How to start a business of Internet Service Provider in India
Table of Contents
To start any kind of business, everybody needs to plan their steps and work towards their goal step by step. For becoming an ISP (Internet Service Provider) in India, a person or a group will have to plan their steps accordingly. The service providers will have to buy some equipment and ensure a hosting center and ensure an alternative system in case of power shortage and they will have to plan the whole process according to their budget.
How to start a business of Internet Service Provider
- To become an ISP in India, an organization or a person will have to ensure they have their own license. The Indian government has presented Unified License System for the internet service provider. Most of the new businesses with less capital tend to take their license from existing license providers.
- After that the group will have to find a building to host their data center. They may start with a small room but it should be in a top floor so they will be able to route their cables properly and ensure internet bandwidth.
- Then the providers will need to find out the local suppliers of the city and they will have to ensure they are buying wholesale bandwidth for the beneficiaries of their targeted city. They may contact more than one wholesale supplier to ensure quality internet service throughout the whole day.
- The new business group will need to ensure they have a UPS in case of power shortage. They will also need cooling equipment for their data center. Then they will need to connect their data center to the ISP upstream or the leased line in the particular area. A group will be able to do it through a fiber optic cable or a wireless cable.
- One will need to ensure they have created a pricing plan and they have a proper marketing and monetization strategy for their ISP business. The new business group will need to carefully organize their pricing plan and they will need brochures or sales agents for the marketing sector.
- If any group wishes to be a new ISP, they will need to ensure a call center or an email ticket system for their services. Only fantastic service quality will ensure more customers.
How to get License
- There are three categories under Unified License System in India. The first category will allow a group to provide their services across the whole country and the second category will only allow a group to conduct their business in 20 regional telecom circles and 4 metro telephone systems. The third category enables a provider to conduct their business in any Secondary Switching Area within the terrestrial limitations of the providers.
- Firstly a provider will need to ensure their company is registered under the Companies Act of 1956 in India. The providers can log in to the website of Registrar of Companies website to register their company.
- After that, the provider will need to ensure they have chosen their preferred type of category under Unified License System. After selecting their preferred category, an individual will need to submit an application. The application fee is RS. 15, 000 for category A and B and RS. 10, 000 for category C. The application fee must be paid from a scheduled bank.
- The providers will need to send proper documents along with their application and after that they will be contacted within 60 days by the Department of telecom. The Department of telecom will issue a Letter of Intent and after that the providers will need to sign their license agreement and submit the PGB to the concerned office.
ISP Franchise in India
If anybody has a small capital and they want to start their own business, they will be able to select a trusted ISP franchise in India and start their business with the help of the ISP franchise. The ISP franchises will enable the new internet service providers with the opportunity to use the trademark of the franchise.
ISP Business Cost in India
The cost of starting an ISP business in India varies according to different categories. Below we will try to provide an estimated idea of the cost.
- Category A: A group will need RS. 2.4 Crore of Performance Bank Guarantee (PBG) for acquiring their license under category A.
- Category B: A group will need RS. 20 Lakhof PBG for acquiring their license under category B.
- Category C: A group will need RS. 3 Lakh of PBG for acquiring their license under category C.
Other Costs
- Legal Consultant: 1 lakh-2 lakh.
- Infrastructure Cost: 3-4, 00, 000 INR. (1 km range)
- Software and Server Cost: 75, 000 each year.
- Leased Line cost: 2, 25, 000 each year.
- Connection cost: 18, 000- 40, 000. (1 Mbps internet)
Cost of Bandwidth in India
If anybody wishes to buy STM-1 (155 Mbps), they will have to pay 13-18 lakh. Also if the service providers are in category C, they will be able to buy bandwidth for an amount of 2, 25, 000 to 2, 40, 000 INR. The internet service providers will be able to buy internet from Class-A ISPs or renowned telecoms.
Profit
The total cost of getting a C category ISP license along with other costs can be up to 8 lakh INR. If a service provider provides their services to 200 customers for a period of 12 months and if the customers pay them Rs. 400 per month for example, the service providers will be able to earn Rs. 7, 20, 000 every year. So, after 15 months, the service providers will be able to get back their invested money and after that they will be able to get profits.
Precaution
The internet service providers will have to be careful about their business plan. They will need to understand the local business market before buying wholesale bandwidth and they will also need to understand the requirements of their customers. The ISPs will have to consult with a legal consultant for their license procedure and ensure their company is registered and they have proper documents. Also, the ISPs will have to get their bulk bandwidth from a trusted Telecom or renowned ISPs.