How to start an Internet Service Provider Business?

The Internet plays an important role in today’s economy and society. The rise in the number of internet users has led to the rise in the number of Internet Service Providers (ISPs). There’s a lot of competition out there when it comes to the network infrastructure market but that doesn’t stop the new players from making an entry.

If the new players know they’ve got what it takes to make it to the top, the competition should not be a deterrent. If you’re planning to start an Internet Service Provider Business, the time can never be this right. The demand in the market is high and there is a vast opportunity to succeed.  

Who is an Internet Service Provider?

An ISP is a company that allows its subscribers to access the internet. The subscribers have to pay a subscription fee to the ISP for accessing the internet. The subscription fee varies depending on the different plans provided by ISPs. These plans offer different data speed, data limit, etc. Internet Service Providers are also known as Online Service Providers and Internet Access Providers. Anyone that uses the internet is only able to do so because of the ISPs.Here’s a list of some famous ISPs in India.

 Now, let’s discuss everything you need to do to start an ISP business!

Create a comprehensive ISP business plan

Without proper planning, it can be difficult to determine all the necessary steps to achieve your desired outcome. Most entrepreneurs succeed when they have a proper business plan. Without proper business planning, the chances of failure are high.

Make an ISP business plan which can keep you focused and help you organize your goals and finances. Include the following essential elements

• Your Goal (where/how you want to operate and for whom, etc.)
• Funds required for starting an ISP Business (infrastructure, license/approval, employees, etc.)
• How you will provide service to customers
• How much you will charge for the service
• How you will deal with problems, such as maintenance and connectivity issues

Additionally, if you want a bank to fund your ISP business, a good business plan can help to increase your chances of success.

Choose the most suitable business structure

You need to decide the kind of company or business you want to get registered as, such as Sole Proprietorship, Limited Liability Company (LLC), etc. You can do your own research or take advice from company registration consultants to figure out which business structure would suit your needs the best. You can get in touch with Registrationkraft’s company registration consultants anytime! We’d love to serve you!

Check your local regulations

Every state or region has its own set of regulations and guidelines for starting and operating a new Internet Service Provider business. It is necessary to visit your closest government office for advice or check the official government websites for the latest information. You wouldn’t want to get any fines or penalties, would you?

Get ISP License

The ISP License is a legal permit which lets ISPs offer their internet services to the customers. This license is also known as the Unified License. It is issued by the Department of Telecommunications (DoT), which is a part of the Ministry of Communications, Government of India. Companies can apply for ISP License depending on the area they want to cover for providing services.

ISP License Categories

The ISP License can be obtained for 3 categories in total:

• Category A ISP (National Level): This category is preferred by ISPs who want to provide their services at the national level.
• Category B ISP (Telecom Circle/Metropolitan circle): ISPs should opt for this category if they want to provide their services in one of the 20 major states or any of these metropolitan areas – Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune. GOI issues notifications from time to time about the territories which are included in telecom circles and metropolitan areas. 
• Category C ISP: A particular secondary switching area, which is a government defined territory with small communities is covered by this category. The license cost for this category is relatively cheaper compared to the licenses of the other 2 categories and is ideal for small companies who have limited funds.

Must read: What is the procedure of IP-1 license registration in India?

Documents required for ISP License

The following documents are required for obtaining this license:

• A registration copy which is certified by the Company Secretary/Statutory Auditor and countersigned by Director duly authorized by the company
• AoA certified by Company Secretary/Statutory Auditor and countersigned by Director duly authorized by the company
• Certificate of Company’s Net Worth from the Company Secretary/Statutory Auditor which is countersigned by the Director duly authorized by the company
• Certificate of the Paid Pp capital from Company Secretary/Statutory Auditor which is countersigned by Director duly authorized by the company
• MoA which is certified by Company Secretary/Statutory Auditor and countersigned by Director duly authorized by the company
• Certificate of the Equity Details from Company Secretary/Statutory Auditor which is countersigned by Director duly authorized by the company
• Certificate from Company Secretary/Statutory Auditor countersigned by Director duly authorized by the company for disclosing the status of foreign holdings
• In case of foreign nationality CEO/CTO/CFO/Director, MHA clearance is needed
• Power of Attorney by Resolution of the Board of Directors

Process of applying ISP license

To apply for ISP License, follow these steps:

• Log onto the www.saralsanchar.gov.in/ portal and register as a user.
• Afterwards, login with User ID and Password and then click on the “Apply Now” option which is visible on the Unified License tab. 
• As a next step, you must add the details of your company before clicking on the “next” button.
• On the basis of the selection of service authorizations selected, the payment will be calculated automatically.
• Upload all the necessary documents in pdf format. To check the documents you need, you can check out the “Required Documents” section of the page.
• Follow the instructions and finish the remainder of the application by filling the details about the owners and partners.
• All the terms and conditions need to be accepted. Make sure you read them carefully first. In case you filled any incorrect details, you have the option to edit the application. Click on the “submit” option only after cross checking everything.
• After this, your page will display “validation successful” in case of no discrepancy. Then you will be redirected to Bharatkosh Payment Gateway so you can make the fee payment. You have to download a PDF of the completed application once the payment is done and upload a digitally signed PDF application before you click on the final submission option.
• Once the application is received by DoT, an officer will examine it and issue LOI upon acceptance.
• Upon receipt of LOI, you must pay a one-time entry fee which is non-refundable along with the Bank Guarantee details. 
• You are also required to submit a signed license agreement with the DoT and provide all the documents which are mentioned in LOI.
• If there are no errors in your application and the process goes smoothly, you will receive your ISP License. Once the license is issued, you will get a notification from DoT regarding it through your registered mobile number or email ID.

