You have to make an urgent call on your mobile during peak hour. After dialling six out of ten times you get: a) "network busy" b) "subscriber you are dialling is not responding or is out of range" c) no ring, no response, no recorded message, d) after connecting you are cut off for no reason e) voice at the other end keeps cutting out.

In most of all these cases, you end up paying for the call even if you couldn't get through. At a time when mobile phone rates are plummeting everywhere else, Nepal's cell phone subscribers are paying more for a much shoddier and limited service.

"We are working on improving the quality of the reception with the Chinese contractor, these are teething problems because we are expanding the network to deal with congestion," explains a Nepal Telecommunications Corporation (NTC) official.

After suspending new mobile connections for two months, NTC started accepted new subscribers since Sunday. Its Jawalakhel office has been swamped with applicants all week. It costs Rs 14,450 deposit and Rs 5,500 for NTC's Nortel handset.

NTC recently slashed its rates to Rs 2 for an incoming call and Rs 4 for an outgoing call, but it is still high by regional standards. It is set to extend mobile reach along the highways from Bharatpur to Kakarvitta. "The expanded network in the east should be operational in the next five months," Subash Bajracharya of the New Services Department of NTC told us. Soon, there will be 40,000 new subscribers, bringing the total to 67,000.

But the chances of the price of a call going down as it has in India are slim. The only other private sector investor in mobile telephony is the Indo-Nepal joint venture between Modi Corp and Nepal's Khetan group called Spice Cell. But this venture is already a year overdue.

Spice first got bogged down in a legal tangle after NTC employees unsuccessfully went to the Supreme Court to challenge the entry of private players. Then, there were political tangles when Spice applied to the Nepal Telecommunications Authority (NTA) for frequency allocation. The Ministry of Information and Communications (MoIC) sat on the file for months.

"It is costing us heavily, we have lined up many people to work on the project, all are waiting for the green signal," Rajendra Khetan a Nepali partner of Spice Cell told us. According to the contract, Spice has to pay Rs 63 million as license fee and Rs 160 million in bank guarantees, and has to start services in ten metros (except Kathmandu) in the next three years.

NTA rejects Spice's allegations, saying the company was putting pressure not to have to pay the bank guarantee. "They haven't got back in touch with us for the past month," said NTA spokesman, Kailash Neupane.

The Khetan Group is reportedly considering pulling out citing interference by Indian officials on behalf of the state-owned Videsh Sanchar Nigam Limited (VSNL) and Mahanagar Telephone Nigam Limited (MTNL). The Indians are said to prefer state-owned companies for "security" reasons, although officials here denied this. The two had also applied for the license in 2000, but Spice outbid them both. VSNL and MTNL are now involved with a consortium of Nepali businesses to offer wireless local loops in Kathmandu Valley for cheap fixed phones without wires.

"We are not brokers, we are investors," Mohan Gopal Khetan, chairman of the Khetan group told New Business Age magazine recently. "The minister (J P Gupta) was bothering us because he had made a commitment to award the project to somebody else. So we decided not to pursue the project."

The Commission for Investigation of Abuse of Authority (CIAA) has filed a case against Gupta over another license for a private television channel, but this cell phone deal is also said to be under scrutiny.

Meanwhile, the delay has not just affected Nepali customers it has also sent the wrong signal to prospective investors who are already wary of Nepal because of political instability.