This presentation highlights the legal and policy regime of telecom services and in Nepal and provides way forward for reform

1. Exploring Legal and Policy Regime
of Telecom Service in Nepal:
Experiences and Way Forward
Advocate Santosh Sigdel
Founder Chair, Digital Rights Nepal

2. Current Status: Telecom Services
Fixed Telephone: 821,875 (2.72%)
Mobile Telephone: 41,176,562 (136.21%)
Others: 2,986 (0.01%)
Total: 42,001,423 (138.94 %)
(Source: NTA MIS Report, Dec 2021)
Telecommunication in Nepal was strated with laying down of
telephone lines in Kathmandu 1913.

3. Mobile Penetration

4. Current Status: Broadband
Fixed Broadband (Wired): 29.79%
Fixed Broadband (Wireless): 0.70 %
Mobile Broadband: 89 %
Total Broadband: 119.49 %
(Source: NTA, Dec 2021)

5. Status of Nepal among South-Asian countries
Source: GSMA

6. Internet Penetration rate in Nepal

7. Regulatory Body and Major role
Nepal Telecommunication Authority (NTA) was established in 1998 as Regulator under the Telecommunication Act,
1997.
● To provide suggestions to the Government of Nepal on the policy, plan, and program for telecom service,
● To make the Telecommunications Service reliable and easily available to the public,
● To make necessary arrangements to avail basic telecommunications Service and facilities in all rural and urban
areas,
● To involve the national and foreign private sector investors,
● To make arrangements for the coordination and healthy competition among different service provider,
● To grant the license to operate the telecommunications service,
● To prescribe, fix and approve the standard and quality standard of the plant and equipment relating to telecom.
● Protect consumer rights.

8. Existing policies relating to Telecom Sector
● Long Term Policy of Information and Communication Sector, 2002
● Telecommunication Policy 2004
● Radio Frequency (Allocation and Pricing) Policy, 2012
● Broadband Policy, 2015
● ICT Policy 2015
● Radio Frequency Policy (First Amendment), 2016
● Satellite Policy, 2020
● Digital Nepal Framework 2019

9. Existing Major laws and Policies
● Telecommunication Act 1997
● Telecommunication Regulation 1997
● Electronic Transaction Act 2008
● Telecommunication Infrastructure Regulation 2017
● Telecommunication infrastructure sharing and cost determination
Bylaw, 2021
● Bylaw Regarding Telecom Service Quality, 2017

10. Major Policy Provisions: Telecom. Policy 2004
● Objective
To create favorable environment in order to make the
telecommunication service reliable and accessible to all
people at the reasonable cost throughout the country in
collaboration with the private sector et.al in order to
support the social and economic Development.

11. Telecom Policy 2060: Major Provisions
● Universal Access to Telecommunication service (4.1)
● Liberalization of the Telecommunication Sector (4.4)
● Open Licensing Regime (4.5)
● Equal level playing field (4.5)
● Private Sector Participation to be encouraged (4.6)
● Increasing economic efficiency of the telecommunication sector by creating an environment that promotes
healthy competition among the telecommunication service providers (4.11)
● Multi-Service Provider and Multiple operator (5.4.1)
● Compliance with the WTO Telecom Reference Paper (5.12.1)
● Independent/Fair REGULATOR (5.11.6)
It is very important to follow these principles in its entirety

12. Telecommunication Act: A liberalized licensed Regime
Provisions relating to license: 2 Processes
1. Auction Method: bidding on License/Renewal/Royalty fee [Sec. 23(1)]
2. Standard method: fixed licence/renewal fee/royalty by regulation [Sec
23 (2)]
● Maximum period : 25 Years [Sec. 25 (2)]
● Renewal: for each 5 years after initial period [Sec. 25 (2)]
● Initial Licence Period: 10 year for Auctioned and 5 year for Standard
method licensee [Regulation, Rule 12]

13. Number and Types of License Issued by NTA
S. No. Name of the Services Number of the
licensee
1. Basic Telecommunications Service 2
2. Basic Telephone Service (Unified) 2
3. GSM Cellular Mobile Service 2
4. Network Service Provider 21
5. VSAT Users 8
6. Internet (With E-mail) Service 134
7. GMPCS Service 2
8. Rural Telecom Service 1
9. Limited Mobility Service 0
10. International Trunk Telephone Service 1
11. VSAT Users (Rural Area) 26
12. Internet (With Email) Service in Rural Area 3
Total 202

