The existing act states that license renewal fee will be accumulated from telecom companies based on the highest price quoted by any service provider.
As per this provision, Spice Nepal, operator of Mero Mobile, has pledged to pay a highest renewal fee of Rs 20 billion in every 5 years. This means another mobile service provider, Nepal Telecom, has to pay similar amount to the government if it wants to exist in the mobile phone market.
In other words, both telecom companies have to generate a net profit of at least Rs 4 billion per year just to pay the renewal fee.
Telecom experts say this is an exorbitant amount and none of the mobile phone companies can afford to pay such a huge fee.
Even Nepal Telecom, the country´s telecom giant that generated a net profit of Rs 9.97 billion in the last fiscal year, says this renewal fee is “unaffordable.” Sources say if such a provision is not scrapped immediately, telecom companies will have to raise the call rates to maintain their profit margins. This will ultimately hurt consumers who have been enjoying cheap call rates.
To relieve telecom companies from this burden, the government had earlier floated a proposal of accumulating the renewal fee based on the revenue generated by cell phone service providers. This measure is much more practical. But the concerned ministers have not dared to introduce such a provision, fearing that they might be summoned by the Commission for the Investigation of Abuse of Authority for chopping one of the major revenue sources of the government.
“The government very well knows it cannot raise Rs 20 billion from one cell phone company (in every five years) if renewal fees are accumulated on the basis of incomes generated by them. So despite being impractical, they cannot do anything about it,” a source at the Ministry of Information and Communications (MoIC) told myrepublica.com, on condition of anonymity.
To avoid taking any risks, the MoIC had forwarded a draft bill to the parliament in April without making any amendments to the provision. But it recalled the bill immediately after private sector lobbied against it. Since then the bill has gathered dust.
But this problem is preventing the government from formulating a new telecommunication act in line with the new telecommunication policy formulated some six years ago.
“Due to lack of a new act we have not been able to take clear cut steps related with frequency allocation and infrastructure sharing as envisaged by the new policy,” a source at Nepal Telecommunications Authority said.
rupak@myrepublica.com
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