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International Journal of Internet, Broadcasting and Communication Vol.9 No.2 27-36 (2017)
https://doi.org/10.7236/IJIBC.2017.9.2.27
Telecommunications Infrastructures and Services Development and Challenges
in Nepal
Surendra Shrestha1*, Dilli Ram Adhikari1
1Department of Electronics and Computer Engineering
Pulchowk Campus, Institute of Engineering, Tribhuvan University, Lalitpur, Nepal
surendra@ioe.edu.np
Abstract
The world’s unique geographical, multilingual, multiethnic, multiracial and multi religious Himalayan
country Nepal has more than 100 years history on telephony service and it has been formulating appropriate
policy and regulation for the adoption of new technology, introducing the competitive market environment
for the overall development of Information and Communication Technology (ICT) infrastructures and
application of ICT service and tools for socio-economic transformation. The Nepalese market seems to be
continuously growing and having huge demand of mobile telephony and internet subscriptions trend. The
ICT infrastructure development in difficult geographical area is quite challenging and thus operators are
focusing mobile telephony and mobile internet services. Nepal has been doing its best effort on formulating
policy and regulation, adoption key strategies for ICT sector development and at the same time joining
hands with international and regional bodies such as ITU, SAARC etc for ICT sector development. Due to
geographical diversity, policy and regulatory barriers in some extent, power supply constraints and low
affordability from customers on ICT tools and services, Nepal has been facing challenges on ICT
infrastructure development. However, the national statistics on ICT, Networked Readiness Index and ICT
Development Index show that Nepal has done quite good progress and is keeping its pace on ICT
development despite the these challenges. Moreover, there seems to be quite uncovered market segments on
internet service and big opportunity on ICT sector development in Nepal in the days to come.
Keywords: Telecom Infrastructure, NTA, Nepal Doorsanchar, Nepal Telecom, ICT Development
1. Introduction
Nepal is a land-locked country sandwiched between India & People's Republic of China with
area of 147,181S.km. It is multilingual, multiethnic, multiracial and multi religious country with
population over 28 million. Nepal possesses unique topographic profile having the World's deepest
gorge 'Kali-Gandaki' to the highest point on earth, Mt. Everest at 8848m. Geographically, it has
IJIBC 17-2-4
Manuscript Received: Mar. 18, 2017 / Revised: Mar. 28, 2017 / Accepted: Apr. 10, 2017
Corresponding Author: surendra@ioe.edu.np
Tel: +977-1-553-4070
Department of Electronics and Computer Engineering, Pulchowk Campus, Institute of Engineering, Tribhuvan University, Lalitpur, Nepal
28 International Journal of Internet, Broadcasting and Communication Vol.9 No.2 27-36 (2017)
been divided into three regions; Himalayan, Mountain and Terai with diverse topography and
challenging landscape, with 75% rugged mountains and hills and remaining lowlands and valleys.
The country‟s population is largely rural, with only 18 percent of the population living in urban
areas [1].
Nepal Doorsanchar Department established the first telephone lines about hundred years back.
This entity was transformed into Nepal Telecommunication Corporation and then into Nepal
Doorsanchar Co. Ltd in 2004 under the company Act 1997. Nepal Doorsanchar Co. Ltd (also
known as Nepal Telecom) and has been serving customers with different telecommunication
services nationwide in Nepal. Nepal Telecom (NT) holds a large portion of the market share i.e.
47% in telephone subscribers throughout the country covering all the 75 districts and all the VDC‟s
with voice and internet data [2]. It has been leading the nation‟s economy by generating massive
revenues, as it is the organization that pays the largest tax to the government. In 1950 AD, NT‟s
establishment of Cross-Bar (CB) telephone exchange (100 lines) was the first in the nation. It was a
voice only exchange in Kathmandu that had Public Switched Telephony Service (PSTN)
technology. Today, Nepal Telecom has adopted and implemented changes in their business model
in response to rapid advancements in technology, high expectations of customers and the ever-
changing market situations. After a decade long journey, Nepal Telecom is providing
communication services in almost every sector throughout the country. Today, NT has no
monopoly on the market due to competition from other telecom players such as Ncell, UTL, Smart
Telecom, Nepal Satellite Telecom Company Ltd and around 50 Internet Service Providers (ISP) etc.
