On Sunday evening, internet users across Nepal experienced a complete service shutdown, lasting nearly an hour, causing widespread disruption. The reason for the outage initially remained unclear.

The Internet service providers (ISPs) attributed the problem to technical glitches with upstream providers in India, from whom Nepali ISPs source their bandwidth.

This marks Nepal’s second nationwide internet shutdown, following a similar incident in May 2023.

The recent disruption was reportedly caused by fibre cuts in Airtel’s network in Birgunj and Bhairahawa.

“It is unusual for problems to occur simultaneously at two locations, but at around 9 pm, internet services around the country went down for 47 minutes,” said Sudhir Parajuli, president of the Internet Service Provider Association of Nepal (ISPAN).

“Initially, we thought Indian providers had cut the service due to unpaid dues.”

Parajuli added that while the ISPs resumed service within an hour and a half, concerns remain.

“While inquiring, Airtel said that the problem occurred due to issues with fibre cables in Birgunj and Bhairahawa. But the underground wire problem could not have been fixed within 47 minutes,” said Parajuli.

“We believe other technical factors were at play,” said Parajuli. Nepal owes around Rs8 billion to Indian upstream providers, including Airtel and Tata. “Given this massive debt, we are not in a position to question them on the outage,” he added.

Insiders suggest the outage was a warning from upstream providers about unsettled payments.

While 70 percent of Nepali ISPs have cleared their dues, 30 percent have yet to do so.

Airtel and Tata supply 90 percent of Nepal’s internet, with Airtel providing 70 percent and Tata 20 percent.

On May 2, 2023, Airtel cut services due to unpaid dues, restoring them only after Nepal’s telecom regulator, the Nepal Telecommunications Authority (NTA), promised to resolve payment issues. The disruption started around 5 pm, and services were restored after five hours.

Indian vendors have sent multiple warnings over outstanding payments.

Last year, senior Airtel officials visited Nepal to discuss the matter with government authorities.

They warned of further disruptions if the ISPs fail to settle their dues and secure foreign currency exchange approvals.

The ISPs argue that a previous parliamentary Public Accounts Committee ruling exempted them from paying certain fees, including royalties and contributions to the Rural Telecommunications Development Fund (RTDF).

However, in May 2023, the Supreme Court dismissed a writ petition from WorldLink Communications and ruled that the ISPs must pay taxes collected from customers.

Parajuli said that despite clearing their dues with the government, the ISPs face difficulties obtaining foreign exchange approvals to pay upstream providers.

Meanwhile, Santosh Paudel, director at the NTA, the telecom regulator, countered the claim, saying, “We are not delaying approvals. The problem is that the ISPs have not submitted required documents as per the Equipment and Foreign Currency Recommendation Bylaw, 2019.”

Paudel said the authority made a foreign currency exchange recommendation for WorldLink Communication around 20 days ago, and the recommendation for Subisu Cablenet is in the final stages of processing.

The bylaw mandates the ISPs to submit a company renewal letter, agreement details, and a board decision approving the exchange request.

So far, WorldLink and Subisu have cleared their dues, while Vianet is completing payments. The NTA reports that 70 percent of ISPs have settled their debts, while 30 percent still owe money.

A former parliamentary Public Accounts Committee had a few years ago ordered the government to exempt the ISPs from paying taxes on non-telecom components like web service, co-location, hosted service, disaster recovery, managed service, data centre, and cloud services.

The committee had said that ISPs would not be required to pay royalties and RTDF charges for three fiscal years—2017-18, 2018-19 and 2019-20.

However, the Auditor General, Nepal’s constitutional body and supreme audit institution, said such fees should not have been waived and instructed the government to recover the charges. The government then wrote to the ISPs to clear the dues.

The current parliament’s Public Accounts Committee has ordered the Ministry of Communications and Information Technology to recover the dues from the ISPs.

According to the authority, WorldLink Communications cleared total dues of Rs2.15 billion, including Rs1.38 billion as royalty and Rs762.39 million as RTDF in November last year.

In January, Subisu Cablenet cleared its royalty dues of Rs174.85 million and RTDF of Rs138.91 million.

Likewise, Paudel said Vianet Communication cleared around Rs320 million and has outstanding Rs120 million. It is in the process of making the payment.

Nepal has 2.89 million fixed broadband subscribers and 25.99 million mobile broadband users. Similarly, fixed broadband penetration is 44.24 percent, while mobile broadband penetration is 89.15 percent.