KATHMANDU: Nepal is at a pivotal moment in its development as a digitally inclusive economy, where the telecom industry could act as a cornerstone for national progress. However, the sector faces challenges that, if left unaddressed, may widen the gap between Nepal and its more digitally advanced neighbors like India and Bangladesh. Increased investments in telecommunications are essential to ensure public benefits, improved services, and better infrastructure—key factors that drive economic growth and support a burgeoning digital economy.
Decline in Telecom Revenue: A Stark Reality
Over the past several years, Nepal’s telecom revenue has fallen by 25%, a concerning trend in contrast to neighboring nations like Bangladesh, where telecom revenue has grown by 46%. This disparity highlights not only Nepal’s regional disadvantage but also the inefficiencies and obstacles in the domestic telecom industry.
Key reasons for this decline include intense price competition, inadequate spectrum allocation, poor-quality network experiences, and limited investment in infrastructure.
This downward spiral has left operators with fewer resources to reinvest, exacerbating the gap in connectivity and quality of services. Without immediate intervention, Nepal risks losing its competitive edge in the South Asian digital economy.
The Role of Government in Sector Revitalization
The government of Nepal holds the reins to a large extent. Policymakers must create a conducive investment environment that allows telecom operators to thrive. Telecommunications play a crucial role in national GDP growth, enabling businesses to flourish and supporting sectors like education, healthcare, and e-commerce.
Currently, telecom operators in Nepal grapple with policies that are neither forward-looking nor supportive of innovation. High licensing fees, restrictive spectrum policies, and cumbersome bureaucratic procedures discourage potential investors. A shift towards progressive policies—such as incentivizing rural connectivity, streamlining regulations, and fostering public-private partnerships—could transform the sector and unleash its true potential.
Connectivity Gaps: A Persistent Challenge
Approximately 19% of Nepal’s population still lacks access to 4G services, creating a significant barrier to digital inclusion. The unavailability of reliable connectivity in rural and remote areas limits access to education, healthcare, and economic opportunities, further widening the urban-rural divide.
In contrast, neighboring countries like India have achieved near-universal 4G coverage, which has catalyzed their digital transformation and economic progress. Nepal must prioritize investments in network expansion to ensure no citizen is left behind. Bridging these connectivity gaps will enable the nation to unlock untapped potential and drive inclusive development.
Low Mobile Data Usage: A Missed Opportunity
Mobile data consumption in Nepal averages just 4GB per user per month, far below India’s average of 20GB per user per month. This stark disparity highlights the room for growth in Nepal’s telecom sector. Increased mobile data usage not only benefits telecom operators through higher revenues but also drives economic activities like e-commerce, digital learning, and remote work.
As smartphone penetration grows and digital platforms like TikTok and Pathao gain popularity, there is immense potential to boost data consumption. However, achieving this will require telecom operators to address key issues such as network reliability, affordability, and user experience.
Telecom as a Driver of Economic Growth
Investment in the telecom industry has far-reaching implications for Nepal’s economy. A robust telecom sector fosters innovation, increases productivity, and supports the growth of digital services. It also contributes significantly to national GDP, creating a ripple effect across various sectors.
For example, the rise of Nepal’s digital economy has introduced new employment opportunities in tech-driven services. Platforms like Foodmandu and Pathao, which rely on strong network connectivity, have emerged as major employers. Pathao alone employs more than 150,000 people, underscoring the transformative impact of the digital economy on the nation’s workforce.
By enabling businesses to operate efficiently and connecting consumers with services, telecommunications act as a backbone for economic resilience. To fully harness this potential, Nepal must prioritize investments in network infrastructure and policy reforms.
The Strain of Rising Data Demand
The unrestriction of TikTok in Nepal has led to a substantial increase in network traffic, placing additional pressure on an already stretched telecom infrastructure. This surge in data demand underscores the growing reliance on digital platforms and the urgent need for improved network capacity.
While platforms like TikTok and YouTube present opportunities for engagement and revenue generation, they also reveal gaps in the current telecom framework. Without significant upgrades, Nepal’s networks will struggle to accommodate rising data usage, leading to poor user experiences and potential revenue losses for operators.
The Digital Economy: A Booming Frontier
Nepal’s digital economy is small but growing rapidly, driven by tech-savvy entrepreneurs and innovative platforms. Services like Foodmandu, which delivers groceries and meals, and Pathao, a ride-sharing service, have demonstrated the potential of the digital economy to create jobs and improve livelihoods.
These platforms depend on reliable and fast internet connectivity to operate effectively. However, the limitations of Nepal’s telecom infrastructure pose a significant challenge. Upgrading networks and expanding coverage will be critical to sustaining the growth of the digital economy and unlocking its potential to contribute to national development.
Policy Roadmap: Actions for Growth
To reverse the decline in telecom revenue and ensure sustained growth, Nepal’s policymakers must adopt a strategic approach. Key recommendations include:
Increasing Spectrum Allocation: Allocating more spectrum at reasonable prices will allow operators to expand their networks and improve service quality.
Reducing Regulatory Fees: High licensing and operational fees discourage investment. Lowering these costs will incentivize operators to reinvest in infrastructure.
Promoting Infrastructure Sharing: Encouraging operators to share infrastructure can reduce costs and accelerate network deployment in underserved areas.
Supporting Rural Connectivity: Providing subsidies or incentives for rural network expansion will ensure that all citizens have access to reliable telecom services.
Fostering Innovation: Policies that encourage research and development in telecommunications can drive technological advancements and enhance competitiveness.
Comparative Insights: Learning from Regional Successes
Nepal can draw valuable lessons from its neighbors. India, for example, has leveraged affordable mobile data plans and extensive 4G coverage to drive digital adoption. Bangladesh has successfully increased telecom revenue through targeted investments and favorable policies.
By adopting similar strategies, Nepal can create a thriving telecom industry that supports economic growth and digital inclusion. Investments in technology and infrastructure, combined with supportive policies, will be key to replicating these successes.
The Role of Public-Private Partnerships
Collaboration between the government and private sector can play a transformative role in addressing the challenges facing Nepal’s telecom industry. Public-private partnerships (PPPs) can mobilize resources for large-scale projects, such as expanding 4G coverage or deploying 5G networks.
Such partnerships can also foster innovation, as private companies bring expertise and efficiency, while the government provides regulatory support and funding. Together, they can create a telecom ecosystem that meets the needs of a rapidly digitalizing population.
The Way Forward: Building a Resilient Telecom Sector
Nepal’s telecom industry has immense potential to drive economic growth, enhance digital inclusion, and improve quality of life. However, realizing this potential will require bold actions from all stakeholders.
Policymakers must prioritize reforms that address the challenges of declining revenues, limited coverage, and inadequate infrastructure. Telecom operators must invest in technology and user experience to meet the demands of a growing digital population.
By working together, the government, private sector, and civil society can create a telecom sector that benefits all Nepalese, ensuring a prosperous and digitally inclusive future.
Conclusion
Nepal stands at a crossroads in its telecom journey. The choices made today will determine whether the country can harness the full potential of telecommunications to drive economic growth and digital transformation. With the right investments, policies, and partnerships, Nepal can bridge the gap with its regional peers and create a thriving telecom industry that supports a resilient economy and an empowered society.
The time to act is now—delaying reforms will only deepen the challenges and limit the opportunities for progress. By prioritizing telecom investments, Nepal can secure its place as a leader in South Asia’s digital economy, creating a brighter future for all.