``This will result in a snowballing effect on consumer tariffs of as much as four times, by putting multi-point taxes on the same item,'' says Rajesh Chharia, president, Internet Service Providers Association of India. He confirmed this was the position of the entire industry, including big ISPs, and not just small players.

Trai doesn't agree. ``Costs will not go up,'' says Trai chairman N Misra. ``Just 20% of licensees account for 98% of the business. With more competition, costs can only come down," he explains.

ISPAI questions Trai's intervention on grounds that other countries have little or no regulation in this sector. Internet service providers pin hope on DoT.

"The move is regressive considering this is the year of broadband. The government wants to take India from 2.1 million broadband users in March 2007 to nine million by March 2008 and make broadband free. Trai's prescriptions will not allow this to happen," says Col RS Parihar, COO, Tulip IT Services and secretary, ISPAI, about 6% licence fee of on annual gross revenue.

Strangely, despite its strong views, the ISPAI has not considered asking Trai for a review of its recommendations. "The industry can seek a de novo review. Though this step is unprecedented, it is better than engaging in an outright confrontation with Trai. Especially if ISP's can point out factual inaccuracies in Trai's work," say telecom analysts.

Instead, ISPAI is counting on Department of Telecomtaking action in its favour, by rejecting these proposals of Trai, outright.

The industry also believes that the move will kill domestic web hosting as the 6% levy makes web-hosting services unviable in India. This implies that even local content will eventually get hosted abroad. .

"This appears to have been done to protect the business interests of integrated players despite ISP's providing these services much cheaper. Is this the level playing field the consumer deserves?," questions ISPAI.