Broadband and narrowband Internet in Nepal

Abstract

This paper examines the relationship between asymmetric digital subscriber line (broadband) and dial-up (narrowband) Internet subscribers in Nepal. While the number of broadband subscribers is increasing, the number of narrowband subscribers has been decreasing over the last couple of years. As expected, broadband subscribers “Granger cause” narrowband subscribers to decline. This suggests that digital subscriber lines are a superior good that is a substitute and replace dial-up services. This relationship should be stable in the short-run. The public sector incumbent Nepal Telecom provides both digital subscriber lines and dial-up access while commercial Internet Service Providers supply dial-up services. Hence, a large proportion of the revenue of the commercial providers is likely to be eroded compared to the incumbent. Given this context and to ensure that there is free and fair competition to support rapid growth in the Internet sector, the Government of Nepal needs to address important regulatory and policy issues related to this narrowband–broadband transition.