Country Paper on Telecom Sector Development in Nepal

Submitted by: Sunil Kumar Karna

Prepared By Sunil Karna (www.sunilkarna.webs.com)

1. Introduction
Country Profile
Nepal: the country with the highest peak in the World and the birthplace of Lord Buddha are some of the platitudes which come easily to mind when one is attempting to describe the country in brief. Nepal, situated along the southern slopes of the Himalayan mountain ranges is a fascinating landlocked country, situated between India to the South, East and West and China to the North. Nepal occupies an area of 147,181 square kilometers. Topographically Nepal is divided into three regions the mountains, hills and the plain region. About 83 percent of the country is rugged terrain and only 17 percent is flat land. Administratively, the country is divided into five development regions and 75 districts . Apart from this there are 3915 Village Development Committees and 58 Municipalities among them 1 metropolitan and 4 sub -metropolitan cities. Each VDC is divided into 9 wards and municipalities into 9 to 35 wards. However a new constitution is being drafted that will determine its federal structure. The country has about 29.5 million inhabitants, of which just 4.13 million live in the urban areas. Agriculture and Forestry account for almost 60 percent of the Gross Domestic Product and these two sectors employ over 80 percent of the economically active population. The average income per capita is around U.S.$ 230 and a large proportion of the population are below poverty line. The average life expectancy is 60 years and 58 percent of the population is literate where the percentage of male literate is 70 and female 45. As mentioned earlier, the economy of Nepal is dep endent on agriculture and a majority of the people lives in the rural areas. This concentration led to an extremely large wealth gap between the rich and the poor. It is estimated that 42 percent of the population are living in 'abject poverty'. This problem is further worsened by high population growth-rate of 2.10 percent per annum. Despite the fact that even after the about 5 decades of planned development effort, the country is still fighting against poverty. Poverty alleviation is the topmost priority of the national development plan. The plan has further incorporated the objectives like attaining the sustainable economic development, lowering the regional imbalance, development of the rural infrastructure, employment generation and so on. As it is very difficult and costly to lay down the infrastructures due to rugged terrain, the importance of telecommunications is of high value for Nepal. As the twenty -first century approaches, it is realized that economic, social and cultural boundaries are disappe aring. In this process, the movement of people, goods and services are becoming increasingly frequent; demand for information and the importance of international telecommunications are increasing.

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Country Profile in a nutshell

Geographical setting
Location Latitude Longitude

26r 22' N to 30r 27' N 80r 4' E to 88r 12' E

Boarder
INDIA - in the South East and West CHINA - in the North

Size
Area Length Width 147,181 Sq. Km. 885 Km (East to West) Mean width 193 Km North to South

Demography
Population Population density Life Expectancy Literacy 29.5 m 125.6/Sq.Km. 60 years 54.1%

The history of telecommunications in Nepal is rather very young as compared to the history and culture of Nepalese people.

2. Policy Framework:
Government of Nepal is committed to improving telecommunications services and efficiency through increased competition and effective regulation of the telecommunication sector. As part of the fifth Telecommunications Project, a study on structural reform of the telecommunication sector was carried out in 1994. It recommended privatization, liberalization and establishment of a regulatory body. A policy Paper on the privatization of Public Enterprises was published in 1992. It notes that privatization of the management and ownership of public enterprises will reduce the financial burden and administrative responsibilities of the Government and will enhance operational efficiency of public enterprises. A new Telecommunications Act, 2053 (1997) has been enacted from 3rd November 1997 and a regulatory body, Nepal Telecommunications Authority (NTA) has been constituted.

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The main duties and functions of the newly constituted regulatory body, NTA are: y To provide suggestions to Government of Nepal on the policy, plan and programme to be adopted for the development of the telecommunications services. To make necessary arrangement to avail Basic Telecommunication Service and facilities in all rural and urban areas throughout the Kingdom of Nepal. To involve the national and foreign private sector investors in the operation of the telecommunications service. To make arrangement for the coordination and healthy competition among the persons providing telecommunication service and facilities so as to provide such service and facilities to all public in general. To prescribe, fix and approve the standard and quality standard of plant and equipment relating to telecommunications service. To grant license to operate the telecommunications service. To approve and regularize the fees to be collected by a person having obtained license for providing telecommunications service. To perform the functions relating to the frequency in accordance with the policy determined by the Radio Frequency Determination Committee. To develop and extend or cause to develop and extend the telecommunications service in such a way that it protects the rights and interests of the consumers. To develop or cause to develop Nepal as an International transit for telecommunications.

y y y

y y y y y
y

The main objective of the Telecommunications Policy is to make the various types of high standard and reliable telecommunications services easily available to all in all areas of the country at a reasonable service charge in a fair competitive atmosphere. The objective also includes the participation of private sector by implementing the policy of liberalization in the telecommunications sector in harmony with the concept of economic liberalization and openness adopted by the country. The National Telecommunications Policy has been formulated in line with the following matters in order to develop and expand the telecommunications services in a fair competitive atmosphere with the involvement of the private sector. y To make available the telephone service as per the demand and to provide new and recent telecommunications services in accordance with the demand of the market in addition to the basic telephone service. To make arrangements for making the basic telecommunications services universally accessible to those, who do not have separate telephone of their own. To make available the basic telephone services in remote and inaccessible rural areas also of the Kingdom. To develop the telecommunications as a main pre-requisite of national development with maintaining the regional balance as well.
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y y y

