New image; new deal? Cambodia's telecommunications HQ
foreign business person in Phnom Penh is approached by a representa-tive of the
government-run Internet service provider (ISP) and offered access to all her competitors'
emails - at a price.
The government minister responsible for telecommunications holds an advisory position
with a mobile phone/ISP company that pays several times his monthly salary and shrugs
off suggestions of a potential conflict of interest.
From a distance, Cambodia's nascent telecommunications industry appears riven by
the same lack of adherence to transparency and ethical practices that is found elsewhere
in the Kingdom's public and private sectors
At the heart of this controversy is the Ministry of Posts and Telecommunications
(MPTC) a former "paper ministry" that the global information revolution
has rebooted into one of the largest revenue-generating sectors of the Cambodian
For consumers and investors, the MPTC is cursed for a lack of enforced industry regulations
fostering illegal internet and international telephone operators delivering poor
service at a high cost and a lack of security against password theft resulting in
the fraudulent use of internet accounts.
These suspicions are heightened by MPTC's contracting of inexperienced companies
to provide key services, the number of ministry officials on company payrolls, and
a complex web of alliances that appear to make participation in the telecommunications
industry limited to government players and a select group of investors.
Since the October 2000 conclusion of Telstra's international telephone contract,
Cambodia's telephone service sector has experienced a massive overhaul. Gateway licenses
have been awarded to Cambodia Telecom (001) and Tele2 (007), but price cuts promised
by the Government are yet to materialize. Both are MPTC joint ventures, with the
ministry holding a 51 per cent stake.
"There used to be a monopoly with Telstra - now there are two companies, but
it isn't true competition because it doesn't bring about a reduction in price,"
said opposition leader Sam Rainsy.
"It is just to make things look acceptable ... but really it is a cartel that
continues to work against customers," he said.
MPTC officials claim Telstra failed to make a request for a contract extension.
Not so, according to Telstra, which says it made numerous attempts with the ministry
to negotiate a further contract.
Louise Hand, Australian Ambassador to Cambodia, said Telstra made very strong representations
to the Government with regard to extending its contract to provide telephone services
in Cambodia. During his May 2000 bilateral visit to Cambodia, Australian Foreign
Minister Alexander Downer met with Hun Sen, Foreign Minister Hor Namhong and Finance
Minister Keat Chhon to discuss extension prospects.
"Mr Downer was very concerned to support Telstra here in Cambodia," Hand
said. "There was no doubt in anyone's mind that Telstra was pitching for a second
term, if the commercial conditions were suitable."
MP Son Chhay claims there was no tendering process to appoint a new contractor, and
Telstra's replacement had already been chosen before the contract even expired.
"[Telstra] started the business here before the peace agreement was implemented
and now another company is benefiting from all the work Telstra has done," he
During the 10-year contract period Telstra invested around $15 million, and reportedly
earned around $100 million, while the Government took between $150 million and $200
At the ceremony marking Telstra's departure, Hun Sen announced the Government would
now have full ownership of Cambodia's phone lines and infrastructure, but recently
he approved a partnership, Cambodia Telecom, between the MPTC and import/export business
AZ Distributions Co (AZ). Industry watchdogs are calling upon the MPTC to explain
the appointment of AZ, which has no telecommunications experience.
In October 2000 So Khun said AZ was contracted because a solely government-owned
venture would not attract future financing. He said lack of experience in the sector
would not be a problem because the Ministry of Finance had agreed to contribute $2
million to train MPTC and AZ staff.
"I haven't seen any other company ask for funding for training, because we suppose
that a company should be able to do this sort of thing itself if it is chosen for
a contract," said Chhay.
He says the contract was handed down directly from Hun Sen, rather than via recommendations
based upon ministry research. Chhay says So Khun has referred repeated enquiries
regarding AZ's appointment directly to Hun Sen.
"The Ministry and the Government are very sensitive about it," said Chhay.
Pricey phone connections: Staying in touch in Cambodia is still expensive.
The secrecy surrounding the A-Z contract is apparently characteristic of MPTC operations.
