Cyber cafes in Kerala go on strike against TRAI

THIRUVANANTHAPURAM: The Internet cafes in Kerala have decided to observe a day's hartal on March 31 to protest against the imposition of eight percent service tax and new telecom rates announced by the Telecom Regulatory Authority of India (TRAI). The service tax and hiked telecom rates could have a dampening effect on the business of Internet cafes and ISP business in general.

SS Manoj, State President, Internet Cafe and DTP Owners Association of Kerala (ICDAK) said that the imposition of eight percent service tax for cyber cafes was impractical to implement and on the other hand would drive many cafes out of business in no time. In effect, an eight percent service tax means the total impact is 16 percent as eight percent tax has to be provided to the Internet service provider (either dial -up or leased).

"For one hour browsing @Rs 20 per hour the tax impact would be Rs 1.60 apart from the tax payable to the ISP by the cyber café," he said. Along with uncertainties about implementation of Value-added Tax (VAT), life is quite miserable for those in the ISP segment including cafes.

Regarding the new rate slabs of TRAI, Manoj said that it would result in cost escalation for cyber cafes. Over 90 percent of the state's cyber cafes have dial-up connectivity and many of them would be driven out of business, he added. There are over 2,000 cyber cafes operating in Kerala and the rate of units closing down was increasing.

ICDAK has sought the co-operation of the Internet Service Providers Association of India (ISPAI) in its campaign against the eight percent service tax and high telecom access rates announced by TRAI recently. Praveen Shrikhande, Vice President of Asianet Satellite Communications Ltd. (ASCL), the leading ISP from Kerala and a state chapter President of ISPAI, said that both the service tax and new TRAI rates could affect the growth of the industry.

However, a formal decision regarding ISPAI joining issue with Internet cafe owners have not been taken as yet.



"Right now there is no growth in dial-up connectivity and its usage is coming down. The new telecom tariff rates could have a dampening effect," he said.