Search for the suppliers

It might be a bit difficult for you to locate a wholesale bandwidth supplier since the ISP industry is highly disorganized. Make sure you do your homework and consult with professionals to find out which bandwidth provider would be right for you, based on your needs and expectations.

Calculate your expenses

The bandwidth cost can be quite high. After you and the wholesale provider have worked out the bandwidth cost, you need to start noting all your estimated costs, including:

• Cost of space or place for data servers to be kept
• The cost of large-scale bandwidth
• Expense of software or hardware
• Marketing and sales’ cost
• The cost of the service

Create a pricing plan

Your pricing plan needs to be thought through very carefully. You need to keep in mind the estimated users, demand of data, local competition and the structure of their pricing.

Market your service

Most of your customers are going to be those individuals who already have an internet connection. You need to do marketing for your services to convince them that you are providing better services at competitive prices and more exciting offers than the other existing ISP businesses. Some ideas for your ISP business’ marketing plan may include: 

• Ad space in magazines and newspapers
• Ads on regional TV channels
• Flyers to customers near your relay towers
• Door-to-door marketing to promote your service offering
• Email marketing
• Marketing through social media platforms
• Online presence by creating a business website

Invest in technology

Invest in the latest technology for your ISP business. You can get field service management software which can help to track and manage your business smoothly. It is necessary to have a good software which can track data usage, send invoices, create orders related to work, optimize routes and manage your workers and customers at the click of a button. It’ll help you save up a lot of time.

Categories of Internet Service Providers

Mentioned below are the different categories of ISP applicants that can register under DoT:

• Wireless ISP: Wireless ISPs make use of wireless technology to offer internet access with the help of a wireless network system. They allow their clients to connect to their servers with the help of wireless connections such as wi-fi enabled laptops and mobiles at the convenience of tethering hotspots.
• Access Provider: Access Providers have to pay subscription fees to end service providers and provide the end-user the internet connection’s access which includes wi-fi, dial-up, fibre optics, cable, modems, integrated services, satellites, etc.
• Mailbox Provider: This type of ISP offers hosting domain mailboxes which can receive and store emails.
• Transit ISP: The Transit ISPs provide a large bandwidth which ensures hosting and access ISPs in order to maintain the internet service. Such providers pay for the transmission to the ISP which is above them and charge their customers for the internet as they use it.
• Virtual ISP: Virtual ISPs buy services from another wholesale ISPs. Customers of virtual ISPs connect to internet services which are under the virtual ISPs’ brand names while the ‘wholesale ISP’ operates and regulates the infrastructure.
• Free ISP: As the name suggests, a free ISP offers free internet services. They often show advertisements to their internet users.
• Hosting ISP: This kind of ISP offers facilities and services such as email, cloud web hosting, virtual servers and physical server operation services.

Different Types of Services Under ISP

An ISP can provide the following types of services:

• Cable: A cable is important for accessing the internet on TV. A coax cable is required for providing high-speed data service. A fixed bandwidth is provided to share with users and the data speed depends on the number of users using the internet. Generally, the upload speed ranges between 5 to 50 Mbps while the download speed ranges between 10 to 500 Mbps.
• Fiber: Fiber optic cables are used for data transmission in this internet service. It offers better speed compared to the cable. Download speed ranges between 250 and 1,000 Mbps while the upload speed ranges between 250 to 1,000 Mbps. This type of internet service is most appropriate for online gamers, heavy internet users and graphic designers.
• Digital Subscriber Line (DSL): In this, the service providers make use of telephone lines to provide internet services to the customers. Because of its low speed, most customers prefer to use cable and fiber. The upload speed of DSL ranges between 1 to 10 Mbps and the download speed ranges between 5 to 35 Mbps. This is ideal for those who don’t have much work to do on the internet.
• Satellite: The satellite internet connection has two parts, a one way connection and a two way connection. For one way connection, a dial up connection is required to download data using satellite connection. In case of two way connection, both download and upload services come through the satellite service. It’s a slow process wherein the upload speed is of 3 Mbps and download speed is between 12 to 100 Mbps.

Conclusion

The internet has become an important part of everyday life in the 21st century. The rise in the number of internet users has led to the rise in the number of Internet Service Providers (ISPs). Opening up an ISP business isn’t as complicated as some might think. But it does take a lot of preparation and understanding of your target market and the entire internet market. The steps in this article will ensure your ISP business will be a profitable one. If you need additional help, you can always get in touch with one of Registrationkraft’s team leaders. We’re always here to serve our client’s needs.

Frequently Asked Questions (FAQs)

Q1. What is the validity period of an ISP License?

The ISP license provided by DoT comes with a validity of 20 years. Once it expires, an ISP has to apply for ISP license renewal in order to continue providing ISP services.

Q2. Am I eligible for an ISP license?

In order to be eligible for an ISP License, a company must get registered under the Company Act, 2013.

Q3. What is broadband?

A broadband is a multiple high-capacity transmission system which carries data, calls and videos over long distances at a fast speed. Fiber optic, coaxial cables and radio waves are all included in the transmission media. Most internet users around the world get broadband through their mobile phones.