Your Internet Bill Might Get Cheaper As Govt Proposes a License Fee Cut

As per a media report, the government is contemplating a license fee cut for fixed-line broadband services in India. This change could bring down the cost of household broadband services and help service providers to expand their coverage area at a lower price.

The license fee concerning the AGR generated by broadband companies via households will be reduced to Rs.1 a year, according to the proposed plan. The projected license fee concerning fixed-line broadband services, measured at a rate of 8%, currently stands at Rs.880 crore per year, making this a significant improvement. The proposal in question is yet to be approved by the cabinet.

According to the report, the new proposal will bring down the license fee based on adjusted gross revenue (AGR) generated by broadband companies for rendering internet connectivity to households in the country. As per the latest data provided by the Telecom Regulatory Authority of India (TRAI), there are more than 1.98 crore fixed-line broadband subscribers in India.

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Jio Fiber is one of the key beneficiaries which may reap benefits through the changes proposed as it formally launched its broadband services last year, but is currently facing massive competition from existing players, including ACT Fibernet and Airtel. Increased revenue potential through a license fee reduction will allow Jio Fiber to accelerate its broadband services in the country. 

The report, quoting people who are familiar with the development, mentioned that there would be no changes in the services offered to commercial users. It is estimated that the proposed reform would result in a loss of Rs.592.7 crore to the government, however, at the same time would result in a rise of 10% in the revenues concerning broadband companies which are offering their services to households.

Apart from Jio, the reduced license fee, if approved, would benefit other prominent broadband service providers. ACT Fibernet, Airtel, and state-owned Bharat Sanchar Nigam Limited (BSNL) will be able to increase their revenues and reduce acquisition costs through the changes announced.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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