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To involve the private sector as well in the development and operation of telecommunications services in accordance with the liberalization concept adopted by Government. To have also the private sector participation in order to enable Nepal Telecommunications Corporation, state owned incumbent operator, to function in a competitive environment by changing the current composition of the corporation. To provide quick, fast and qualitative (standard) telecommunications services at a reasonable price by creating as environment of fair competition among the service providers. To create proper environment in order to interconnect the network of the various service operators among each other. To give priority to utilize the means and resources available within the country in developing and expanding the service and to take also the version of producing skilled manpower, mobilizing people s participation and cost recovery.

y y

Telecommunications Policy, 1999 has classified the telecommunications services into the following three categories: 1. Basic Telephone Service 2. Mobile telephone Service 3. Other Value Added Services of Telecommunications

Basic Telephone Service:

In the policy it is stated that: 1. Provision of license will be made to one extra service provider in addition to Nepal Telecommunications Corporation with the authorization to operate throughout the Kingdom of Nepal local telephone service based for the time being on Wireless in Local Loop (WLL) technology from among the basic telephone service through the process of bidding; 2. The operators of the telecommunications services based on the WLL may provide the international telecommunications to its customers through its own network from 2001AD, and may provide the circuit fro m its network to other service providers or service users on lease; 3. The provision of full competition for operating all telecommunications services including the domestic and international telecommunications services will be made by 2004 AD. Mobile Telephone Service: In the policy it is stated that: 1. Two licenses will be granted through the process of bidding in order to operate the service by adopting GSM technology. 2. Among the two licenses to be granted in such a manner, one license will be
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grante to a bidder selected through the process of bidding. Nepa Telecom l will be asked to operate the service under the same terms of license.


Oth V lu Add d vi s of T l o uni tions: Government has already issued gazette notifications so that NTA c grant licenses at an any time for the following telecommunications services Internet including e-mail Fax mail Services VSAT network provider VSAT user Limited Mobile Rural VSAT User 9 0 9 99 12


Government has a plan to establish minimum two telephone lines in each Village Development committees (VDC) for the fulfilment of Universal Service Obligation (USO). Government has implemented a "Special Rural Telecommunications Program (SRTP) partly through NT and partly through private operator.

3. Le

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The following agencies will have the main role in implementing this Policy:y y Government of Nepal, Ministry of Information and Communications Nepal Telecommunications Authority Policy Formulator/Coordinator

Regulator, Promoter and License Provider y National Planning commission (NPC) Planning for development of Telecommunications services Ministry of Information and Communications is mainly responsible for formulation and implementation of the policy. The regulatory body for the Telecommunications Sector including Policy matter is NTA. Apart from this the ministry co-ordinates with the agencies -operation and understanding dealing with telecommunications strengthen contacts co with the international organizations.

4. Re

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After the restoration of the multi-party democracy in 1990 Government of Nepal adopted a liberalization policy in communications sector by the formulation of National Communication Policy 1992. In pursuant to the liberalization policy Government has decided to expedite the development of telecommunication services through private sector
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Radio paging Video Conferencing GMPCS Rural Telecom Int. Trunk Telephone

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investments gradually. As result of such policy, telecom legislations were introduced. The Telecommunications Act, 2053 (1997), Telecommunications Regulations, 2054 (1997), Long Term Vision of Communication Sector, 2002 and Telecommunications Policy 2004 are the main legal and policy framework of telecommunications services in Nepal. Nepal Telecommunications Authority (NTA), separate regulatory body of Nepal in telecom sector has been constituted under the Telecom Act in order to make telecom service available throughout the country in a competitive manner and regulate the sector.

5. Operational Framework:
At present, the incumbent operator, Nepal Doorsanchar Company Limited (NDCL) the than Nepal Telecommunications Corporation (NTC) is operating local, domestic, long distance, international telephony, cellular mobile and internet service including ADSL in Nepal. Besides NDCL the regulatory authority, Nepal Telecommunication Authority (NTA) has issued one Mobile license to Spice Nepal Private Limited (SNPL), two Basic to United Telecommunication Limited (UTL) & Nepal Satellite Telecommunications Private Limited (NSTPL) and 2 rural telecom service licenses to private telecommunications operators known as STM Sanchar Privet Limited (STM) and Smart Telecom Private Limited (STPL). Nepal is committed to improving telecommunications services and efficiency through competition and effective regulation of the telecommunication sectors. The current number of licenses in various telecom services and status of the sector is stipulated below.
$ # $ #

A.

he A ailable Voice elephone Ser ices:

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B. Data/Internet Ser ices:

