Recognising broadband as the next telecom revolution, the Telecom Regulatory Authority of India on Thursday said that the prices of high-speed Internet of 256 kbps should be brought down to about Rs 400 per month from the existing Rs 1,600.

"This can be done by a series of fiscal and physical sops. The current duty structure is about 33 per cent over and above 8 per cent service tax...the duties need to be slaughtered," Trai Chairman Pradip Baijal told reporters in New Delhi.

Trai estimates that the fiscal sops will result in a loss of revenue of up to Rs 200 crore (Rs 2 billion) annually to the government.

While releasing the recommendations on broadband services, Trai favoured the removal of anti-dumping duty for recycled computers imported into India and also proposed allowing 100 per cent depreciation in the first year of computers with a view to increase the penetration of Internet and broadband.

Trai said India could achieve 20 million broadband subscribers and 40 million Internet subscribers by 2010.

Comparing the situation with Korea, Trai said the high-speed Internet of 256 kbps cost just a little over $0.5 per month.

The key recommendation of Trai relates to unbundling of last-mile link which means enabling the use of existing infrastructure of the state-owned Bharat Sanchar Nigam Ltd's copper network to reach consumers in the households.

For promoting the broadband penetration, Trai said it was important to encourage both domestic and foreign players to host their websites within the country.

"Profits that accrue to such web hosting enterprises should be partially exempted from income tax by at least 50 per cent for the next five years," Trai said.

It said duties levied on inputs and finished product used in providing broadband and Internet services should be reduced to the level equivalent to mobile phones.

Trai said that ISPs should be exempt from payment of service tax, which is 8 per cent of the value of service provided, for the next five years.

"The exemption will reduce immediately the cost of purchasing such services by 8 per cent to the consumers," Trai said, adding that the implementation of these recommendations would increase the broadband penetration 50 times from the current level.

Trai recommended that the service tax levied on services used by ISPs in the delivery of their services to Internet and broadband customers should also not be imposed.

"The Government of India should also recommend to all state governments to waive sales tax on goods and services that are transacted through the electronic mode (e-commerce) for the next 5 years up to limits to be prescribed by the government. This recommendation should then be followed with legislation to ensure execution by the state governments," it said.