With the advent of new technology, Nepal is paving a shiny step in the field of internet and communication. The accessibility of wireless GSM internet to broad band internet is also increasing in recent years as compared to last decade. There are many ISP which are doing business in Nepal in order to fulfil the shortcomings in services. So in this article we will articulate and focus on the opportunities and threats of ISP business in Nepal.
The ISP business have been operated in Nepal since 1994 A.D with first being Mercantile communications. With this, by 2021 according to MIS report issued by NTA there are around 129 licensed ISP having email with internet operated in all 7 provinces.
If we see the MIS data issued by NTA, there are total 195 existing license holders in telecom and communication field. In total, till now 551 licensed have been issued and 356 license have been cancelled. In ISP domain, with internet and email services, there have been 174 licensed issued where 45 licensed have been cancelled. In Rural ISP, 11 license have been issued but now there are only 3 existing license holder. Above data showed that more than 70% license have been cancelled which may be due to merger and acquisition or bankruptcy.
Currently, out of various medium like twisted pair cable, co-axial cable and wireless, Fiber optic is the most common form of connecting media to internet. From urban to rural and plain to hill, there have been outnumbered optical fiber connectivity. The subscribers in using optical fiber is around 15,79,438. Upon screening the MIS report, we can see that there are not many ISP’s among 129 licensed ISP. So we can justify that around 20-25% of the actual subscriber is not listed in MIS. So about 20 Lakh subscribers are there using optical fiber to connect to the internet.
Lucrative business in Past
By 2017, the ISP business was lucrative, Many ISP’s have been centric in Kathmandu valley. There was fair competition among ISP’s in Kathmandu valley but beyond that there wasn’t. Indeed there were not much more ISP’s before 2017 and in 2017 only 48 ISP’s were operated. People were not much more conscious and even they were not in need of broadband internet. People don’t have much more choices and used to pay what the ISP’s have charged.
Apart from annual package or monthly subscription, there have been additional cost on installation charges. Around 5 thousand was spent on installation charges which is used for devices, cables and routers. Broad band internet usages density was very less.
From above chart, the competition has started from 2018 as there were 108 license issued, which is 25% greater than the license issued in previous year 2017. From then, the number of ISP have been growing subsequently and reached to 134, 154 and 174 in 2019, 2020 and 2021 respectively. With growing in ISP’s number, the blue whale becomes red whale. This means, there comes competition between ISP’s to sustain in the market starting up new technologies and offers which are as follows.
Introduction of 120 Mbps plan by CG net: 2020
CG net, the conglomerate of chaudhary group have started its ISP business in Nepal in June 2020 with the starting package of 120 Mbps at just Rs 999/month. It’s one of the first ISP providing 100 Mbps bandwidth to users, before other leading ISP like worldlink used to provide 60 Mbps packages. This packages have grabbed the attention of many subscribers in valley who were fed up with the services of other’s ISP.
Worldlink 600 Mbps:
Now, the competition has just started and the fire ignite by CG net have ultimately effected other ISP. And one of them that hurts more too is World link. Being the leading ISP in Nepal with largest subscribers was unable to watch and see the competition and therefore have launched 600 Mbps internet with photon series. However, the real speed is yet to provide by the fellow subscribers.
Subisu and Classic Tech
Subisu, which is the fist ISP in Nepal which have bring cable internet where TV and internet can be operated using a single cable also brought the competitive packages of Mbps.
Classic Tech is also on market offering 100Mbps Toofan Tv to the subscribers.
Besides worldlink, vianet is the second largest ISP having huge subscribers. Being competitive to market it also have launched the speed of upto 250 Mbps naming as Ultra-Fi packages.
All the ISP have been upgrading the highest bandwidth to the subscribers as possible. Worldlink, vianet, Subisu have upgraded the bandwidth for free.
From above we can see that there is stiff competition among leading ISP’s. But still the penetration of broadband internet in rural areas is very low. This is because the major ISP’s are focused in cities.
The leading ISP’s have been expanding its business and services in a very rampant manner. This have hampered to the local ISP as their capital is low to expand its services. Leading ISP’s have no doughty captured the local market by offering promotional packages.