%

C. Public Call Center:

6. Spectrum Management
Spectrum management function has been carried out by a small unit named "Frequency Management Division" within the Ministry of Information & Communications. Because of telecom sector liberalization policy and the competitive environment the same assignment of managing the scares resource has become a challenging job for the policy maker and regulator. Before 1999, in telecom field , there was only one major spectrum user i.e. NTC, a sole telecom operator. After the introduction of private sector in telecom market, spectrum management has been evolved as a major decisive factor to assure good and quality service. Today MOIC is mainly responsible for frequency management and monitoring activities within the country. All related coordination works have to be performed by the same unit in MOIC. In order to get clear picture of spectrum management in Nepal one has to consider the function of NTA. These days MOIC & NTA are performing the work together regarding the assignment of frequency for private telecom operator. (i) Frequency Allocation:

Allocation of frequency is carried out by a Radio Frequency policy determination committee (RFPDC) closely following the allocation made by ITU for different services. The secretariat of RFPDC is the Frequency Management Division in MOIC. (ii) Frequency Plan:
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In 1992 the first National Frequency Plan was drafted by an expert from ITU. It was planned when there were no private frequency users. Army, police, NTC, CAAN etc were the major users as well as other government entities. So the first National Frequency Plan addressed only government users. MOIC is going to redraft the national Frequency Plan to cater the demand of today's market environment. (iii) Spectrum Pricing Policy: The RFPDC is responsible for making spectrum pricing policy. Now, there is n o comprehensive spectrum pricing policy of HMG/N. The Radio Communication (License) Regulations has incorporated few spectrum pricing principles which are being used till now. MOIC has started to work for the better spectrum pricing policy. Hopefully in ne xt few months Nepal will have the pricing schemes. (i ) Spectrum Monitoring: MOIC is the solely responsible for the spectrum monitoring. Right now we have one fixed monitoring station at the capital city Kathmandu where almost all the major spectrum users are concentrated. It was established in 1993 with the help of ITU. Few portable direction finders, monitoring receivers have been used to get the interference scenarios outside Kathmandu valley .
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7. Challenges & Opportunities:

The telecommunications industry is currently in a position where long-awaited third generation technologies and services are coming into commercial use. With the increase in the number of mobile phone users, another remarkable change in telecommunications has been the increase of bro adband Internet connections. Together these two show good promise for the success of third generation mobile services. Services are expected to be the most rapidly growing business type, and here multimedia applications provide new ways for customers to exploit mobility. Both in developing areas and in industrial countries, the success of the technology is related to how open standards can be developed, so that all services are interoperable. But there are some technical problems such as:

Frequency Assignment Locating the Nodes of a Network Optimally Balancing the Load of Signaling Transfer Points Integrated Topology, Capacity, and Routing Optimization as well as Survivability Planning Planning IP Networks

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Optical Network Design and many others

After accession into WTO and commitment on telecom services arises some policy level and functional challenges for Least Developed Countries (LDCs) like Nepal. These may be indicated as follows: LDCs would not have done enough research due to constraints of budget and skill manpower. So, LDCs like Nepal may not be able to identify sectors of competitive advantage. But they are forced to commit in the name of harmonization between member country legislation to become member of WTO. The governments of LDCs may need to change national policies time and again by various reasons but after accession to WTO there will be little room for flexibility for such policy changes. There are so many institutional requirements under WTO agreement, which may not be fulfilled by the member states in time. LDCs do not generally have sufficient and developed human resources in all sectors, like telecommunications, technology etc. They may not be able to comply with WTO provisions and compete with other member states. There are some regulatory issues under the mode of supply formula. It is difficult to regulate under such formula due to changing nature of the service, development of ICT technology and convergence. Here are some findings of such difficulties, such as; Regulatory regime is not often mode-specific. Supply of services comes under multiple regulatory regimes. Physical distance between regulators and suppliers creates problem in the part of enforcement of regulations and Jurisdictional issues Restriction on means of supply (VOIP is not opened by all countries.)

8. Way Forward:
The future of Telecom where are we headed next? That question has been asked by many. Where is the telecommunication market headed over the next decade? For two decades the telecommunications industry has been facing changes caused by the growing dominance of the internet as a communications infrastructure, mass media, and also by a new generation for mobile communications. This development will continue: new netw ork technologies (e.g. NGN, LTE) will change cost and market structures, innovative cycles for products and technologies will become shorter, value chains will change. Further new challenges offer opportunities, but require a thorough techno -economical evaluation. The current network transformation to an IP -based infrastructure of the Next Generation Networks offers potential for increased efficiency. The upcoming fiber optics connection right into homes (Fiber To The Home) will not only offer bandwidth of well over 100 Mbit/s
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to end customers, but will also give operators new opportunities to shape the network architecture, as well as to further automatize the internal business processes up to a "zero touch" (i.e. fully automatic) provisioning. The latest issues which are going to be changed are: Technologies and Architectures y Application architectures (e.g. for mobile devices, backend) y Architectures of Service-Delivery-Platforms y Broad band architectures and their economical evaluation y Architectures for ho me networking y Network virtualisation, IT virtualisation and architectures for cloud computing, telecommunication infrastructure of data centers y Network transformation and migration from classical telecommunication protocols to IP, next generation (mobile) networks y (Mobile) operating systems, open source software (e.g. Android, Chrome OS)

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