The cost to internet service providers (ISPs) for internet bandwidth has declined despite significant rise in internet users.
The service providers spent Rs 2.39 billion as bandwidth fees in the last fiscal year 2013-14, according to Nepal Telecommunications Authority (NTA) that claimed that the internet bandwidth charge paid to international companies providing bandwidth service is nearly eight per cent less compared to Rs 2.59 billion a fiscal year ago in 2012-13.
Internet consumption is in increasing trend due to multiple reasons like boom in mobile data users, increasing use of smartphones and video streaming.
Similarly, owing to reduction in bandwidth fee and market competition, internet connection charges have been declining.
The NTA data revealed that total number of users of data service reached close to 9 million by last fiscal year, up from 6.91 million in a fiscal year ago.
The telecom sector regulator confirmed that the fall in price of internet bandwidth cost globally contributed to the decline in the bandwidth expenses for domestic companies too.
The amount paid for bandwidth is based on foreign exchange facility recommended to telecom companies and network service providers (NSPs) that sell internet bandwidth to ISPs.
The central bank gives exchange facility to Nepal Telecom Authority licensees upon receiving recommendation from the authority through Information and Communications Ministry.
The ISPs buy bandwidth from network service providers and provide service to customers, dividing the internet bandwidth they bought.
Recently, service providers’ gradual switch from costly satellite connection to optical fibre is also attributed to the reduction in bandwidth costs.
Ncell and Nepal Telecom – the licensees of ISP – spent Rs 1.18 billion and Rs 992.5 million, respectively, on bandwidth during the last fiscal year 2013-14,
according to the authority. Likewise, Communications and Communicate paid Rs 69.36 million, Nepal Satellite Telecom 40.6 million and Mercantile Communication Rs 28.96 million as bandwidth fees, it added.
The bandwidth consumption is expected to grow more from current fiscal year with telecom companies and other ISPs competing to provide high speed internet service at cheaper rates.