After Ncell acquired by Telia Sonera gourp and then Celcom Axiata group, the state owned
company has been facing fierce completion and many challenges and threats in the market in voice
telephony as well as internet service. The current market share of around 92% belongs to Nepal
Telecom and Ncell, the market seems like duopoly irrespective of the presence of other 3 telecom
operators [2].
A World Bank study emphasizing the importance of internet penetration for developing
economies concluded that "Every 10 % increase in broadband penetration provides a 1.38 per cent
increase in GDP". This is the era of ICT and Nepal is not the exception. According to the ITU
report, measuring the Information Society 2016, Nepal has improvement in Information and
Communication Development Index (IDI) ranking of 142 with IDI value of 2.32 in 2015 to 142
with IDI Value of 2.50 in 2016 among 152 countries [3].
As per the Global Information Technology Report 2016 by World Economic Forum, the Networked
Readiness Index [4] of Nepal has been improving. This is illustrated in table 1.
Nepal has recently experienced unprecedented mobile growth & has the potential to repeat the same
for broadband data service. ITU‟s MIS 2013 indicates that wireless broadband Internet access
remains the strongest growth sector in developing countries.
It shows that 50% of the world population lives within reach of a 3G network. Recent Nepal
Telecom Authority (NTA)‟s MIS report also shows the overall market growth of internet/data
service is growing up exponentially in Nepal e.g. Within 7 years of time Nepal‟s Internet
Telecommunications Infrastructures and Services Development and Challenges in Nepal 29
penetration has surged from 2.5% to 52% i.e. more than 20 fold. Thus there is a tremendous growth
in this segment of telecom business in Nepal.
Table 1: Networked Readiness Index of Nepal
Year
Rank
Score
2013
126th out of 144 Countries
2.9
2014
123rd out of 148 Countries
3.1
2015
118th out of 143 Countries
3.2
In Nepalese scenario, few years back, dial up service and leased line was the only possible media
for internet. But at present people have many choices like ADSL, VDSL, and Fiber to Home (FTH),
WiMax, WiFi, 3G, EVDO, cable TV etc. Moreover, there is not any monopoly of NT in the data
market. Data customers have many options like different service provider, different bandwidth, and
different technologies (fixed and wireless). So, the competition in the data service market is also
becoming tougher. The trend of telephone subscriptions and internet service subscriptions in Nepal
shows that service is mainly dominated by wireless i.e. mainly mobile telephony and mobile
internet. The figure 1 below is the trend of service subscription from Nepal Telecom in Nepal [5].
The trend graph shows that the internet subscription is highly dominated by mobile technologies
GSM (GPRS, EDGE, and 3G) and CDMA (PDSN, EVDO). Moreover, Nepal Telecom has
launched 4G/LTE service from 1st January 2017 after government has amended the spectrum policy
to allow operators to use 1800 MHz frequency band as technology neutral band and opened for
4G/LTE service [3].
Though the internet subscription rate is increasing exponentially, still there is huge gap to fill the
under-served internet market in Nepal. In other word, 48% of Nepalese people are still out of reach
of Internet The big telco operators and new entrant are focusing their target on new customer
segments using mobile as well as fiber based technologies.
