No visible effect on economy from high teledensity

Published On: June 18, 2016 07:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, June 18: With more players in the market, cheaper call rates and growing consumerism, subscription to voice telephony services in Nepal has outnumbered its total population.

But while individual users now get more for less and service providers have healthy balance sheets and contribute more to state coffers, this has not had any visible effect on the country’s economic growth, a recent World Bank report says.

Nepal’s teledensity has increased to 111.54 percent -- meaning voice telephony subscriptions and use outnumbers Nepal’s total population of 26.49 million, according to the latest MIS report from Nepal Telecommunications Authority (NTA).

Until January 15, according to the MIS report, teledensity had touched 111.54 percent, of which mobile phone service had teledensity of 105.14 percent, fixed-line service was 3.20 percent and others were 3.20 percent. The over 100 percent mobile is due to single individuals carrying multiple and multi-SIM mobile phones.

Nepal Telecom led the country’s voice telephony services market with 14.06 million subscribers, followed by Ncell with 13.22 million.

Nepal Telecom had 11.92 million GSM subscribers and 1.34 million CDMA subscribers by January 15. It terms of market share, Nepal Telecom had 48 percent closely followed by Ncell with 45 percent, while the next big player UTL had cornered just 2 percent of the market and other operators together made up the remaining 5 percent.  

However, the growing usage of telephony has not been reflected in the economic growth also due to its failure in contribution to the national economy. 

The continuous rise in the number of subscriptions and has lowered the rates charged on calls contributing to more subscriptions and usage and had a cyclic effect on each other. But while this phenomenon should accelerated the country’s economic growth as it has been doing in other parts of the world, in Nepal it has failed to contribute to the economy, according to a recently-launched World Bank report. Increase in the number of telephone service providers and competition has pulled down the prices, the World Bank added.

The liberal market policies adopted by Nepal after 1990 opened the telecom sector up to private players and pushed the state-owned Nepal Telecom to become a publicly-traded company. Customers and government have both reaped the benefits from this. The government is getting more revenue while customers have a choice of service providers at affordable cost.

The service quality has also seen improvement over the years, though there is still space for improvement.

With a 2.59 score, Nepal ranked 136th among 167 countries in 2015 compared to 140th (1.75 score) in 2010, according to the Global ICT Development Index published by International Telecommunication Union (ITU). “In the Asia and Pacific region, Nepal is ranked 26 among the 32 economies,” it says.

Eight in 10 people in the developing world own a mobile phone, but the cost of using phone services varies significantly, according to the 2016 World Development Report that explores the impact of the Internet and mobile communication devices on human develop

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