A government-appointed study committee in Nepal has recommended two options for the much-anticipated auctioning off of 4G mobile frequency licences, paving the way for the possible launch of commercial services within the year. The committee, which was set up to consider the implementation issues of delivering the state’s ‘Telecommunications Radio Frequency Distribution and Pricing Policy 2012’ has advised the government to amend Nepal’s telecoms legislation by mid-July 2014 to allow for the auctioning of Long Term Evolution (LTE) spectrum to ‘involve a new company’, or to allocate it to the two incumbents – Nepal Telecom (NT) and Ncell – which have been petitioning for 4G spectrum for the past three years.
The committee’s coordinator Mahesh Prasad Adhikari, who is also a member of the national regulator Nepal Telecommunications Authority (NTA), notes that whilst one of the policy document’s aims was to deliver a new market entrant, the existing Act does not make any provisions for that to happen. ‘Thus, we have recommended either to amend the law immediately to bring a new company or auction the 4G spectrum between NT and Ncell,’ he said. The government is understood to be planning to use 700MHz, 2300MHz and 2600MHz bands for 4G services.
In addition, NTA deputy director and study team member Amber Sthapit says that recommendations have been made to the board of the national watchdog to charge a one-off frequency acquisition fee in year one, followed by annual fee payments from year two, as seen in some other international markets. ‘We concluded that the government should charge a certain percent of the annual income as frequency fee after one-time charge of frequency fee fixed from the auctioning,’ Sthapit said. The committee is recommending a fixed annual spectrum charge equivalent to 0.9% of an operator’s total income for 2G, 3G and indeed, 4G spectrum. However, if a company opts not to utilise 4G spectrum, the fee will drop to 0.7% of annual income. As it stands, Nepal’s mobile operators pay 0.4% of income as a minimum fee, plus NPR12 million (USD124,340) per MHz block for 3G spectrum; NT and Ncell have been using 2×10MHz of spectrum for their 3G services.
In terms of the 4G auction itself, the government committee is advising the NTA to set a reserve price of NPR12 million per MHz block of 4G spectrum. Finally, in response to complaints from telecoms companies that the existing frequency policy plan is too ‘rigid’, the study team has suggested making some additional amendments.