Figure 1: Internet service subscription of Nepal Telecom
30 International Journal of Internet, Broadcasting and Communication Vol.9 No.2 27-36 (2017)
1.1 Tele-Density scenario in Nepal
In 2016, Nepal‟s Tele-density has reached to 123% (Fixed: 3.24% + Mobile: 116%), where fixed
lines growth rate is almost nil but mobile services growth rate is still tremendous. But here it is
important to notice that Mobile penetration has already reached to 116% i.e. the market is already
saturated and the service subscription mainly focused niche market and dual subsections. As of Oct
2013, there were almost 21.2M mobile subscribers in Nepal. Based on Central Bureau of Statistics
(CBS) data (www.cbs.gov.np) by the end of 2018 the population will reach to almost 29.1M i.e. to
have 100% penetration, additional 7.9 M lines capacity is required in the next 5 years. The mobile
service subscription trend in Nepal can be best explained from the trend analysis of Nepal
Telecom‟s telephone subscriptions given in figure 2. [5]
Figure 2: Telephone subscription trend of Nepal Telecom
2. Policy initiatives to boost ict service
The national statistics on ICT [as per MIS Report of NTA and Nepal Telecom] and international
comparative statistics given by ITU, Nepal has a lot of space to work on field of ICT. Since the
global demand of ICT services in various fields such as education, health, commerce, development,
agriculture and infrastructure development is increasing day by day. The overall success to achieve
the Millennium development goal (MDG) set by ITU, UNESCO and UN agency also dependent on
development of ICT infrastructures, use of ICT tools in various applications, Nepal Government
with assistance and guidance of World Bank, Asian Development Bank, ITU, UN agencies has
been working for the development of ICT and minimizing the digital gap and elimination of digital
poverty.
To accelerate the growth of ICT and change the socio economic condition of Nepal, Nepal
government has formulated the ICT policy 2015 with the vision to transform Nepal into information
and knowledge based society and economy [6]. To materialize this vision, Nepal government has
set the mission and goal as; Mission: To create conditions for the intensified development and
growth of ICT sector as a key driver for Nepal's sustainable development and poverty reduction
strategies. Goal: To Enhance overall national ICT readiness with the objective of being at least in
Telecommunications Infrastructures and Services Development and Challenges in Nepal 31
the top second quartile of the international ICT development index and e-Government rankings by
2020. Likewise, IT Policy 2011 was formulated with the objectives to make information technology
accessible to public and increase employment opportunities, in order to build a knowledge based
society and to establish knowledge based industries [7]. Telecom Act and Regulation came effective
from 1997[7] which deregulated the telecom market and the monopoly market of state owned
company Nepal Doorsanchar Company Ltd was demolished and several private sector telecom
operators and internet service providers (ISP) emerged in the market. To support further the
Telecom Act and Telecom Regulation, Telecommunication Policy had been made effective from
2004 with the aim to provide telecom service reliable and accessible to all people throughout the
country with the collaboration with private sector.
A World Bank study emphasizing the importance of internet penetration for developing
economies concluded that "Every 10 % increase in broadband penetration provides a 1.38 per cent
increase in GDP". This is the era of ICT and Nepal is not the exception. According to the ITU
report, Measuring the Information Society 2011, Nepal increased its Information and
Communication Development Index (IDI) ranking up from 137 in 2008 to 134 in 2010 among
152 countries [8]. Nepal has experienced unprecedented mobile growth & has the potential to repeat
the same for broadband data service. further to enhance the growth and keep the spirit accelerated,
Nepal has formulated the Broadband Policy 2015 with the key objectives to provide secure,
meaningful, affordable and reliable broadband service on demand on urban areas and universal
access of broadband service in rural areas[9].
2.1 Key Strategies taken to Access the Broadband Service [9]
Roll out the 4G/LTE wireless broadband network. Nepal has launched 4G/LTE broadband service
in existing GSM 2G/3G spectrum by frequency reframing. Nepal has already identified 700 MHz
and 2600 Mhz frequency band for the rolling out of 4G/LTE services. The auctioning of this band
will also be realized soon.
Provide broadband internet service to all the villages of country, however the villages in
Himalayan and hilly region are challenging to build network and less profitable to the operators.
Nepal has provision of Rural Telecommunication Development Fund (RTDF) created to subsidize
the service operation in remote and rural area.
Provide broadband and Wi-Fi connectivity to all government schools, hospitals, Public service
offices, municipalities, and public places utilizing the RTDF fund to reduce the digital gap and
increase the socio-economic status of people from rural connectivity plan. The rural connectivity
plan aims to support education, health, public service delivery, employment generation.
Nepal has formulated the policy and regulation for mobile financial solution that help to introduce
the m-commerce, mobile money and mobile wallet service in the country soon.
