NATIONAL 9 (Spotlight Weelky)]

Giant Enters

As state-owned Nepal Telecommunication Corporation (NTC) enters as an independent ISP with a heavily reduced price, the private ISPs are grappling for new strategies to survive

By A CORRESPONDENT

It was a nasty surprise to some one dozen private Internet Service Providers (ISP) when the NTC last week ran an advertisement in major dailies announcing its entry as an independent ISP. What more, the prices the NTC offered to the customers were way below the minimum being currently offered by any of the private ISPs.

In a way, NTC's decision to enter the internet market was a belated one. For more than half a decade the corporation passively witnessed the phenomenal growth of private ISPs content only at providing the basic infrastructures to them. As it enjoyed the monopoly in the telecommunication sector of the country, its unwillingness to enter the market was strange.

But now that the NTC has finally announced its foray in the field, the private ISPs are left gasping for breath. Already suffering from cut-throat competition among themselves that saw them slashing down the prices over the years, the announced entry of NTC with further reduced price is sure to affect them adversely. By the time this magazine was going to the press on Tuesday afternoon, the about dozen private ISPs were discussing to evolve the collective strategy to deal with the NTC's latest thunderbolt.

The NTC's introductory offer for internet is lower by almost half than the least price made available by the private ISPs currently. The NTC will charge Rs 1000 for one month of unlimited internet service, Rs 5500 for 6 months, Rs 10,500 for one year and Rs 19,200 for two years. Likewise, the corporation is offering unlimited email service for a flat fee of Rs 900 per year.

The private ISPs are complaining that the NTC is not playing in a level field. "It enjoys having monopoly in the communication infrastructures," said Allen Tuladhar, CEO of the Unlimited Numedia, an ISP.

But officials at the NTC deny the charges. "If they can reduce price, why can't we?" asked Nabin Lal Shrestha, chief at the NTC's New Service Directorate that oversees the internet facilities. He says the NTC's prices are not unfairly placed. "We can reduce it even further."

He says NTC was about a decade late in entering as ISP in the country. According to Shrestha, the market here is enough only for few good ISPs and not all of the dozen registered.

The NTC is entering the ISP field with the initial 250 lines of telephone which is more than the number of lines even the currently largest ISPs have in the country. "The number of lines is not any problem to us. We can always increase it as and when we so require," says Shrestha.

On the other hand, private ISP operators blame that NTC does not provide them with adequate number of lines. "It is so difficult to extract extra phone lines from them," said Tuladhar.

In the aftermath of the NTC's announcement, the private ISPs are currently busy evolving price strategies for survival. Tuladhar admits that in the given environment, the private ISPs will find it difficult to survive. "Unless they diversity their services, it will be very difficult to survive." Tuladhar's Unlimited Numedia is not only an ISP but also a software development company. "Internet and email service is not the bread and butter for us and so in a way we are safe from NTC's entering the competition. We are engaged in a number of new services like providing listen mail, Internet-enabling of the television and so on."

But he says the current government attitude towards the ISPs is not friendly. "Almost Rs 100 million is already invested by private sector in this sector. So any move to discourage us will not be positive." He complains that even though ISPs have been paying taxes as specified by the Nepal Telecom Authority, the VAT department is currently said to be in touch with NTA asking the latter to close all ISPs because they were not paying VAT. "This does not seem fair. First, the government invites us to enter the field, pay taxes and now it is pushing us to corner."

But one point the private ISPs are banking on is the NTC's "well-known inefficiency". As reports came that the initial customers' call inquiring about the announcement were met with unpleasant response, the corporation's own weakness could be its undoing especially at a time when customer service and efficiency are regarded as the most valued assets to overcome competition.