The Indian government is considering cutting the fees paid by fixed line home broadband providers from 8% of adjusted gross revenue to one rupee per year, Bloomberg reported. The government proposal reportedly cited a 2019 ITU report (perhaps this one) which said that raising broadband penetration by 10% can lead to a GDP growth of 1.9%. The proposal reportedly does not cover enterprise broadband.
The government reportedly estimated that this cut would lead to a loss of Rs 5,927 crores.
A policy brief by the World Wide Web Foundation and the Alliance for Affordable Internet earlier this year urged governments to cut luxury-like taxes on internet services. Slashing AGR fees for broadband providers fits into this goal, as broadband providers would either be able to invest the saved money into their business or pass on the cost benefit to consumers. This, of course, applies to ISPs in places with significant competition between fixed line providers — in places with less competition, ISPs would just be able to pocket the profits.
But bigger ISPs, such as JioFiber, would also see a major upshot if this license cut finalised. They have already been rolling out broadband nationwide, and this would give them a monetary boost to pursue their fixed line ambitions.