When free feels illegal Image: Google
It turns out a free connection comes at a price. The proliferation of public WiFi hotspots across Nepal has delighted users and disrupted telecom firms. Now it has triggered regulatory retaliation. Following mounting pressure from the country’s largest mobile operators—Ncell and Nepal Telecom (NTC)—the Nepal Telecommunications Authority (NTA) is clamping down on internet service providers (ISPs) accused of offering mobility-style WiFi without authorisation. The rules are changing and so is the business of being connected.
The dispute turns on a figure that unsettles boardrooms. Every year Ncell and NTC estimate they lose Rs 7bn apiece in foregone data revenue owing to free public WiFi. The NPR 14bn hit has not gone unnoticed. For companies whose profit margins increasingly depend on mobile internet rather than voice services, free hotspots represent both an existential threat and a regulatory loophole. The market, they argue, is being distorted by firms that provide mobile-like services without paying mobile-like dues.
The regulator seems to agree. A recently issued order prohibits ISPs from offering seamless WiFi outside of specified zones or time limits. Those who flout the boundaries, geographic or temporal, risk penalties. The NTA’s spokesperson confirmed many providers had been “operating outside legal boundaries”. Under existing regulations only licensed mobile or basic telecom operators are allowed to offer roaming-style connectivity. Most ISPs do not hold these licences.
The main offender, by sheer scale, is WorldLink Communications. With a market share surpassing 31%, it dwarfs its nearest rivals. It also operates an estimated 15,000 of the country’s 25,000 public hotspots, many of which allow users to log in once and stay connected indefinitely. These persistent connections are precisely what have drawn Ncell’s ire. It argues such services amount to offering mobile data by stealth, without the burdens of spectrum fees or regulatory levies nor telecom taxes.
Mobile firms are not merely defending profits. They point out their revenues support a raft of public finances. The government levies a 30% corporate income tax on telecom earnings, along with a 13% VAT and a 10% telecom service charge. Add royalties and contributions to the Rural Telecommunications Development Fund and the effective tax burden becomes weighty. By contrast ISPs providing free access contribute no revenue-based levies and generate no tax on giveaway services. The fiscal leakage, say mobile operators, is big.
Their argument is grounded in numbers. Telecom companies pulled in more than Rs 72bn in total revenue during the 2022–23 fiscal year. ISPs brought in less than a third of that. Yet the nature of internet consumption is changing. As mobile data grows ubiquitous and broadband becomes a utility, the line between telecom and internet providers has blurred. That blurring has created confusion—and competition—the regulator is now keen to clarify.
The new enforcement regime will rely on geographic zoning and session limits. Public hotspots will be allowed to operate for defined intervals—typically 30 minutes to an hour—after which users must log in again. Continuous access, the hallmark of many urban hotspots, will be restricted to firms with mobility licences. In effect most ISPs will need to curtail the very service features that have made their public WiFi offerings attractive.
The bearing on users could be tangible. Seamless free WiFi has provided an alternative to mobile data in congested cities, where signal quality can falter. Students, small businesses and cash-strapped commuters have all benefited. Critics of the regulatory pivot argue limiting free access amounts to prioritising corporate interest over consumer convenience. Some see the move as a protectionist response that penalises innovation by smaller firms.
Yet ISPs are not scrappy startups. Many are large, well-funded businesses with growing influence. Apart from WorldLink, other top providers include Dish Media Network, Vianet and Subisu. Together they account for nearly 72% of the broadband market. Dozens of smaller players—Classic Tech, Websurfer, Techminds, CG Communications and others—scramble over the remaining share. The market is concentrated but far from settled.
The regulatory shake-up may alter the hierarchy. Smaller ISPs that relied on hotspot proliferation to build brand loyalty may struggle. Those that compete on price alone will face narrower margins. The incumbents, especially mobile licence holders, will gain room to breathe. The shift could also provoke some ISPs to seek new licences, opening the door to a hybrid model where broadband firms move into mobility territory.
What this means for digital inclusion is unclear. Free WiFi, notwithstanding its limitations, has extended internet access in areas where mobile data is patchy or expensive. Nepal’s internet penetration is around 50% but affordability and access gaps persist. Curtailing public hotspots risks widening those gaps, unless offset by improvements in mobile infrastructure or subsidised services.
For the moment the winners are Ncell and NTC. Their lobbying has paid off. Whether consumers will pay more, or get more, is to be seen. A telecom sector that has welcomed liberalisation and private investment is now testing the boundaries of competition. Regulators must tread carefully. Overreach could stifle innovation; inaction could eat into revenue. The country’s digital future will not be shaped by how many users log in. It will be decided by who controls the connection and who gets paid for it. ■
Got a tip? Contact us at [email protected]
