Mobile rule makes Nepal immobile

The divestment by Malaysia’s Axiata from Nepal’s Ncell mobile operator has overshadowed a more persistent problem concerning imported handsets.

It has been nearly a month since Nepal’s telecom authorities enforced its on-again-off-again rule on the use of imported mobile phones, but it has left confusion and frustration among tourists and Nepalis returning with their phones from abroad.

The Mobile Device Management System (MDMS) is ostensibly supposed to deter tax evasion, enable tracking of stolen phones, and even geolocate users in emergencies. In theory. But many believe it is being implemented under pressure from powerful phone importers who are losing out on sales to Nepalis bringing phones for themselves and relatives.

The policy was first tested in 2018 but immediately withdrawn after protests mainly from the migrant worker community. They ran a #NoRemittances campaign on social media prompting the government to allow Nepalis working abroad for at least six months to bring home a maximum of two new mobile phones, avoiding the 13% VAT and 5% excise duty.

Foreigners visiting Nepal who wish to connect to the local telecommunication network or make and receive calls during their stay are now required to register their cellular devices. If they do not do so within 15 days, they can only use their phones to connect to wifi and not to local cell networks.

The Nepal Telecommunications Authority's MDMS Bylaws, 2079 (2022) explicitly states that it ‘shall not apply to the mobile devices of subscribers to non-Nepali mobile networks operators while roaming in Nepal’. But a majority of visitors to Nepal get a local sim to reduce roaming costs and would be impacted by this new system.

“A lot of tourists are not as equipped with technology nor are they familiar with the Nepali language or with this convoluted system," says Giancarlo Cattaneo, a Swiss journalist who has been coming to Nepal twice a year for the past ten years. “In fact, a lot of tourists already begin trekking in remote locations upon their arrival and are unable to even register their phones.”

MDMS has not been widely publicised abroad, and most arriving passengers at Kathmandu airport have no idea that there is such a policy. This week, there were unprecedented crowds at SIM card counters of cell phone providers at the airport which are doing brisker than usual business.

The only mention of MDMS that is readily available to tourists is an automated text that one receives upon arriving in the country, but it is entirely in Nepali and contains no link or information regarding the registration process. Unless tourists are familiar with the Nepali language or were previously made aware of the policy, their phones can be blocked with no prior warning.

Cattaneo described his own experience of the MDMS registration process as being cumbersome and confusing. After being told of the policy by a Nepali person, Cattaneo tried thrice to register his phone, but in vain.

The registration process involves the detailed disclosure of both personal and cellular data. Visas and passport information need to be uploaded as JPEGs, however, the maximum file size that the system allows for is 512kb meaning that the majority of photographs taken on most mobiles are beyond the upload limit and therefore cannot be submitted.

“I am a friend of Nepal, I’ve been coming here twice a year for over a decade and it is incredibly disheartening to see these kinds of systems being created. It leaves a bad taste,” adds Cattaneo. Other recent visitors echoed similar sentiments.

MDMS software allows the NTA to manage and monitor all mobile devices in Nepal through each device’s unique International Mobile Equipment Identity (IMEI) number. MDMS was implemented after strong lobbying by smartphone importers to help control the grey market of imported phones. They convinced the government that it was losing taxes because of the unauthorised imports. The system is supposed to make it easier to trace stolen phones or geolocate criminals by tracking IMEI numbers.

According to the Nepal Mobile Distributors Association (NMDA), the grey market accounts for 25% of the smartphone market in Nepal. All foreign-bought devices, regardless of the owner’s nationality, must be officially registered through the MDMS system within 15 days of entry into the country. Devices imported by designated importers of iPhones and Android brands already have IMEI numbers and do not need to go through the MDMS process.

Imported devices not registered within the 15-day window can be ‘blacklisted’, meaning these handsets will be blocked by Nepal’s cellular operators. While wifi use is still possible, users with blocked devices cannot receive or make phone calls or text messages even with local SIM cards.

There are some 5 million mobile phones in Nepal that are yet to be registered through the MDMS system. Ncell contacts blacklisted users asking to register their devices, but the state-owned NTC blocks the phone with no prior warning.

However, the NTA appears to have put the cart before the horse because it does not have the necessary equipment to enforce MDMS automatically. It has to ask operators like NTC and Ncell to manually block users.

“Tourists have been dragged into this which leaves a very bad impression indeed, at the very least there could have been an information counter at the immigration so that the visitors are made aware of this provision,” admits a mobile phone company executive.

Some tourists interviewed for this article said they have a similar policy back home where imported phones stop functioning after a certain period of time, and that in the longer term, the system can regulate the import of the illegal phones.

But the question is not if it is a good system but rather how well communicated it is. Tourists could unwittingly have their connections cut off without even realising that they need to register their phones. Others suggest excluding tourists entirely from the provision.

“How about extending the registration period to 100 days, that way most of the tourists are exempt from having to register their phones,” says Giancarlo Cattaneo. “Or at least have the automated message in English and with clickable links to where one could register, among other things.”

Given that the system is currently manual, there are also concerns over data privacy.