This paper investigates conditions that need to be met in order to make smart subsidies successful in bridging access gaps in rural telecommunication services. Nepal’s Eastern Development Region project is the case under study. The final report, Smart subsidies: Getting the conditions right – The experience of expanding rural telecoms in Nepal can be downloaded HERE. The study finds that while it is possible to use the smart subsidies option to provide rural communities with telecommunications services the real question is whether such services are optimal and whether these projects could be sustained in the medium to long term. The findings throughout the paper converge to the point that unless the right regulatory conditions are in place; particularly with respect to cost-based asymmetric interconnection agreements and effective regulation of incumbent’s anti-competitive practices, success of rural telecom service providers who are empowered by smart subsidies, would be questionable.