LAST year it all looked so promising and straightforward. Give internet service providers bandwidth and a licence to operate, creating stability for the likes of Chuan Wei and Mekong Net to feel confident to invest millions of dollars in WiMAX – a technology that could increase broadband coverage and lower connectivity costs in Cambodia.

But that confidence has evaporated. After nearly a year in which the government has failed to solve an overlapping licence issue, the Kingdom’s internet expansion looks to be stalled by years as investors hold back until the fiasco is resolved.

The country is set to lose out on the many benefits associated with spreading internet connectivity. In the words of one anonymous ISP executive whose company has been affected by the debacle: “This licensing problem has come along at the worst possible time for Cambodia.”

How and why did the government allow this to happen?

Just a few years ago analysts were predicting a rapid broadband rollout in Cambodia that would reduce some of the highest connection costs in the region. But with companies now reluctant to spend on costly WiMAX stations, which can transmit connectivity up to 50 kilometres where no cables exist, less comprehensive solutions such as enhanced WiFi are being deployed.

This cheaper technology can travel just 1 kilometre, at best. The result is that internet expansion to rural areas remains stalled. Where cables do exist, WiMAX has often not yet been deployed to compete and reduce costs.

Countless studies have shown that where you boost internet connectivity, you also spur economic activity. A 2009 World Bank study found that where you boost the number of internet users by 1 percent you in turn raise exports 4.3 percentage points. When new users go online they have access to a host of resources that point to potential markets, help advertise their products, increase communication and even secure payments outside of the confines of their town or village.

Rural connectivity also helps communities diversify economic activity away from agriculture, a major advantage when the economy remains extremely narrow. In cities, where you have confident ISPs investing in infrastructure and bringing down costs, the economic benefits are obvious – cheap, comprehensive internet coverage is an indispensable tool for GDP growth.

The government’s fumbling of the internet licensing issue is creating a serious setback for what would be guaranteed GDP growth. The solution is obvious. At the highest levels of government a clear decision needs to be made regarding the jurisdiction ministries have over licences. The problem is, of course, that licences provide lucrative revenue streams.

The debacle should serve as a wake-up call. If ever there was an instance when officials needed to sacrifice self-interest for the wider economic benefit, then surely this is it.