy (certified) of the Certificate of Incorporation of your company.

b. A copy (certified) of the Memorandum of Association and Articles of Association of your company.

c. A consent, duly signed and certified, by the directors of your company to establish an ISP.

d. a Duly filled Application form along with the copy of Challan receipt in which you have filled the details of the entry fee you’ve paid.

e. A demand draft of non-refundable entry fee of INR 15,000/-

Things to remember when furnishing the documents and filing the application:

Every document has to be duly attested by a Chartered Accountant. Also, don’t keep any space empty in the application. Doing so can lead to rejection of your application almost instantly. 

Step 3 – Get the letter of Intent: 

Once your application reaches the assessment officer at the Department of Telecommunication, it will be scrutinized thoroughly. If he encounters any errors, you’ll receive a notification specifying the errors you’ve made and the time period within which you can correct and resubmit the application. If he doesn’t find any errors, you’ll receive the letter of intent.

Things to remember when the application is being processed: 

Don’t fill the application yourself. It has many intricate details that a layman can easily miss. Thus, hire an ISP consultant to do this particular job. He would also visit the department and submit your application there.

Step 4 - Fulfil the requirements mentioned in the Letter of Intent: 

The letter of Intent contains the final steps for you to take to get the Unified ISP License. They include:

a. The amount of Financial and performance bank guarantee you’re required to submit; and

b. The additional documents depending on the nature of your ISP whose copy you’re required to submit to the department.

Things to remember when fulfilling the requirement of the letter of intent: 

The bank guarantee requirements for a category A ISP are disproportionally higher than the category B or category C ISPs. Furthermore, bank guarantees tend to come with extra complications. To deal with those, consult with Chartered Accountants.

Conclusion

Starting an ISP might be easier when you look at the steps, but the deeper you in them , the more you realize that it isn’t for you to follow. It’s the ISP experts who can do the heavy lifting of taking your rough application, adding finesse to it and get you the ISP License to start your business. Therefore, if don’t want to be among the emerging ISPs that can fail, you shouldn’t be afraid to ask for help.

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