The government is considering a cut in the license fee applicable for fixed-line broadband services in India, according to a media report. The change could reduce the cost of household broadband services in the country, and help service providers widen their coverage at lower costs. As per the report, the new proposal will reduce the license fee on the adjusted gross revenue (AGR) earned by broadband companies for providing Internet connectivity to households in the country — a direct benefit for the service providers. The country has over 1.98 crore fixed-line broadband subscribers, as per the latest data provided by the Telecom Regulatory Authority of India (TRAI).

 

Under the proposed plan, license fee on the so-called adjusted gross revenue earned from households for providing fixed-line broadband services will be slashed to Re 1 a year, people with knowledge of the matter said. The note said the estimated license fee for fixed-line broadband services, calculated at the rate of 8% of adjusted gross revenue, is about 8.80 billion rupees a year.

 

Relevant ministries have been asked to share their view on the proposal before it goes to the cabinet for approval, the people said, asking not to be identified as the matter is not public.

 

The report, citing people familiar with the development, said that there wouldn’t be any changes for services provided to commercial users. Reportedly, the proposed changes would bring a loss of Rs. 592.7 crores to the government, but at the same time, would result in a 10 percent growth in revenues of broadband companies providing their services to households.

Jio Fiber could get some benefit from the proposed change
Reliance Jio Infocomm’s Jio Fiber is likely to be a key recipient of benefits through the proposed changes as it formally launched its broadband services last year but is so far facing a huge competition from existing players, including Airtel and ACT Fibernet. The increase in revenue potentials through the license fee cut would enable Jio Fiber to accelerate its broadband services in the country.

 

 

Apart from Jio, the reduced license fee, if it gets cleared would help other major broadband service providers. Airtel, ACT Fibernet, and even state-owned Bharat Sanchar Nigam Limited (BSNL) would be able to broaden their revenues and reduce the cost of acquisition through the reported changes.