This content is from: Local Insights


The government of India has permitted voice over internet protocol commonly known as internet telephony with effect from April 1 2002. The guidelines issued by the government permit only Indian internet service provider licensees to provide internet telephony to their customers. However, internet telephony is, presently limited to calls:

  1. from personal computers (PCs) in India to PCs outside India;
  2. from PCs in India to telephones outside India; and
  3. from internet protocol based terminals in India to similar terminals both in India and abroad.

While internet telephony can also be used to make long-distance calls from a PC to a phone within India, Telecom Regulatory Authority of India guidelines do not presently permit such use.

Internet service providers can now offer internet telephony services:

  1. all over India;
  2. in particular states within India; or
  3. in specified cities in India.

They can commence internet telephony services after they:

  1. submit an application to the Department of Telecommunications requesting permission to offer internet telephony services;
  2. deposit a non-refundable processing fee of Re10,000 ($210); and
  3. sign an amendment to the Internet Service Provider Licence Agreement.

Service providers that wish to offer internet telephony are required to set up and maintain additional monitoring systems at their own cost, as per the requirements of Indian security agencies. At present the government has prescribed no minimum service quality. Except the processing fee of Re10,000, the government has not specified any additional payment or licence fees for service providers to provide internet telephony services. But the government has the right to impose a licence fee including a universal service obligation levy and tariff on the service providers at any time. Based on tentative tariff plans, calls from India to the US may cost about 16 cents a minute against the present peak-time rate of 83 cents per minute.

Internet telephony will no doubt lower the communication costs for customers and have a positive impact on the telecoms industry but at the same time service providers are conscious of the poor voice quality generated by internet telephony. Because of this, budget conscious consumers may be attracted to use internet telephony services. Low PC penetration and therefore lower internet accessibility may also hamper the growth of internet telephony in India. Indian internet service provider licensees who are seriously considering internet telephony are working out alliances with known international internet telephony software/equipment/device providers. These must have the technology and experience of offering services in the global market and be able to upgrade their equipment and network systems and offer internationally competent services to household as well as corporate clients. Satyam Infoway and Data Access India have already secured permission to offer internet telephony services. About 25 other service providers are expected to secure permission in the near future.

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