Nepal has recently drafted Telecommunication Infrastructure sharing strategy 2015 and guidelines
for cutting the cost in infrastructure and regulating the infrastructure for ICT services. We believe
the new strategy adopted in infrastructure sharing will enable operators to cut the cost, to build the
32 International Journal of Internet, Broadcasting and Communication Vol.9 No.2 27-36 (2017)
robust and resilience infrastructure, to maintain quality of service and to support environment
protection by implementing green telecom infrastructures.
2.2 SAARC Initiatives for Regional ICT Development
Nepal, alongside other SAARC [13] Members (Afghanistan, Bangladesh, Bhutan, India,
Maldives, Pakistan and Sri Lanka), is committed to a regional ICT policy aimed at increasing
penetration, quality and harmonization of ICT services.
A „Plan of Action‟ for telecommunications services has evolved over three SAARC conferences
in 1998, 2004 and 2008. The following aspirational goals and objectives were formulated:
„To promote cooperation in the enhancement of telecommunication links and utilization of
information technologies within the SAARC region;
To minimize disparities within and among Member States in the telecommunications field;
To harness telecommunication technology for the social and economic upliftment of the region
through infrastructure development by optimal sharing of available resources and enhanced
cooperation in technology transfer, standardization and human resource development; and
To evolve a coordinated approach on issues of common concern in international
telecommunications fora.’
At subsequent SAARC conferences, Member States committed to implementing fellowships and
training program for telecommunications HR staff as well as R&D and adopting uniformly
applicable low tariffs for intra-SAARC phone calls. In addition, Member States were directed to
„give priority to universal access‟ and „cooperate in the development of plans and for the utilization
of ICT in e-commerce, health care education and other areas by the exchange of information and
expertise‟. In 2009, a meeting of the Working Group on Telecommunications and Information and
Communications Technology agreed in principle to a proposal regarding upgrading of national and
regional telecommunications infrastructure.
An 18-point SAARC Plan of Action on Information and Media (PAIM) was formulated to
achieve the ICT and media objectives that member states agreed to in the 1998 Dhaka conference.
These objectives (Revised in 2004) included:
• Reducing rates for media transmission and information materials;
• Ensuring the free flow of information; and
• Enhancing the exchange of data through the Internet.
It is worth noting that the achievement of higher broadband penetration will facilitate the meeting of
PAIM targets [14].
2.3 Key Players in the development of ICT
The overall development of ICT sector in Nepal has been led by Ministry of Information and
Communication, Government of Nepal. It has facilitating role by consulting all the stakeholders,
supporting coordination and cooperation, formulating appropriate policy, regulation and Acts. The
Nepal Telecommunication Authority is the major stakeholder who is also the advisor of government
and who monitors all the service providers, issue license, regulate the market. The state owned
Telecommunications Infrastructures and Services Development and Challenges in Nepal 33
telecom company, Nepal Telecom, is the leading ICT player in the country who has social and
governmental obligation to provide ICT service at the every nook and corner of the country. The
other players are private telecom operators such as Ncell Axiata Ltd, UTL (a JV company of Indian
Telcos), Smart Telecom Ltd, and Nepal Satellite Telecom Pvt Ltd. Similarly about 50 Internet
Service Providers and 10 Network Service Providers [4] are also playing the role to enhance the
ICT growth and introduce digital communication innovation in Nepal.
3. ICT Infrastructures in Nepal
Nepal has achieved significant goals in building ICT infrastructure in such a diverse terrain
country. The formulated policy, Acts, Regulation in Telecommunication sector have paved a way to
outcome significant development in infrastructures. The current infrastructures in Nepal has Optical
Fiber Networks: East – West Optical Fiber Network about 1000 Km that connects all Terai districts
and North-South Optical Network having length of 500 Km that connects China border at
Rasuwagadhi and India border at Bhairahawa, Birgunj and Biratnagar[10].
51 District headquarters are connected by Optical fiber network with Underground, OPGW and
ADSS based optical cable Network [10]. Similarly Microwave Networks have been built in most of
the hilly areas to connect these areas to main stream of the ICT community. Mobile backhaul
network in Terai is also connected via microwave networks. Microwave network has been extended
to all the districts since August 2015.
