New telecom Bill likely to increase call tariffs

KATHMANDU, April 10: The writing on the wall for all cell phone users is clear: The tariff rates of phone calls will go remarkably up if the new telecommunication Bill is enacted. [break]

The telecommunication Bill tabled in the parliament for discussion states that the license renewal fee will be accumulated from telecom companies based on the highest price quoted by any service provider. Although this condition applies to all telecom companies, it is expected to hit those providing cell phone services hard.

As of now, two companies – Nepal Telecom (NT) and Spice Nepal Private Limited (SNPL) – are authorized to provide mobile phone services in Nepal. Of these, SNPL, operator of Mero Mobile, has pledged to pay a highest renewal fee of Rs 40 billion every 10 years.

Highlights

License renewal fee to be flat for all telcos

VOIP to be legalized for all

Telcos to be allowed to provide all data and voice services

Going by the new Bill, NT and any new mobile phone service provider will also have to pay the flat rate as quoted by SNPL. In other words, these companies will have to generate a net profit of at least Rs 4 billion per year.

Even though country’s cell phone market is growing at an exponential rate, this is a huge amount considering the income of telcos. Last fiscal year, NT, the largest telco in Nepal with almost 2.5 million mobile phone users, generated a net profit of Rs 7.94 billion. Of this, around 50 percent came from cell phone service. This shows that even the largest telecom company of the country will face difficulty in accumulating this amount if the Bill is enacted. How will the companies with lower subscriber base collect this amount is a big question.

In this context, it is apparent that the telcos will raise the tariff rates to meet the requirement set by the government. This will only disenchant consumers who were enjoying reduced tariffs for years. On top of that, it will also dampen investment climate in the telecom sector, fending off possible investors in the mobile phone sector.

Nepal Telecommunications Authority, country’s telecom regulatory body and one of the architects of the new Bill has, however, remained tightlipped over the controversial provision.

The telecommunication Bill has, however, opened gateway for telcos to operate any kind of service. In other words, a basic telephone service provider will be able to operate mobile phone services once the bill is endorsed. However, such companies have to get a separate license from the government to operate additional services.

The only clause in the Bill that is expected to benefit consumers is legalization of Voice Over Internet Protocol (VOIP) technology. Currently, four major telcos – NT, SNPL, United Telecom Limited and STM Telecom Sanchar that have international telecom gateways – are allowed to use this technology to provide international telephone service. Once the bill is enacted even cyber cafes that are providing cheap international call services clandestinely can operate VOIP based services without the fear of being arrested.

VOIP is a technology under which telcos use the Internet to place telephone calls on the Internet itself or on fixed and cell phones. It is considered a cost-effective technology, which has brought down tariff rates of international calls worldwide.

rupak@myrepublica.com