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Logo of Phnom Penh Post newspaper Phnom Penh Post - Govt issues crackdown on telcos

Govt issues crackdown on telcos

Most firms respond by raising call tariffs following warning

Telecoms AdS situation changes as spending drops

Cambodia’s nine mobile-phone companies have in recent years been among the highest spenders on advertising in the Kingdom – seven were among the top 10 investors in print advertising during the first eight months of last year, according to Indochina Research data. But the new prakas on pricing issued by the Ministry of Posts and Telecommunications (MPTC) on December 9 has since forced telcos to change the tack of their marketing messages in one of the world’s most competitive mobile markets. In competing for the attention of the Kingdom’s 14 million people (just over 5 million of whom own a mobile phone, MPTC figures showed in November), mobile firms have in the past two months instead focused on advertising new services, network expansion and prize giveaways. Previously, most promotions were based on pricing. Beeline’s new service offering free text messages to users who have run out of credit has been advertised on billboards all over the capital this month with the prize of a Ssangyong car on offer.
Mobitel has largely focused on its mobile Web package, and Smart Mobile has shifted focus away from local call rates to its international tariff. Meanwhile, most firms in the sector have come up with a variation on the most-used numbers package which offers discounted rates for between 10 and 15 friends and family. But telcos are also feeling the competition hurt revenues, which has in turn forced ad spending down sharply, according to Indochina Research. In January 2009, telcos (including ISP and mobile-equipment firms) were the top spenders on total advertising at US$1.3 million, representing 23 percent of total spend, but by last month this fell to $828,000 and just 12 percent of overall advertising spending as the beverage industry claimed top spot with 16 percent. It was previously number two behind telcoms. “I guess margins are thin, and there’s less money to spend now, as operators have to focus on costs much more … and if all tariffs are more or less the same, [isn’t there] less to say?” Hello CEO Simon Perkins told the Post last week. STEVE FINCH

LEADING mobile-phone operators issued new tariffs Tuesday to conform to a government prakas on pricing, following a crunch meeting at the Ministry of Post and Telecommunications (MPTC) Monday.

In December, mobile-phone operators were ordered by MPTC and the Ministry of Finance to raise tariffs to at least US$0.045 per minute in a bid to end a price war that the government felt was undermining profitability in the sector.

At the time, companies had just 15 days to comply. Though some did so almost immediately, others challenged the edict.

This week, nearly two months after the original order, some cut-price price plans offering reduced-rate calls were still in place.

The situation was brought to a head Monday at a meeting held at the MPTC head office.

A telecoms executive, who declined to be named, said that an MPTC official handed each operator a sealed envelope at the gathering.

At least two mobile companies received the same letter, seen by the Post on Tuesday: a warning signed by the Council of Ministers on February 2 that outlined the punishments that would result from failure to comply with the prakas, which was ratified by Prime Minister Hun Sen on January 28.

The letter says companies face a three-month suspension of their operating licences if they fail to comply. The licences would then be terminated if inaction continued, the letter stated.

On Monday, Mao Chakrya, director general of MPTC, confirmed that the meeting was held as a result of companies violating the prakas.

“We had left the operators about two months to comply. Why did they not change then? When the companies go back from this meeting, they will have to change,” he said.

Action has quickly followed the government’s strong-line approach. On Tuesday, phone companies including Smart Phone, qb and Mfone announced new tariff rates.

Today Smart Phone changed rates on its WOW tariff to $0.05 a minute. In December, when the prakas was first enforced, the company offered customers up to 30 minutes of free calls a day within the Smart Mobile network when they topped up with $5 or more of credit.

On Tuesday, its Web site stated that Smart Mobile users could enjoy free calls for only $0.10 per day.

Speaking to the Post, Thomas Hundt, Smart Phone CEO, confirmed that the new tariff rate – which is set to be in place for only a few weeks until a new tariff is introduced on February 28 – was made to conform to the government order.

He said that the prakas has not aided his business, and he declined to discuss any marketing plans to boost customer numbers in the future.

Phone company qb also issued a new price plan, called qbfr3dom, to comply with the regulations.

Its customers will now be charged $0.05 per minute for in-network calls and $0.07 for across-network calls. Before, customers paid $3 for 300 minutes’ worth of on-network calls.

A qb staff member, who declined to be named, said that the new price went into effect on Tuesday.

The source said that it would take about a month to move all its customers – many of whom were said to be unhappy about paying higher rates – to the plan because of an obligation to provide its previous rates to customers who had already signed up.

“We have to comply with the regulations set out by the prakas,” he said. “But we are experiencing serious problems with our customers and have changed our price plan twice already.”

Mfone also announced that a new tariff, charging $0.078 per minute, would be in effect on its network today.

A Star Cell call centre worker told the Post on Tuesday that the company intended to leave its pricing unchanged in January.

She said that Star Cell users are charged $0.05 per minute for within-network calls, and $0.07 per minute for across-network calls.

She added that from 12pm to 6am, in-network calls would be charged $0.025 per minute. The prakas minimum is $0.045.

Som Kongkea from Star Cell’s corporate affairs division said the promotion had been approved by MPTC.

Other operators are now considering how to make the most of their business now that the price war is set to end.

“As far as we understand, all of our tariffs comply,” said Hello CEO Simon Perkins, adding that his firm was in the process of applying for MPTC permission to run new promotions, a requirement under the recently updated regulations. ADDITIONAL REPORTING BY STEVE FINCH

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