After the bloom and collapse of smaller, pure-play ISPs in the late 1990s and early 2000, one activity that helped many survive was VPN service. As the bigger operators also jumped into this, and prices dropped, VPN has been a big focus for small players. This is important, especially with no signs of local loop unbundling by the incumbents. Government of India's sudden decision to stop ISPs from offering VPN services (and later open them up for a huge onetime entry fee with eight percent revenue share), is unfortunate.

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It is unfortunate for many reasons. One of them is arbitrary decision making. First the ISPs are allowed to offer VPN-they have been offering these for quite some time. And then one fine morning they are asked to switch off. This is not a best practice, whatever be the argument. Besides the ISP, the corporate users are also left in a lurch by such high-handed decisions of the authorities. This is not a very healthy thing, and corporate users will be jittery with this technology as well as the service provider in future.

The second thing about such decisions is the lack of transparency. Everybody seems to believe that trigger for this decision was the incumbent operator loosing a huge VPN tender from an insurance company to a small private player. And that the operator, in connivance with DoT, managed to get the VPN policies out of bounds for ISPs. This is not the best way of building industry-government trust and respect.

It is worth mentioning here that TRAI had made some recommendations on VPN tariffs for pure-play ISPs, but this seems to be totally ignored. From a time when ISP business was opened up with a Re 1 license fee, with the objective taking Internet usage to greater heights, we seem to have come full circle. It would not be surprising if some of the bigger ISPs take to legal recourse and everything gets into a quagmire once again. Instead of TRAI, it appears that a few DoT officials are driving ISP and VPN policies in the country.

This issue will get sorted out, to the advantage or disadvantage of ISPs, but a bigger question is about the fate of small players in telecom. It appears that presently there isn't too much of a role for them. Unbundling of the local loop is not happening, therefore, there isn't much that they will be able to do. This decision on VPN services will clearly favor only the large integrated operators such as BSNL, MTNL, Tata, and Reliance.

The government (read DoT) will try to convince that they want a level playing field and uniform rules for all. Policy makers must realize that this plea seems to work only for large players, not for the smaller players. Traditionally, small and local players have been more innovative, have a local and regional focus, and play a big role in concepts like specialized and niche services. We will kill all of these if we do not encourage them.

Finally, if India is serious about building its communications infrastructure and specially moving fast on broadband, then it must not sideline smaller players and technologies like VPN. Both of them have played a crucial role in innovation and rapid deployment of communication services, thereby making the country's telecom service quality better and stronger.

Ibrahim Ahmed