Years of civil war both destroyed most of the
existing fixed network and prevented the construction
of new lines. At the end of 1992, the year mobile
cellular was introduced in Cambodia, there were
only a little over 4,000 fixed lines for a population
of some 9.3 million. A year later, mobile had
already surpassed the fixed lines. Another contributing
factor to mobile success was that the government
liberalized the market early on, allowing both
private investment and competition. As the Minister
of Post & Telecommunications, H.E. So Khun
explains: Even though it was very hard to
attract foreign investors towards Cambodia, the
telecommunications sector in this country had
two points of interest. First we put unto place
a very liberal and open market and second there
were plenty of donations from international organizations
to help develop the sector. The private sector
is mainly investing into mobile phone services".
Cambodia was the first country in the world where
mobile telephone subscribers passed fixed ones
- way back in 1993. Cambodia began the millennium
with more than four out of five telephone subscribers
using a wireless phone, the highest ratio in the
world. Thanks to mobile, Cambodia's teledensity
- telephone subscribers per 100 inhabitants -
reached one in 2000, a significant achievement
for a Least Developed Country (LDC). While mobile
has contributed to the bulk of Cambodia's telecommunication
progress over the last decade, wireless fixed
lines have also helped and accounted for five
percent of all telephone subscribers at the beginning
development. Perhaps the biggest factor contributing
to wireless success is that there just never were
many fixed lines to begin with. Today,
Mobitel , a GSM mobile operator, is the largest
telecom network operator in the country with more
than 120'000 subscribers at the beginning of 2003,
and the company is planning to expand further
as Oknha Kieth Tieng, Vice-Chairman of the Royal
Group (from which Mobitel is a subsidiary) explains:
"In terms of growth we are expecting an increase
of 10,000 new subscribers every month. We have
always been the pioneers in this country and we
will keep on being leaders by a constant innovation.
We were the first to bring in a GSM system in
Cambodia; we also were the first to introduce
a cell card (
) This is the only way to win
the communications battle, always being one step
ahead, and of course provide the best service".
This tendency to growth can be confirmed thanks
to the statistics of The
Ministry of Posts and Telecommunications of Cambodia
(MPTC) where an steady increase of the subscriptions
can be observed throughout the beginning of 2003.
There are three digital and two analogue mobile
operators, all with foreign investors. Two additional
digital mobile licenses have been awarded but
have not yet started operating. Another success
factor has been prepaid, with over 90 percent
of mobile subscribers opting for this payment
method. With a per capita GDP of only US$260,
most Cambodians either could not afford or would
not qualify for a subscription telecommunication
service. Prepaid cards with denominations as low
as US$5, and a used handset available for as little
as US$20 make mobile telecommunications much more
accessible. Prepaid is also attractive from an
operator's perspective because it eliminates the
risk of subscriber default. Another contributing
factor to mobile growth is billing in US dollars
(use of the US dollar is widespread in Cambodia),
which reduces the investor's exchange rate risk.
While wireless communications have helped Cambodia
achieve a minimal level of communications, it
has also created its fair share of problems. This
includes a confusing mix of government shareholdings
and agreements; an interconnection maze; and an
over-reliance on mobile network service provision
to the detriment of the fixed line network.
The Ministry of Posts and Telecommunications of
Cambodia (MPTC) is the industry policy-maker and
regulator. In addition, it is involved in some
way in every telecommunication network in the
country either as a provider or joint venture
partner. But this is soon going to change as the
H.E.So Khun is planning to create an independent
body who will start regulating the industry and
is also considering all the options for privatization.
"The first step is to set up the Telecommunications
Authority (TCA) in order to be able to prepare
a Telecommunications Law. We have drafted some
suggestions on how this regulator should have
to function and discussed it for a long time with
the Ministry of Finance how to set it up. The
privatization is needed, but we don't want to
go too quickly to avoid problems".
It has managed this feat without investing much
of its own money. Most of the fixed network has
been provided through bi-lateral assistance, while
the mobile network has been constructed with foreign
investment. According to the Council for the Development
of Cambodia, private capital totaling US$131 million
was invested in the telecommunication sector during
the period 1994-1999.
The only network the MPTC owns outright is the
local exchange in Phnom Penh. The Japanese Government
largely funded extensions during the 1990s to
the Phnom Penh network (US$ 40 million in two
projects, US$ two million contributed by Cambodia).
The first extension began in December 1996 and
was completed in March 1997 providing 6'800 lines
and is to be expanded to 50'000 lines by 2007.
In the year 2000, the MPTC also began installing
fixed lines outside Phnom Penh by putting local
exchanges in eight provinces.
One side effect of practically starting from
scratch is that all local telephone lines are
connected to digital exchanges. Although over
the years consultants have presented several proposals
advocating the corporatization of the telecommunication
arm of the Ministry and the creation of a "Telecom
Cambodia", no action has been taken. Instead,
MPTC's revenues continue to be reported as a part
of overall government revenues, and its profits
absorbed by the government for use elsewhere.
This has adversely affected the MPTC's ability
to expand the fixed network. As a result, there
is a de facto policy of allowing private investment
in partnership with the MPTC to expand telecommunications.
Most of this investment has flowed into the mobile
sector but has also included Wireless Local Loop
(WLL), fixed lines in the provinces and international
While this policy has contributed to telecommunication
development, it is marked by a lack of transparency.
For example, there is no clear picture of licensing
or policy and timetable for telecommunication
liberalization. Rather, restrictions on market
entry are generally a function of various contracts
signed between the MPTC and the operators.
