Cambodia's telecommunications ministry yesterday defended intervening in the market by fixing minimum prices for mobile phone calls, rationalising the base charges as necessary to stem the loss of tax revenue and avert a monopolised industry.
“The regulation is not to exploit the operator or the customer, but to ensure fair competition,” Prak Sokhon, the recently appointed Minister of Posts and Telecommunications, told reporters.
The floor price was introduced in 2009 to prevent the demise of telecommunications operators in what was and still is considered an oversaturated market. It sets a minimum charge of 4.5 cents per minute for calls made within a network, and 5.95 cents for calls made between different networks.
Providers found ways around the rules, however, and an attempt to re-enforce them in May was put off by the ministry so as to avoid creating a stir among consumers ahead of July’s national elections, according to Cambodia’s telecom regulator.
Now it is back, and the government is explaining itself to angry consumers who are confused as to why they are set to pay more for their phone calls.
“We have seen an increase in telecom competition, but we have not seen an increase in tax revenue,” Sokhon said.
In 2008, there were 3.8 million subscribers. That rose to 19 million in 2012. Yet industry revenues of $80 million in 2012 and government revenues of $20 million the same year were both less than expected, officials said yesterday.
Economists have questioned the controversial rules.
“There has not been a monopoly so far as a result of free-price competition,” independent economic analyst Chan Sophal said.
“On the contrary”, he added, free-price competition ensures no monopoly as people are free to compete “without collusion” or intervention.
Officials also said that the decision would be open to future review.
Thomas Hundt, the CEO of telecom Smart, which sent a letter to the Council for Development of Cambodia questioning the base fees, did not immediately return requests for comment.