Mobile gray market thrives as device management system lags behind

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Shadow mobile phone vendors are having a blast due to the Nepal Telecom Authority’s delay in implementing the mobile device management system, traders say.

The management system, which allows the telecommunications regulator to secure, monitor and manage end-user mobiles, eliminating gray market imports and phones sold without invoices or warranties, was due to launch last December.

Insiders say tens of thousands of unlocked high-end cellphones have been sold on the market, starving the government of tax revenue.

“We suspect that the mobile gray market has increased. It may have increased by 50% or is at the same level before the government soft-launched the mobile device management system at the beginning of the financial year,” said Sanjay Agrawal, Vice President of Mobile Phone Importers’ Association. the post office.

“When the telecommunications authority soft-launched, the gray market had fallen to almost zero, which led to strong mobile phone sales,” Agrawal said.

“But when opportunistic traders discovered that the system was not going to be implemented, the gray market flourished. Individuals are bringing in bulk cellphones through illegal channels,” he said.

The mobile device management system should completely end the import of gray mobile devices contributing to government revenue collection. Insiders say the government has lost revenue due to the illegal importation of phones.

The government charges 2.5% excise duty and an additional 13% VAT on every mobile phone imported into Nepal.

In a recent meeting with the association, officials from the Nepal Telecommunications Authority said the system would be activated by February.

“The authority has extended its implementation deadline many times,” Agrawal said.

According to the Customs Department, Nepal imported 3.56 million mobile phones worth Rs 25.62 billion in the first six months of the current fiscal year from mid July 2021 to mid -January 2022.

In the same period of the previous fiscal year, imports amounted to 3.66 million sets worth Rs 20.63 billion.

“We have urged finance and communication ministers to implement the system,” Agrawal said.

The Nepal Telecommunications Authority originally planned to roll out the system in mid-July 2021, but it was postponed due to the increasingly lengthy lockdown as deliveries of equipment needed to set up a data center were delayed, the authority said.

As the budget statement for the 2021-22 financial year said the system would be in place, the authority proceeded with a soft launch on July 16, 2021.

“The government decided to implement the mobile device management system as a policy decision without even consulting the Nepal Telecom Authority. It was not the decision of the regulator,” Purushottam Khanal, chairman of the authority, told the Post.

The software is imported from the Malaysian company Nuemera while the system hardware is imported from Huawei.

According to Khanal, the latest shipment has not yet arrived from Huawei. “We are in constant communication with the supplier. He said the equipment would be delivered as soon as possible,” Khanal said.

“It could take three months for the mobile device management system to be fully implemented,” Khanal said.

Last July, Khanal told the Post that it might take a month and a half for the system to be fully implemented.

Khanal admitted that a delay occurred due to the second wave of the Covid-19 pandemic which started in late April and virus restrictions continued for at least four months.

“We have completed all internal preparations for the implementation of the system,” he said.

According to Khanal, Nuemera’s software has already been installed at the government’s integrated data center.

The system will be synchronized with a database called Equipment Identity Register which contains records of legal and illegal mobile devices in the country. The device management system should also identify cloned and low-cost copy versions of branded phones with fake registration numbers.

According to Mobile Device Management System Regulations 2018Persons importing a device for personal use in accordance with customs regulations will be required to register its International Mobile Equipment Identity (IMEI), Equipment Serial Number (ESN) and Mobile Equipment Identifier (MEID) online ) from the mobile device management system during the application process.

The telecom regulator decided to expand the system four years ago after the publication of the 2018 Mobile Device Management System Regulations.

Mobile connectivity from telecom operators like Nepal Telecom, Ncell and Smart Telecom will need to be connected to the system which will be operated from a new building in Chabahil.

The telecommunications regulator said the system was being built at a cost of 650 million rupees.


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