Proposed NEA rental charges likely to skyrocket internet prices

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ISPs pay rent to use NEA infrastructure like poles and optical ground wire

May 12, 2019

The Nepal Electricity Authority’s move to increase the rent on internet service providers for using its poles and optical ground wire is likely to have a direct hit on consumers.

According to the Internet Service Provider’s Association, once the new charges are enforced, majority of the internet providers would face losses running into the millions as the electricity authority has set abnormally high rates.

The internet service providers refused to pay the new charges after the state-owned power utility proposed the new rates in August. The row between the electricity authority and service providers has intensified after the electricity authority warned internet service providers on Friday that it would cut their lines if they do not pay.

“We are not in a position to adjust the cost in our existing prices as the electricity authority has asked for five times more than the previous rate,” said Bhoj Raj Bhatta, president of the association. “The industry competition is very high and we are operating at a profit margin of 5-6 percent.”

According to Bhatta, if the new rates are imposed, a customer paying Rs1000 per month will have to pay Rs1500 for internet services.

Photo source: Internet Service Providers

“We have already adjusted for a previous increase of 13 percent in telecom service charges (TSC) in our costs after the government requested us to,” he added.

After facing public backlash following its decision to increase telecom service charges in July last year, the government entered into agreement with ISPs and the latter adjusted increased service charge in their cost without increasing consumer prices.

The government had agreed not to impose new charges other than the 13 percent TSC if the ISPs agreed to adjust the increase in their cost price.

A month later in August, the state-owned power utility proposed new rates which the internet service providers have been refusing to pay.

Currently, ISPs are charged Rs128,000 per kilometre of optical fibre. With the new rates proposed by the state-owned power utility, ISPs will now have to pay Rs 6,000 per kilometre for 24 core fibre, Rs172,000 for 48 core fibre and Rs345,000 for 96 core fibre. According to the ISPs, the rent charges are three times higher than previous charges.

Apart from fibre rates, the state-owned power utility has also increased the charges for optical ground wires in its transmission lines that allow long distance voice and transmission at high speeds.

The power utility used to charge Rs14,630 per core each year. After the revision, the ground wire rent has been set at Rs30,000 for 33 kV lines and Rs72,000 for 66 kV lines.

Apart from the internet service providers, telecom companies also use the electricity authority’s ground wires to relay data.

“Every year, the electricity authority earns just Rs250 million in fibre and pole rent while service providers earn billions using our infrastructure,” said managing director Kulman Ghising at Nepal Electricity Authority. “We aim to generate larger revenue from infrastructure rent.”

But the internet service providers say that the power utility managing director is misinformed. “We are not telecom giants that play in billions and we could have agreed to a rise of 15-20 percent,” said Bhatta. “We have called for a meeting at the electricity authority’s office and will present real figures to Kulman Ghising on Tuesday.”

 

PRAHLAD RIJAL

Source: The Kathmandu Post