Nepal has reliable and uninterrupted Satellite Network to keep intact with global citizens. For this,
a Satellite Earth Station has been built at Kathmandu. Similarly 300 KU band VSAT Network
terminals [10] are installed in hilly and mountainous region to cover the uncovered region in
difficult terrain. As a part of Universal service obligation, Nepal has been putting effort for
connectivity in rural and remote areas.
To facilitate the ICT and IT industries, Nepal has developed a well-equipped IT park at Banepa
nearby the Kathmandu valley which provides basic requirement for ICT industry. Similarly Data
centre has been also managed at GIDC, Kathmandu, ICT Centre at Institute of Engineering,
Pulchowk, Lalitpur.
3.1 SASEC information highway project
Nepal is a participant of the South Asia Sub-regional Economic Cooperation (SASEC)
Information Highway (IH) Project. The USD 11.2 million venture, a joint partnership between the
Asia Development Bank (ADB) and the Government of Nepal, was approved in 2007 with the ADB
contributing USD 9 million and Nepal USD 2.2 million. The two-phase project (phase one,
December 2002 and phase two, December 2015) is a sub-component of the broader IH framework
for the SASEC Member States, the objectives of which are:
• To improve ICT connectivity between SASEC Member States;
• To provide modern, affordable and reliable broadband information, communication and
knowledge-based services within and across the borders to universities and businesses; and
• To expand ICT accessibility in remote and rural areas.
34 International Journal of Internet, Broadcasting and Communication Vol.9 No.2 27-36 (2017)
The IH project hopes to improve the quality and penetration of IH in rural areas via mobilizing
the concept of social capital within rural communities and leveraging the SASEC regional exchange
as a sharing facility [12, 14].
ICT human resource capital is intended to be developed through improved local content as a
result of raising ICT awareness, e-literacy and training. This will necessitate the establishment of a
Research and Training Centre, which will implement the processes that will achieve these goals [12,
14].
3.2 ICT Infrastructure Development (Work in Progress)
Nepal has policy to support universal service obligation. The Rural Telecommunication
Development Fund (RTDF) has been created to support USO. Operators have to support 2% of their
income in RTDF fund [7]. The Telecom Regulator Nepal Telecommunication Authority has
decided to invest this RTDF fund to build nationwide ICT infrastructure and provide subsidy for the
operators who provide service in difficult terrain and remote areas (commercially not viable areas)
NTA and Nepal Doorsanchar company Ltd has signed the agreement to build Optical fiber Network
in Mid hill highway(province 1 to 3)[11] and similarly NTA has floated the tender to build similar
network across the midhill highway for remaining parts (Province 4-7) (Source: Nepal
Telecommunication Authority)
The Mid Hill Optical highway will be connected with most of the district headquarters of hilly
and terrain region and this network will be messed with East-West Optical Highway and North
South Optical highway to create resilience and robust network with auto protection service.
4. Challenges for development of ICT in Nepal
The statistics and reference presented above shows that Nepal is still striving to develop the ICT
infrastructure, increase its uses and expand it in various applications to meet MDG and transform
socio economic condition through the use of ICT tools. Nepal has formulated various policy related
issues and has been receiving grants, aids and support for international agencies to uplift the ICT
development goals. The market is also the competitive and maturing, the affordability of the service
is also increasing. However, the outcome of the ICT goals and achievement is still below the line of
the expectation. There are key challenges which are creating barriers to achieve the goals and target
in ICT sector. The key challenges are: power disruptions, affordability, and policy, difficult
geological terrain.
• Power disruptions:-Nepal‟s power grid is insufficient and needs substantial investment. The
national grid powers wireless networks and therefore subject to potentially crippling disruptions
which may have the effect of suppressing ICT uptake. The government may need to mitigate this
significant obstacle via the use of alternative power sources, such as solar, grid upgrades and
backup battery equipment.
• Affordability: - At present, notebook computers and 3G Internet access prices are unaffordable to
many Nepalese. Lack of affordability of both Internet access devices and services constitutes the
Telecommunications Infrastructures and Services Development and Challenges in Nepal 35
most significant barrier to wireless broadband adoption and development of ICT infrastructure in
Nepal. The government will need to endeavor to bridge this affordability gap by considering the
merit of a number of options such as: free Wi-Fi hotspots, subsidies and community Internet
centers etc. These policies are especially important for the approximately 70 per cent of the
population who live in isolated/rural areas.