A local ISP personal, masking his identity have told that, the local ISP couldn’t survive without going into merger. As, the competition is very high due to larger competition. Even he told that, there are companies who told that they will give internet services in just Rs 600/month. However, to make a reasonable profit, there must be at least 10,000 subscribers, he further stated.
Now, all the networks and subscribers are now connected by optical fiber. So, the initial cost to setup an ISP and creating distribution link is quite high. So there will be higher profit if huge subscribers can be connected in the same distributed optical fiber.
Customers are hungry for the higher speed and technology. However, the hungry doesn’t mean they will be stable to one ISP’s for long run, but instead they will switch to another ISPs comparing prices and service as long they have option.
Raise capital and expand or merge:
The leading ISP’s have been expanding its services to various parts of nation. They have good experience in marketing and also can collect handsome capital to expand its services. On the contrary, this have not been the cases for local ISP’s as most of them are startups and running in a low capital focusing to a certain area.
One ways or another, in order to survive the threats of larger ISP’s, the new ones should either have the large capital or should go in merger with nearest ones to expand the market.
Case study: How Dish Home merged with Prabhu TV helps to lead market
Dish Home, the DTH provider in Nepal have expand its service Horizon to ISP. With over 1 million subscribers in DTH, they are also doing great in ISP sector too.
Dish Home was formed after merger between Dish Nepal and Home TV in 2010. Both of them were DTH service provider. Dish Home in August 2020 have merged with Prabhu TV. However the name of service provider have remain as Dish Home.
Prabhu TV have been providing services like IPTV, Dish TV and fiber internet. Prabhu TV which already have subscribers of 1,25,000 in DTH and around 10000 in internet services have gone merger with dish home to expand its services.
Both companies have the expertise in DTH domain. Former Dish Home has a very strong team in specializing technical and management have already been in merger to create a monopoly in DTH service provider in Nepal. On the other hand, Prabhu TV which is subsidiary group of prabhu network have its own DTH services and IPTV. Prabhu TV have expanded its network via cables and fiber. So, the basic foundation for creating a fiber network have been already setup by prabhu TV and now after merger, Dish Home can now rebrand the name to provide the services at a shorter time period.
Also, both companies have huge capital to expand its services. Equally, both have same level of expertise in technical as well as management skills. This way, they have been no less than other whether in expanding or providing the internet services in Nepal.
From this case study we can summarize that: If you want to go into merger or acquisition, make sure you are reaching to the good organization having managerial and technical skills. Also, always try to either acquisition or merge the competitive to create a more strong team.
Opportunities in Rural Areas:
The broadband internet penetration in rural areas is very less. The MIS report suggest that the internet penetration is 91% as of July 2021. Still many villages are deprived of broadband internet services. People are getting the remote education and jobs from anywhere. So, ISP focusing their business in rural areas of Nepal where there is no existence of internet or competition is very low can be a good opportunities.
Focus on Quality:
We know there are many ISPs are providing high speed internet to consumer. But still, consumer are not happy with this because they are not given what it was promised. Even, there is not timely support from the ISP’s. So, if we can focus on quality we will have potential to attract the consumer in the long run.
IPTV is now must
Now, every ISP’s is giving IPTV services. So if you are planning to open new ISP then you should also provide IPTV services to the customer. Also, lowering the IPTV prices would retain the subscription.
Focus on New Technologies:
Now, every ISP’s are providing dual band, 5G router to the existing as well as in a new connection. So customers are likely to stay in the ISP’s where they can avail the latest technologies and services. Even, some ISP’s roll back the old one router with the new one for free.
Corporate subscription is huge advantage:
We suggest focusing on corporate client as they need higher bandwidth with dedicated line and they pay higher amount. If we can deliver good services to corporate client, they will be our ambassador to the public people. So ultimately, overall subscribers would increase. We can see many ISP’s have been putting testimonials of corporate client in their webpage.
So in Nutshell, with increasing ISP business in market there are still many places in both urban and rural areas of Nepal where affordable and quality internet is still a misery. So focusing on quality service with upgrading latest technologies can be the wisest decision to sustain in the market to both new and old internet service provider.