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"Regarding VPN, ITU has recognised the existence of various forms of Network Based Virtual Private Networks (NB-VPN) based on different layers. Typically a Layer 3 network based VPN is used which is a VPN operating at layer 3 and providing a layer 3 service between customer devices belonging to the VPN using IP protocols. As per ITU definition of IP-VPN - 'A network based on IP-VPN is a network based layer 3 VPN that uses IP addressing, IP forwarding and routing, and the IP protocol for control and data, and IP technology as the basis for providing the VPN facilities".

13. The letter points out that there is no separate licence for providing IP-VPN services at Layer-3, though in many countries like Australia, New Zealand , Hong Kong, Japan and USA, IP-VPN services is provided by various ISPs with very low or zero entry fee and revenue share. Pointing out the technical aspect of VPN, TRAI recommended that DoT "may kindly consider reviewing its decision to bar ISPs from providing IP-VPN services".

14. On 22.11.2004 Secretary DoT wrote to TRAI that `ISPs cannot be permitted to provide IP-VPN/MPLS/other end-to-end services under their present licensing agreement". It also mentioned that guidelines for permitting ISPs to offer VPN service were being issued "shortly"`

23. The VPN can be IP VPN or MPLS3 VPN. Basically both are on Layer-2 or Layer-3 and use Internet Protocol (IP)4 for carriage of data. The ISPs are not permitted Layer-1 VPN, which is primarily based on the physical media i.e. optical fibre, co-axial cables or any such other media.

24. Though the Cabinet intended the introduction of ISPs for making the nation IT savvy and to use IT enabled services but it will be pertinent to point out here, and which is not disputed, that since 1998 VPN has been used by most of the ISPs including Bharat Sanchar Nigam Limited (BSNL), a Government of India enterprise, though the guidelines have been issued by the government making it as a separate service now as late as December 2004.

* Provision of VPN services by ISPs is in full knowledge of DoT, TRAI and BSNL. ISPs have been offering this service for more than 5 years.
* DoT's views on VPN services on Internet: Perspective Plan released in 2000 mentioned that VPN services are one of the many proposed Internet services. Further, Telecom Engineering Centre (TEC)'s generic requirements mention that these (VPN) are the services which are essential for ISPs to have a wider reach.
* TRAIs view on VPN: TRAI regulation notified in Feb, 2004 mentions VPN as one of the services under category of Internet services provided by ISPs. Tariffs for VPN services have been reported to TRAI since 1999 by ISPs.