• Policy and Regulatory Barriers:-A number of policy and regulatory barriers exist which impact
wireless broadband penetration. These include:
o A complex licensing scheme that acts to discourage enterprises from entering the domestic
market and hence providing additional competition;
o Non-transparent spectrum allocation regime and inefficient allocation of key spectrum bands
(e.g. on a regional basis without reuse);
o The lack of an effective interconnection regime; and
o Inefficient taxes that add to the expense of purchasing new technology / equipment.
These barriers will need to be addressed by the government in order to facilitate the most efficient
and effective rollout of wireless broadband services.
• Difficult Geographical Terrain:- 75% rugged mountains and hills and remaining lowlands and
valleys. Therefore, it is very difficult to build ICT infrastructure in such difficult geographic
condition. Similarly, Nepal does not have direct access to submarine cable system and has to rely
on the terrestrial link hired from Indian and Chinese telco providers which has significantly
increasing the internet cost and cost for international connectivity.
5. Conclusion
As per Nepal‟s recent success story, it has been experienced that not only the voice subscribers
growth but recent 2G(GPRS/EDGE) and 3G (WCDMA), 4G/LTE mobile broadband data network
expansion in Nepal including Kathmandu valley shows an overwhelming response from the data
customers. it is seen that Nepal has been doing a lot of works in policy level to uplift the ICT
sectors. The formulated policies, Acts, Regulations and outcome of these initiatives in terms of ICT
statistics and available ICT infrastructures, it can be concluded a successful initiatives and growth
towards lowering digital gap and eradicating digital poverty in Nepal. Due to diverse topographic
situation and scattered settlement, Nepal faces difficulty and more challenges to build ICT
infrastructure and provides broadband ICT service in Nepal.
References
[1] Geography of Nepal accessed on Jan 20, 2017.[Online]
[2] Available:http://countrystudies.us/nepal/21.htm
[3] MIS of NTA (http://www.nta.gov.np) and Milestone of Nepal Telecom, accessed on Jan 22, 2017
[4] [Online] Available: http://www.ntc.net.np
[5] Telecommunication Radio Spectrum Policy 2012, MOIC, Government of Nepal [Online]
[6] Available: http://www.moic.gov.np
[7] Global Information Technology Report 2016 published by World Economic Forum.
[8] Data collected from Nepal Telecom in December 2016, MIS section, Central Office, Bhadrakali, Kathmandu
36 International Journal of Internet, Broadcasting and Communication Vol.9 No.2 27-36 (2017)
[9] ICT Policy of Nepal 2015.[Online]
[10] Available: http://www.moic.gov.np
[11] Telecom Act and Regulation 1997, accessed on Jan 18, 2017[Online] Available: http://www.moic.gov.np
[12] MIS report of ITU, accessed on Jun 2, 2016. [Online]. Available: http://www.itu.int
[13] Broadband Policy of Nepal 2015.[Online]
[14] Available: http://www.moic.gov.np
[15] Data Collected from Nepal Telecom, Optical Project Implementation Department on Jan 2017.
[16] Agreement on “Mid hill Project for Optical Fiber Network construction” between Nepal Telecommunication
Authority and Nepal Telecom dated 28th Sep, 2016.
[17] SASEC Information Highway Project Plan, Ministry of Information and Communication (MOIC), Nepal
[18] Reference taken from http:// www.saarc-sec.org.
[19] Wireless broadband master plan for Nepal, ITU, 2016
[20] MIS reports of NTA, Sep-Oct, 2016 [Online].
[21] Available: http://www.nta.gov.np
[22] Data Collected from Nepal Telecom from Optical Project Implementation Department, Satellite Service
Implementation Department on Jan, 10 2017. Available:
[23] Agreement on “Mid hill Project for Optical Fiber Network construction” between Nepal Telecommunication
Authority and Nepal Telecom dated August 2016.