Critical Issues in Nepalese Telecommunication industry Regulation

Nepal, situated along the southern slopes of the Himalayan mountain ranges, is a landlocked country, situated between India and China. Nepal occupies an area of 147,181 square kilometers and has about 27 million inhabitants. Topographically Nepal is divided into three regions: the mountain, hill and the terrace regions. About 83 percent of the country is rugged terrain and only 17 percent is flat land. However a new constitution is being drafted that will determine its federal structure. Since it is very difficult and costly to build transportation infrastructures due to the rugged terrain, telecommunications services are of utmost importance for Nepal to serve the rural population. With the approach of the twenty-first century, it is realized that economic, social and cultural boundaries are disappearing. In this process, the movement of people and the trade of goods and services are dependent in Information and Communications Technology (ICT) that is based on telecommunications services. Thus exchange of information is a crucial fact. The years 1997 & 1998 can be considered as the dawn of a new era in the telecom sector in Nepal. These were the years when the Telecommunications Act 2053 (1997) came into force and the telecom regulator i.e. Nepal Telecommunications Authority (NTA) was established. The establishment of regulator was a clear signal from the Government to introduce competition in the telecom. During the long area of the monopolistic environment, the tariffs were high and penetration of telecom services was low. The telecom services were mostly concentrated in the urban areas primarily in the capital city of Kathmandu. The progress was slow but steady. License to the second basic service operator was issued in the end of year 2002 and to the second mobile service operator was awarded only towards the end of the year 2004. The regulator or the Government has taken a cautious approach in opening of the telecom sector. A safer way of limited competition was adopted as some times it may happen that the sector collapses if opened suddenly to the unlimited competition (as large number of operators jump into the market while due to prevalent economic conditions, the demand is not created at the same pace). Opening of the telecom sector has created opportunities for the direct consumers, business community, government, operators etc. With the entry of new operators, the direct and indirect employment opportunities for the youths of the country have increased and the overall life conditions have

improved. Now, people are not required to queue up and wait long to get a telephone connection, at least in the big cities. The telecom connectivity is no longer a luxury, it is a necessity now.
In Nepal, like in many other developing countries, the abysmal performance of the state-owned telecommunications service provider and the increasing requirement to attract capital for the up gradation of the sector were the major drivers for the liberalization of the sector. Moreover, technological changes in this industry made less tenable the argument that telecom is a natural monopoly. The end of the Nepal planned economic development, which was inspired by socialist principles; lead to across the board policy changes the most important of which was the liberalization of the industrial policy with a State commitment to introduce competition in some industries that had been previously served by government-owned monopolies. Simultaneously, there emerged a renewed faith in the forces of competition and the market. It was realized that provided the correct institutional foundations and properly designed mechanisms, greater reliance on competition and private investment need not be inconsistent with more equitable access. The more nuanced modern view that was gaining limited acceptance was to allow private provisioning of these services subject to independent regulation, so as to maximize social welfare, howsoever the political process frames it.

International incoming call bypass has become perennial problem for the country. Lots of revenue leakage is there from the international incoming call bypass. Call bypass is also security threat to the country as the bypassed call cannot be traced for its origination as it generally make use of public internet as transport media. In most of the cases, it happens that the caller is not aware that his call is going through the grey route and he is charged at the normal call rate. Thus, it would not be exaggeration, if we call it as socio-economic evil for the country. NTA/ government are required to lay stringent laws so that the perpetrators involved are not being spared. Critical issues in the telecom sector Since the main objective of this piece of writing is to bring out some of the pressing, urgent and very controversial issues of importance in the telecom sector regulation, the instigator feels that the following issues need special attention. Issuance of the Mobile License through competitive bidding Issuance of Limited Mobility License for basic service licensee

 Authorization of Roaming between Limited Mobility Licensees Cellular field project for basic and rural telecom service providers Jurisdictional expansion of rural service providers either by the amendment of the license or by the award of limited mobility license Development of scientific basis for field allocation, assignment and pricing Development of proper policies and programs for disbursement and management Enforcement of quality of service standards -particularly in mobile service Enforcement of proper interconnection regime Maintaining level playing field The list continues but the discussion is limited to some of the critical issues that will pose difficulty even when there is a unanimous desire and commitment among the stakeholders to go forwardthey will be elaborated one by one. Functions, Duties and Powers of NTA As prescribed in the Act, NTA broadly has the following jurisdiction in terms of its functions, duties and power: Government advisor on telecom sector Licensing Competition regulation Tariff regulation Spectrum management and new technology management Human Resource Development in telecommunication sector Consumer interest protection Universal service obligation Dispute settlement Law enforcement These frameworks seem to have been unable to cope up because of the fantastic changes in the technologies and the convergence towards which technology and services have already moved to, and due to very specific development need of the country like ours challenged not only by

geography but also by the overall socio-economic indicators. The successive governments tried to address these challenges through certain policy, legal and regulatory interventions. Such interventions produced certain tangible results as well so far as availability and access to services, reduced tariff due to competition etc. and their applications for socio- economic sectors such as education and health, agriculture and government service delivery are concerned. However, along with these seemingly positive consequences such interventions have been proved to be critical challenges in ensuring level playing field among the service providers, enforce effective competition in the sector and moreover ensure a transparent, objective, professional, efficient and independent sector regulation. We cannot afford to delay in addressing these critical issues unless we are heading towards a disastrous future in telecom sector.

Name:- Shreenidhi pokharel Nepal Telecom Nepalgunj, Banke