TOPICS : Is telecom sector competitive?

Ramesh Adhikary

The Nepali telecommunication sector has been moving from a government monopoly to a competitive environment through the licensing of the private sector. Its policy and regulatory framework is guided by the National Telecommunication Policy 1999 and 2004 and the telecommunication act 1997.

The consumers expect quality service for low price with the greatest ease of use and readily available help. To meet this demand, NTA launched and stimulated competition in the Nepali telecom market. The operators NDCL, UTL, STM and SN compete for business in a variety of ways: competition between mobile services of NDCL and SN, competition between basic services of NDCL and UTL and competition between the telecommunications Internet of NDCL, and cable TV Internet of the SuBiSu Cable Network as well as Mercantile’s wireless and wired internet.

NTA invited competition in a phased manner in mobile telephony and basic services. But till now the result of the competition is not entirely satisfactory. NTA auctioned one licence each for cellular mobile and basic service for private sector. The private investors bid such high amounts in mobile licence that the business was rendered unviable, and for a while it seemed the attempt to attract private investment would be a major failure.

The competition introduced in mobiles has not been adequate to keep pressure on quality. Similar situation could be predicted for the basic services of UTL and NDCL.

A large number of new customers acquired by NDCL in mobiles are predominantly those who

have not used a mobile terminal before. NDCL and UTL select their targeted markets.

The business relationship is maintained involuntarily because a consumer is prevented by mobility barriers from changing telecom operators. Therefore, consumers in Nepal are not able to take their assigned phone numbers with them to another network operator.

The costs that consumers have to pay for the use of telecommunication access are difficult to estimate when a contract is being signed. This applies particularly to consumers who have no experience of wireless services. Thus, there are a large number of cellular consumers who, as a result of having to pay more than their threshold value, intend to terminate the contractual relationship with their network operator to completely withdraw from the market.

In the Nepali telecommunication market, market forces are yet to effectively regulate tariff and the regulator has to step aside except for a broad supervision in the interest of the consumers.

However, launching and stimulating competition in the Nepali telecommunication market is an important policy goal. Experiences of developed countries show that free and open competition benefits individual consumers and societies as a whole by ensuring lower prices, new and better products and services, and expanded consumer choices. In Nepal, this has not happened yet.