14. Challenges
• Laws not tuned according to the Policy
• The prevailing Telecom Policy was adopted in 2004 in line with international standards
and to comply with WTO member commitment on specific service sector open up,
whereas the Telecom Sector is still regulated under the 1997 Telecommunication Act,
without any significant amendment.
• State has shown no urgency to attuned the law in line with the policy provisions.
• Failure to update the law in line with policy has hindered the development of the Sector.
• For example, Clause 5.12.1 of the policy mentions that, “provision relating to the
competition shall be immediately incorporated in the Telecommunication Act until
separate legal provision relating to competition has been enacted”. However, adequate
provision on ensuring competition has not been enacted yet.
• Law has also failed to address the technological evolution (Basic landline has evolved
mobile technology and which has evolved to 5G but no legal or policy adaptation)
• Executive decision for Unified License Provision

15. Level playing field: No equal treatment
● Different treatment for FDI and non-FDI licencee upon expiry of the licence
● Above 50% FDI: The land, building, plant, equipment and other structures related to the
Telecommunications service developed by the Licencee goes to Nepal government after
Expiry of the Licence [Sec. 33(1)]
● If below 50% FDI: May acquire the licence and operate telecommunication service again
[Sec. 33(1)]
● No explicit provision in the Act, in case of no FDI
● It also hampers the continuation of services, which tramples the right to access internet,
freedom of speech, right to information of the citizen
● Unequal treatment between Service providers
○ Regulatory treatment
○ Forex Policies
○ Frequency Policy

16. • Failure to odopt necessary Policy
• The existing policy is almost two decades old. The policy is obsolate and
fails to guide the telecom sector due to a huge change in the ICT and
telecom sector
• New and emerging issues such as Internet of Things, Internet of goods,
Artificial Intelligence are neglected in the absence of policy update
• Media convergence has taken a huge leap, which both the law and
policy has failed to address
• Lack of policy and law for converged services like AI/IOT/OTT/ Digital
content (including video)

17. Conflict of laws
• Section 25: Period of Licence
• Section 33 of Telecommunication Act provides for management of assets of a Licencee.
According to this provision, The land, building, plant, equipment and other structures related
to the Telecommunications service developed with more than fifty percent of its investment
by a foreign person or corporate body shall be under the ownership of Government of Nepal
after the expiry of the period of the Licence.
• Section 33 of the Foreign Investment and Technology Transfer Act mentions about no
nationalization expropriation of industry with foreign investment.
• No Nationalization: Industrial Enterprises Act, Sec. 34
• Discourages Conflicting provisions of deters investment environment as well as further
investment
• This dual approach or inadequate assurance against the liberalization policy and deter
existing or probable foreign investment in telecom industry.

18. • High frequency and renewable fee against the policy
• IT Policy, Clause 5.4.8 says that the license fee and radio spectrum fee
including other fee shall be collected only for sufficiently covering the
overhead (operation) cost of the such Regulating body.
• However, the license renewal has been capped at 20 billion for five years
• Based on requests from Telcos, NTA has recommended the MoCIT make the
renewal fee 4 percent of total company revenues, which was subsequently
rejected.
• The huge renewal fee has resulted to a high price of telecom services in
Nepal, making an impact on the affordability of services.

19. Excessive taxation and Affordability
• Nepal ranks 111th out of 183 countries in the world for the price of
mobile data and voice calls (ITU Report)
• 28+ % tax applicable (13% VAT, 13 TSC, 2% RTDF)
S.No. Country Rank
1 Srilanka 29
2 Pakistan 37
3 India 49
4 Bhutan 68
5 Bangladesh 91
6 Nepal 111

20. • New Policy to be enacted immediately
• Telecom/ICT sector is one of the fastest growing sector, thus timely policy intervention is
necessary
• Include new dimension of the telco/ict evolution
• Address the issue of convergence in the policy
• Comply the WTO RTP concept.
• Ensure meaningful participation of stakeholders including civil society and private sector
in the policy drafting process
• Ensure human rights principles and approach in the policy document
Way forward

21. • Ensure timely update/enactment of laws and rules
• Update the current Telecommunication Act
• Address the issue of convergence (regulating Voice, Data, Video through one
mechanism)
• Bring OTT under the regulatory regime.
• Formulate comprehensive Data protection Law
• Specific Cyber Security Law to be enacted immediately to ensure security of ICT
infrastructure and system

22. • Ensure level playing Field
• Remove license period cap
• Ensure equal treatment for on the facility and license for all operators
• Facilitate the competition/Promote accessibility
• Timely assess the tax and fees applicable to the industry to ensure affordability
• Provide for revenue based Fees like license/renewal/etc (Telecom Policy, Clause 5.5.4)
• Allow operator to provide digital/It content/IOT mobile financing operation
• Ensure policy and legal mechanism to ensure quality of Service

23. • Institutional Arrangement
• Independent and autonomous regulator
• Ministry has a decisive role in determining the structure of NTA, determining the terms,
conditions, remuneration and facility of the Chair, members and Staffs of the NTA; Annual
programs to be approved by the NTA (Rule 34b and 34c, Telecom Regulation)
• Make the processes transparent

24. Thank you
@sigdelsantosh