The department of telecommunications may issue an order allowing data resale without double taxation within a month, a move that can potentially enable mushrooming of public WiFi hotspots
New Delhi: Public WiFi hot spots could mushroom with the government planning to lift an existing prohibition on the resale of internet data, a person aware o the mater said.
The department of telecommunications (DoT) is planning to issue an order within a month allowing such resale without double taxation, this person said on condition of anonymity.
“Right now, a virtual network operator (VNO) or his equivalent public data office aggregator buys bulk bandwidth (from a telecom service provider, or TSP). The TSP is paying 8% (licence fee), this person (VNO) is also paying 8%. So, we will now move to the GST principle of value addition, where you will be taxed only on value addition. So, if he invests in infrastructure and other things, he will be able to claim input tax credit for the bandwidth," the person cited above said.
A VNO buys bulk bandwidth or talk time from a telco or an internet service provider and utilizes it to sell its own branded services to consumers. It does not own either spectrum or network infrastructure.
VNOs pay a licence fee and spectrum usage charges in addition to the required entry fee.
Easier rules on data resale are expected to aid the VNO segment, which has not picked up despite being allowed to conduct business in 2016.
The new rules could also help struggling state-run telcos such as Bharat Sanchar Nigam Ltd, or BSNL, and Mahanagar Telephone Nigam Ltd, or MTNL, monetize excess unused capacity on their networks.
Separately, DoT has set an ambitious target of deploying 500,000 WiFi hot spots by December across the country from the current 38,000.
Under present norms, resale of data is not permitted and Telecom Regulatory Authority of India (Trai) chairman R.S. Sharma, too, has urged the government to allow this to enhance broadband proliferation.
The Telecom Commission had on 1 May accepted the regulator’s recommendations on setting up public data offices (PDO) on the lines on public calling offices in order to boost public WiFi hot spots which could potentially also create employment opportunities by having a new category of service providers through PDO aggregators (PDOA).
These “pay-as-you-go" PDOs will buy data from telecom or internet service providers and resell sachet-sized data packs starting at Rs2.
“Virtual network operator and PDOA, for both these to flourish, the Telecom Commission was strongly of the view that we should not have cascading taxation and the DoT is already working on that separately on how to avoid cascading taxation," Telecom secretary Aruna Sundararajan told reporters on 1 May on a query on whether data resale would be allowed.
The government has set an ambitious target to provide broadband to all citizens by 2022 in the draft of its National Communications Policy.
The department of telecommunications will establish a light-touch licensing regime for the proliferation of PDOs and PDOAs for providing internet access through WiFi hot spots, the draft said.