From telegraphs and telephones to the fifth-generation mobile technology, 5G, telecommunications technology has established itself not only as a means of communicating between people but also as a tool to support the overall socio-economic development of the nation.

The use of telephones began in Nepal about 40 years after the invention of the telephone in the world. The Internet in Nepal was started in 1994 at the initiative of the then Royal Nepal Academy of Science and Technology and a private company.

Looking at the latest technology adopted by service providers, mobile service providers have started providing services through 4G technology and internet service providers through Wi-Fi-6 technology. The results of the Nepal Multi-Indicator Survey 2081/82 published recently by the National Statistical Office showed that 95.5 percent of households in Nepal have access to telephone (landline phone or mobile) facilities. The same survey revealed that four out of every five households use a device with internet facilities.

According to the Nepal Telecommunications Authority's data of 2060 Kartik, the number of Internet/email subscribers was 30,000 at that time, while by 2082 Poush, the number of wired and wireless (excluding mobile broadband) broadband Internet subscribers had reached about 3.4 million. Similarly, the number of prepaid and postpaid mobile subscribers in 2060 BS was about 88,500, but it has now reached 29.4 million. In this way, after the liberalization policy in the telecommunications sector, access to services has expanded widely. Now, along with access to telecommunications and the Internet, its meaningful use should be prioritized. It is necessary to move forward in a planned manner towards increasing production and productivity through such meaningful use.

The time has come to link the expansion of mobile and Internet access in Nepal with production and productivity, not just personal communication, social networking, and entertainment activities. Digital literacy and the availability of Internet content in local languages ​​are key conditions for this. A study conducted by the World Bank on broadband Internet use and economic growth concluded that a 10 percent increase in broadband Internet use would increase the GDP of developed countries by 1.21 percent and developing countries by 1.38 percent. A report published in 2019 by the International Telecommunication Union on the economic impact of broadband Internet in 91 countries, including least developed, landlocked developing, and small island developing countries, stated that a 10 percent increase in mobile broadband access would increase per capita GDP by 2 to 2.5 percent and fixed broadband by 2 to 2.3 percent.

Access to digital connectivity helps support economic development with a positive impact on both the demand and supply sides of the economy. As companies adopt internet-based technologies, workers can complete work faster and at a higher quality level, and digital platforms can help consumers reach markets.

The economic and employment benefits of digital technologies depend on how companies and individuals use these technologies. According to the Nepal Country Economic Memorandum 2025 published by the World Bank, by 2023, 48 percent of business companies will not have their own website, only 9.6 percent of payments will be made online, and the proportion of online-based goods and services sales will be about 23 percent.

The digital sector, which includes telecommunications, computers, and information technology services, has become a significant contributor to Nepal's export revenue. Over the past six years, ICT service exports have averaged 10 percent of Nepal's total service exports, which is 0.3 percent of GDP. This has positioned Nepal as a competitive player in South Asia. Only Pakistan surpasses Nepal in ICT services exports as a percentage of GDP. This clearly shows that ICT offers a significant opportunity for export promotion. The report cites the lack of necessary skills among workers as a significant obstacle to Nepal's digital aspirations and job creation in the ICT sector.

The United Nations Broadband Commission has set a target of reducing broadband internet charges to 2 percent of average monthly income. In Nepal, mobile broadband charges are in line with the target as of 2024, while wireless broadband charges are 7.2 percent of average monthly income. Service providers have been complaining that the government is taxing the telecommunications sector like tobacco and alcohol companies, making internet charges more affordable. Telecommunication service providers have been paying taxes and fees including 30 percent corporate income tax, 4 percent of total income as royalty, 2 percent of total income as contribution to the Rural Telecommunication Development Fund, and 10 percent as telecommunications service fee.

Another major issue for digital inclusion is the accessibility of digital devices (especially smartphones). In the context of Nepal, the average price of an internet-enabled smartphone is about 33 percent of monthly income. This forces middle and low-income individuals and households to stay away from access to digital devices.

The failure to amend the Telecommunications Act issued in 2053 BS, the complexity of managing the assets of telecommunications service providers whose licenses are not valid, the continuation of double investment in infrastructure rather than the establishment of a telecommunications infrastructure company, and the unequal arrangement in the amount to be paid by mobile service providers and internet service providers for license renewal fees are the main challenges in the telecommunications sector.

Digital Literacy and Skills

Digital literacy and skills play an important role in increasing production and productivity through the meaningful use of digital connectivity and tools. The ability to use digital technologies competently and safely for various purposes, including employment and entrepreneurship, indicates the level of digital literacy. The use of digital tools and services without digital literacy has led to new types of fraud and criminal incidents in society.

According to the Cyber ​​Bureau, 2301 cybercrime incidents were registered in 2076/77, while this number had reached 18,926 in 2081/82. In this regard, the report on cyber-enabled fraud published by Nepal Rastra Bank in 2024 also showed that more than 63 percent of the total fraud incidents were related to cyber-enabled fraud and suggested launching a campaign for cyber literacy nationally.

The results of the Nepal Multi-Indicator Survey recently released by the National Statistical Office also show that Nepal has a weak level of digital literacy and skills. This indicates that the skill-based and productive use of technology is low. The survey results show that 24.2 percent can use copy-paste, about 48 percent can exchange messages, only 10.2 percent of the population can use simple arithmetic formulas in spreadsheets (Excel), about 20 percent of the population can download and install software from the Internet, 17.6 percent can create electronic presentations, 11.5 can exchange files between digital devices, about 20 can set security measures on digital devices, apps or personal profiles, 3.1 can do computer programming and 9.3 percent of the population knows how to connect devices such as pen drives, cameras or printers. The presented data clearly demands the need for Nepal to prioritize digital literacy and skill enhancement programs along with its digital transformation strategy.

The European Commission has released ‘The Digital Competence Framework’ with the goal of providing basic digital skills to 80 percent of the population and creating 20 million skilled workers by 2030. It aims to support policymakers in formulating digital strategies and training target communities. The framework has classified digital skills into five main areas. These include information and data literacy, communication and collaboration, digital content creation, security and problem-solving skills.

The skills of browsing, searching for information and details on the Internet and assessing the relevance of information and details sources are included under information and data literacy. Communication and collaboration include the ability to interact with each other and exchange information and details using digital technologies.

The way forward

Regarding the telecommunications sector regulatory models, Nepal has scored 58.33 points out of 100 points in the International Telecommunication Union's first generation (Generation-1) to fifth generation (Generation-5) models, and is still limited to the second generation regulatory model. The pre-digital era Telecommunications Act of 2053 BS needs to be amended according to the current and future needs. It should include issues such as cybersecurity, security of personal details, and 'ethical AI'. Only such amendments can bring about improvements in the regulatory environment in a timely manner.

The unequal arrangement in the license renewal fee to be paid by mobile service providers and the license renewal fee to be paid by internet service providers should be removed. A system should be adopted to determine the license renewal fee based on their income. The amount of the Rural Telecommunications Development Fund is currently used only for service expansion in rural areas. This fund should also be mobilized for digital literacy, access to digital devices and public infrastructure construction at the national level. Such a policy arrangement will help further strengthen the overall digital ecosystem.

Double investment in telecommunication infrastructure should be discouraged. Internet service charges can be reduced by promoting the sharing of infrastructure. Nowadays, telecommunications and information technology have become complementary to each other. Therefore, it is necessary to restructure the Telecommunications Authority as a 'digital regulator' instead of keeping it in a limited circle.