Since there is no parliament, Nepal can't ratify its accession to the WTO. But the government is using innovative ways to demonstrate its commitment to the process, and one of them is to deregulate domestic telecommunications.

The new Telecommunication Policy 2004 is nothing less than revolutionary: it allows any investor to provide all telecommunication services in any part of the country. All a wannabe service provider will have to do now is obtain a license from the Nepal Telecommunication Authority (NTA). Officialdom is now pushing hard to have the new Telecommunication Act and rules approved. "We are working in coordination with the Ministry of Law, and the Act should be in place within few months," said Ministry of Information and Communications spokesman Mukunda Regmi.

Once that happens, foreign and domestic investment applications are sure to flood the NTA. Even before the government came up with its previous policy, there were more than half-a-dozen bidders for the Wireless Local Loop (WLL) service two years ago. The successful bidder then was the Indian joint venture, United Telecom Limited that has made a capital expenditure of Rs 2.7 billion to service to more than 15,000 customers in Kathmandu Valley.

This time, there will no longer be any bidding, everyone is welcome. Investors of any size can open shop for a variety of services including land phone, WLL, Global Satellite Mobile (GSM) and even Internet-related services.
Local potential investors expect half-a-dozen private parties to obtain licenses for the land phone services. There could be fewer investors for GSM, but the most popular is expected to be the wireless local loop. Local businessmen say Indian telecom companies like Reliance, Tata, Airtel and Chinese and Turkish investors are already waiting in the wings.

International operators will not have much trouble creating the necessary infrastructure for telecom services. The government is already laying down a fibre-optic backbone along the East-West Highway with Indian assistance. The first phase of the project is expected to be completed by July this year, and the installation that started in Kakarbhitta has already reached Lamahi in Dang.

"This is a high revenue generating area, so the number of investors will certainly be big," says Nepal Britain Chamber of Commerce President Rajendra Khetan, who was a successful bidder for mobile services two years ago, but never started the service.

Less than two percent of Nepalis have access to telephones, and the days of the Nepal Tele-communications Corporation (NTC) were characterised by dramatic expansion of infrastructure in the early 1990s which was never followed up with proper service delivery. To be fair, NTC was shackled by interference from politicians in the late 1990s who saw it as a cash cow. "Later, whenever the corporation tried to go for tendering to allow private operators, it faced petitions at the CIAA," explains Regmi.

Now that NTC will have to share the market with international players, the big question is: will Nepali consumers benefit or will the service providers form a cartel and keep on fleecing them? Given the experience in India, fair competition and open licensing cold slash prices and make telephones accessible and reliable.

In case of land phones, some believe, customers will have to pay a little more than what they are paying to the NTC right now: Rs 1 for a two minute call. "That is because the current rates of the NTC are subsidised," notes Khetan. "Private operators cannot provide subsidy therefore the land phone tariffs will be slightly higher. But, in case of mobiles it might remain the same as that of NTC."

Others argue that the NTC's tariff will have to be the cap and other players will have to compete with each other for lower tariffs. "We will not be able to compete with a giant like NTC," says a UTL official.

But under the new telecom policy, even NTC will soon have its shares sold to the public and when that happens its own tariffs may have to be revised upwards or down. The government appears to have decided to let in private operators even while moving forward with NTC privatisation because of Nepal's commitments to the WTO.

Before the accession to the global trade body, some WTO members reportedly had demanded that the government open up the telecom sector. "Countries like the US, EU, New Zealand and Japan had said that they would be interested in investing," NTA spokesperson Kailash Neupane told us. "We promised, so we had to open it up."