Internet Service Provider Profit In India

Introduction to Profit in Internet Service Provider in India

To start any kind of business, people should properly plan the methodology and work towards their goal gradually. For becoming an ISP (Internet Service Provider) in India, a person or a group must plan their steps consequently.

A Step by Step Guide to Profit in Internet Service Provider Business

The service providers should purchase some equipment and make sure a hosting center is there and even have an alternative system in case of power shortage and this should be planned along with the entire process according to the financial support one has.

Procedure to Start a Business of Internet Service Provider

To become an ISP in India, an organization or a person must ensure they acquire their own license. The Indian government has presented the Unified License System for any internet service providers. Most of the new businesses with low investment tend to take their license from already present license providers. After that, the group will have to find a place to host their data center. They may start with a moderately sized room but it should be on the top floor so they that they are able to route their cables easily and provide the internet with proper bandwidth.

Then the providers must find out the local suppliers of the city and they must take care they are purchasing wholesale bandwidth for the people of their targeted city. They may approach more than one wholesale supplier so that they do not compromise on the quality of internet service throughout the whole day.

The new business group must have the facility of UPS in case of power cuts. They will also require cooling equipment for their data center. Then they must connect their data center to the ISP upstream or the leased line in the locality. A group can do it through a fiber optic cable or a wireless cable. One must be sure that they have decided on a proper pricing plan and they have a proper marketing and monetization technique for their ISP business. The new business group must carefully organize their pricing plan and they will require flyers or posters to give out to sales agents for the marketing purpose.

If any group wishes to be a new ISP, then they should have a call center or an email ticket system for their services. This will aid you to get a good customer base as service quality is very necessary while dealing with an internet connection.

License, Registrations and Permissions for Internet Service Provider Business

There are three categories under the Unified License System in India. The first category will permit a group to provide their services in the entire country and the second category will only allow a group to conduct their trade in 20 regional telecom circles and 4 metro telephone systems. The third category will allow the provider to conduct their business in any Secondary Switching Area within the terrestrial limitations of the providers.

Primarily a provider must ensure their company is registered under the Companies Act of 1956 in India. The providers can log in to the website of the Registrar of Companies website for registering their company.

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Permissions for Internet Service Provider Business.
Permissions for Internet Service Provider Business.

After that, the provider must ensure they have selected their preferred type of category under the Unified License System. After choosing their preferred category, an individual must submit an application. The application fee is Rs. 15, 000 for category A and B and around Rs. 10, 000 for category C. The application fee can be paid from any bank.

The providers must provide proper documents along with their application and after that, they will be approached within 60 days by the department of telecom. The department of telecom will allot a Letter of Intent and after that, the providers should sign their license agreement and submit the PGB to the concerned office.

 ISP Franchise in India

If an individual has a small capital and they wish to start their own business, they can try to opt and select a trusted ISP franchise in India and begin their business using the ISP franchise. The ISP franchises will provide the new internet service providers with the prospect to make use of the trademark of the franchise.

Investment to start ISP business in India

The cost of starting an ISP business in India differs according to different categories. Below we will have provided an estimated idea of the charges.

Category A: A group requires Rs. 2.4 Crores of Performance Bank Guarantee (PBG) for obtaining their license under category A.

Category B: A group needs Rs. 20 Lakhs of PBG for getting their license under category B.

Category C: A group must have Rs. 3 Lakhs of PBG for gaining 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)

Investment for Bandwidth in India

If anybody desired to buy STM-1 (155 Mbps), they should pay 13-18 lakh. Also if the service providers are in category C, they can purchase bandwidth for an amount of Rs. 2,25,000 to Rs. 2,40,000. The internet service providers can buy internet from Class-A ISPs or renowned telecoms.

Profit in Internet Service Provider (ISP) Business in India

The total cost of getting a C category ISP license along including extra costs can be up to Rs. 8 lakh. If a service provider provides their services to 200 customers for about 12 months and if the clients pay them Rs. 400 per month, for example, the service providers can easily earn Rs. 7,20,000 every year. So, after 15 months, the service providers will get back their capital and after that, they can gain the profits.

Precautionary Measures in ISP Business

Internet service providers should be careful about their business plan. They should be aware of the local business market before purchasing wholesale bandwidth and they must understand the necessities of their customers. The ISPs should consult a legal consultant for their license procedure and make sure their company is registered and they keep proper documents. Also, the ISPs must get their bulk bandwidth from a trusted Telecom or renowned ISPs. 

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