For a country of its size and income, Cambodia
has one of the most crowded telecom markets in
the world with six operators running a total of
eight fixed and mobile networks. These numbers
rather than names have assigned different prefixes
to the networks that are often referred to. There
is no number portability, for either fixed or
mobile. Cambodia has a Calling Party Pays system.
All networks are required to interconnect and
there is a central interconnection point at the
MPTC in Phnom Penh.
The interconnection charge established by the
MPTC has been revised several times. While the
MPTC had authorized negotiations between operators
to establish cost-based interconnection charges
the Ministry abruptly changed its mind in mid-2001.
It announced that it would adopt Sender Keeps
All (SKA) and thus no longer make interconnection
payments. This reversal was, no doubt, triggered
by a traffic imbalance from fixed to mobile calls
of between 14-20:1.
Mobile operators, who receive more fixed calls
than they send out, will be adversely affected
by this change. Some operators have suggested
that if SKA were fully implemented, they would
have to reconsider their investment strategy due
to the end of revenues from incoming calls.
Telstra of Australia opened Cambodia to the world
when it installed the first international gateway
in 1990. This was done as a so-called 10-year
Business Cooperation Contract (BCC) with the MPTC.
Telstra received 51 percent of the revenue, and
the MPTC the remainder. The BCC expired in 2000
and the gateway is now fully owned by the MPTC.
Millicom launched the country's second international
gateway in November 2000 through its Tele2 subsidiary.
This arrangement is structured as a joint venture
between the MPTC, Millicom and the Royal Group.
The license is valid for 25 years. It is not believed
that any additional international gateways will
be awarded in the near future.
The MPTC earns 85 percent of its revenue from
international tariffs in the world and the fixed
network is so limited. The international tariff
structure is straightforward. There are three
bands and a weekday and weekend rate. Mobile operators
charge the MPTC rate in addition to the mobile
per minute call charge. Access to direct international
calling from fixed lines requires the payment
of a deposit of currently US$150 for the MPTC
network and US$200 for Camintel's
Because of the high cost of international calls,
users are turning to other methods for communicating
abroad. First, many people rely on incoming international
calls with the ratio of incoming to outgoing 3:1
(29 million minutes of incoming international
calls in 2000 compared to 9.6 million outgoing).
Second, despite its illegality, there appears
to be growing use of Voice over Internet Protocol
(VoIP) with a number of Internet cafés
openly advertising it. Due to this situation,
the MPTC is looking at the possibilities to open
this market. "So far they are in the trial
period, from the university of Phnom Penh you
can already use it and if everything works out
fine, the whole system will be launched this year
and will be a protected market for 7 years",
said the Minister
of Posts & Telecommunications.
The penetration of the Internet in Cambodia has
been as skyrocketing as the implementation of
mobile phones, as Under Secretary of State, H.E.
Koy Kim Sea, who is also in charge of Camnet,
explains: "Lately the growth of Internet
has been slowed down due to the lack of a proper
telecommunications infrastructure in the country.
The mobile telephony has developed at a greater
pace than the ground lines making the penetration
of Internet to the rural areas more difficult".
Nevertheless, next to Camnet, national Internet
access provider, there are another 4 ISP's active
in the country and other licenses have been granted
although they are not yet active.
In order to see the IT sector develop the government
has created a new institution responding directly
to the Prime Minister Hun Sen, in words of his
Secretary General, Mr. Leewood Phu, the NiDA (National
Information Communications Technology Development
task is to formulate an IT promotion policy for
the short, medium and long term. The purpose of
that is again in response to the evolution in
ASEAN and to the whole world as well". The
Authority is also charged with the formulation
of an ICT Master Plan, with one of its main objectives
the connection of all layers of the government
to the Internet to improve the quality of service
to bring the government closer to the people and
Since the creation of the Authority three years
back, the evolution has been remarkable. It started
as a three men team and currently counts with
106 employees. "Before the formation of NiDA
the connection to the Internet was considered
a luxury for the people of Cambodia. Only NGO's
or high government officials had access to it.
After the formation of NiDA, the price dropped
and Internet café's sprung up. A survey
conducted early this year showed that in Phnom
Penh only, there were almost two hundred Internet
café's with a very cheap access to Internet".
The telecom operation arm of the Ministry
of Posts and Telecommunications (MPTC) would
be separated out into a state enterprise called
Telecom Cambodia (TC), which would respond to
the market trends in competition. A Draft of the
Sub-Decree on this subject has been made and expects
its finalization, possibly, in the current mandate.
Telephone calls in Cambodia are generally among
the highest in the world. The official price of
international telephone calls was set up and published
with yearly steady reduction and with up to 20
percent discount on Week-End, based on the international
accounting rate bilaterally agreed up on a specific
schedule. Prices for calls to neighboring countries
then were decreased throughout the years as follows:
This decrease would be gradually applied for
the year 2003. There is no possibility of the
MPTC issuing another gateway license based on
the current laws and traffic demand. However,
these are subject to change depending on the company
expressing interest. There are about 313,160 mobile
users in the country. It is a very prosperous
sector as the operators enjoy the fair playing
field fostered by MPTC. They compete with each
other freely without any impositions of price
restriction. However, it is a common phenomenon
for congestion to plague the networks because
of over-capacity and insufficient equipment to
meet demand, especially during peak hours. Investment
has been quite stagnant in this aspect because
of costs involved (investments normally get investment
incentives such as tax free imports) and the high
costs of securing expansion investments.