Nepal’s licence Raj

  • The telecom regulator can impose rigorous conditions to bar entry of unprofessional firms

May 12, 2017-

The Ministry of Information and Communications (MoIC) has said a controversial provision in the draft of a regulation that aims to stifle competition in the  telecom infrastructure services market would be amended. This is a praiseworthy decision.

The draft of the Infrastructure Development and Sharing Regulation was framed by the Nepal Telecommunications Authority, the telecom sector regulatory body. It was recently forwarded to the MoIC.

A provision in the draft regulation says once the licence to provide telecom infrastructure services is extended, similar permission will not be granted to another service provider for a period of five years. This provision can be manipulated by authorities to extend the licence to a single firm, helping the company gain monopoly in telecom infrastructure services market.

The telecom infrastructure services market is expected to attract billions of rupees in 

investment, because once the regulation comes into effect, no telecom service provider in the country will be able to develop telecom-related infrastructure on its own. In other words, telecom companies present in the country will have to share infrastructure, such as base transceiver stations, and pay the firm that provides infrastructure services certain fees once the proposed regulation is enforced.

The telecom sector regulator is mulling over introducing the new regulation after service providers diverted too much attention to infrastructure development, ignoring issues of quality and effectiveness in the telecom service. Moreover, telecom infrastructure, according to the regulator, is being developed in a haphazard manner, resulting in a waste of financial resources.

Once the government enforces the proposed regulation, the quality of voice, data and other telecom services will depend on firms that provide infrastructure service. So the government should be mindful while extending licences to such firms. The telecom sector regulator is aware of this. Hence the controversial provision aimed at preventing too many cooks from spoiling the broth.

Haphazard extension of licences, as seen in the financial sector, is definitely not the 

solution, as it will only raise quantity and not quality. Yet the government should also note that Nepal has embraced the policy of a free market economy, in which no company with a proven track-record and capability should be barred from getting a licence to conduct any business. Otherwise, there will be no competition, 

something that enhances efficiency and effectiveness and, at times, reduces costs.

So, to strike a balance, the government can come up with stringent conditions, such as higher paid-up capital, to bar entry of unprofessional companies. But it should not close the door for establishment of competitive firms, because a pseudo “licence Raj” will only stifle competition, and consumers will have to pay the price.

Published: 12-05-2017 08:18

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