We selected the Eastern Part of Nepal to implement our policy of making available telephone service on demand, including rural areas. We specified that telcom was crucial to national development, and tried to encourage private investment. We also stipulated that the basic provider (ie the incumbent) must invest 15% in development.
We selected 893 areas with minimal phones, 534 with no phones at all. Gurkas come from that area and there was much migration from that area. We knew that unless we brought the private sector it would be very expensive. We designed the project and said that you have to complete the entire project in 18 months, given certain incentives (subsidy, based on international competion). The one asking the least subsidy would be awarded the contract, and the license for 10 years, and the waiving of various license fees.
After you installed 2 telephones you could expand you services in any sectors (Interned, International Dialling). Without further licenses. Within 3 months the company we chose put 107 VSAT links into rural areas.
What has happened after this? What are the impacts on other service sectors? The incumbent has started rolling out services in rural areas. The incumbent had asked for $70 million dollars, but now they are rolling out on their own tab. They have also reduced tariffs, including the SAARC long distance traffic. If this becomes successful the government has said they will roll out in other parts of the country, and this competion has scared the incumbent.