Nepal Telecommunications Authority (NTA), Nepal’s telecommunication regulator marked its 26th anniversary on Sunday, March 4, 2024. Speaking on the occasion, the authority’s chairman Bhupendra Bhandari said that the internet price war is risking internet service providers’ investment.
This was likely the most significant statement from the newly appointed NTA chairman Bhandari. During his address, he expressed the belief that due to the intense internet speed and price war at the top, a few ISPs might lose their investment. He also shared that necessary steps need to be taken to rescue the ISPs. Most probably, the largest ISPs are exempt from the fierce competition however, it’s too hot to handle for many others who are not in for the competition.
NTA has consistently branded internet speed and price war a risk to ISPs. However, the service providers have continued to inflate the speed and revised the prices to attract customers.
According to Bhandari, ISPs account for 25% of the total revenue from Nepal’s telecommunication industry. Over the past 6 years, ISPs saw their revenue grow by 5 times. Bhandari stressed that this growth has been most noticeable since Covid-19. But it doesn’t mean all the service providers are having it great. Except for the major ones, many down-the-leaderboard companies are also facing existential threats.
While overall, ISPs are seeing their graph rising, it’s the opposite for mobile service providers.
Need another telecom company in the market
Bhandari also said that the dominance of just two telecom companies hasn’t done better for the subscribers. To alleviate this situation, he shared that frequency auction/allocation must be more convenient. With just two companies plying their trade in the telecom market, it’s also brought a monopoly in the telecom market in Nepal.
Pointing to the looming expiration of Ncell’s license for mobile service, he said that the need for another telecom operator is a must. Private telco Ncell’s license is expiring in 2029 AD. You might also want to read: Spectrlite UK Buys Axiata’s Ncell Shares for $50 Million
CG has recently seen the revocation of its rural telecom service license. Still, many feel that the conglomerate is likely to enter telecommunication services though.
Telcos revenue on a slum trajectory
In recent years, Nepali telcos- Nepal Telecom (Ntc) and Ncell have not had their best in terms of financial gains. Both companies have generated less profit than in previous years. The pattern is ever more conscious since COVID-19. This is due to several factors. For e.g., mobile customers resort to OTT apps for voice calls. Besides, due to the stiff competition between the companies, each is providing data packs at affordable rates which is also not contributing the most brightly to their revenue streams.
NTA chairman Bhandari shed light on these harrowing challenges telcos are facing. “Mobile operators’ are struggling with revenue as more users tend to use OTT services,” he noted. Significantly enough, he also said that “while their revenue is falling, license renewal, frequency charges, investment on technology and other fees are still intact. Therefore, their return for investment is not ensured.”
When it comes to the intense competition among the ISPs, we can attribute it to having started with CG’s 120 Mbps plan launch. After that, the internet speed war ensued. Then it translated into a full-fledged speed and price war.
There are currently 2 mobile service providers, 23 network service providers, and 128 internet service providers. According to the latest NTA data, there are over 28.64 lakh unique FTTH fiber internet subscribers across Nepal.
Government secretary Baikuntha Aryal told to resign
In another big news, the chief secretary of the government and former Ministry of Communication, Information and Technology (MoCIT) secretary Baikuntha Aryal has been told to resign. According to reports, the prime minister Pushpa Kamal Dahal “Prachanda” gave him a verbal order to stay on leave.
Aryal has been mired in controversy over the procurement of TERAMOCS in Nepal. He has also drawn notoriety for being favorable to former Ntc MD Sunil Paudel over the controversial new billing system. For the same and similar reasons, former NTA chair Purushottam Khanal also had to step down a few months prior to completing his tenure.
Do you think NTA ignored the key premises while proceeding with TERAMOCS and is the price war in the internet market really becoming a risk to ISPs in the country? Do share in the comments below.