"As the chairman of the committee most of the time I receive information through
the newspaper or when people dissatisfied with the ministry send information to me,"
AZ, known as Bun Hoaw & AZ Distributions Co just one month prior to the expiry
of Telstra's contract, reportedly omitted the name Bun Hoaw from its name to thwart
speculation that the company had high level official connections.
AZ declined repeated Post requests for an interview, and refused to tell the Post
the name of the person responsible for the telephone project.
Cambodia Telecom's counterpart is Tele2, a joint venture between the MPTC, Millicom,
and Royal Group under the banner of Royal Telecam International. Tele2 has invested
$15 million to set up two satellite links, an international switch system and national
microwave links for the project and will employ as many as 80 customer service, technical
and administrative staff. It promises 24-hour customer service and a rewards scheme
for regular customers, but is unable to offer either collect or credit card calls.
Hun Sen recently said the new competition would mean a drop of around 15 per cent
in call costs, but prices have not changed significantly.
So Khun accepted a list of questions from the Post about internet services, AZ, Tele2
and his payments from MobiTel, but no response was received. He refused all requests
for an interview.
Internet agonies and intrigues
Cambodia's entry to the internet age was initially lauded as a giant step toward
the nation's modernization, with the MPTC and Canada's International Development
Research Center launching CamNet, the nation's first internet service provider (ISP),
According to Bill Herod, a former CamNet board member and now an advisor to Khmer
Internet Development Service (KIDS), a service was set up to allow CamNet customers
to pay their bills over the counter at the bank.
Initially all bills were paid directly into the Foreign Trade Bank account of the
Minister for Posts and Telecommunications, So Khun. MPTC staff described this move
as an "anti-corruption" measure, but months later, when a CamNet account
was finally created at the Canadia Bank for the payment of bills, there were only
two signatories with authorization to make withdrawals from that account - Khun and
an MPTC administrator.
"The situation was not necessarily irregular in terms of how business is done
in Cambodia, but it was certainly an unusual way of doing things," Herod said.
CamNet general manager Koy Kim Sea said the Canadia account was created following
lobbying by Herod and another CamNet board member, Andrew McNaughton, and was intended
to cement CamNet's "financial autonomy" from the MPTC. He said despite
the account being in Khun's name, only the finance section of the MPTC had access
to the account.
Koy Kim Sea is also Undersecretary of State at the MPTC, while Secretary of State
to the ministry Phan Phin is a long-standing member of both the CamNet and Camintel
boards. Their appointments violate Article 10 of the Law on General Statute of Public
Enterprises, which states "the function of ... [a] member of the Council of
Administration is incompatible with the function of members of the National Assembly
and the Royal Government."
Neither Kim Sea nor Phin have been questioned about this apparent conflict of interest
in Parliament, and as CamNet is a wholly government-owned venture it may not be seen
as a conflict of interest by the MPTC. However, Son Chhay, head of the National Assembly's
telecommunications committee, says this is an issue his committee will investigate
when they conduct a "study visit" to the MPTC and CamNet within the coming
"[We] have asked them to send us information about CamNet and what the business
operations are about," Chhay said.
"We have hardly received anything so we want to visit first hand."
When Telstra's BigPond started its 49 per cent joint venture with the MPTC one month
after the CamNet launch, it signed a contract with the Government containing an exclusivity
clause stating only two ISPs would be permitted to operate in Cambodia. Within one
year, however, the Government had introduced an additional ISP called Camintel, a
joint venture between the MPTC and Indonesian state corporation IndoSat, in direct
breach of its contract with BigPond.
The Government claimed it would allow Camintel, as a re-seller of CamNet's Internet
services, to operate only in the provinces. The move prevented the creation of an
Internet monopoly in Cambodia, but also damaged the Government's reputation within
the sector with regard to its willingness to honor written contracts.
When Herod questioned whether allowing Camintel to operate in Cambodia, in either
provincial or urban areas, was in the best interests of CamNet, he was told it was
not an appropriate topic for discussion.
Kim Sea said he was a strong supporter for the introduction of Camintel, saying CamNet
did not have the capital or the staff resources to expand into the provinces. However
Sea concedes he was alarmed when Camintel began offering services in Phnom Penh.
"They did not obtain the approval of the MPTC to do this," Kim Sea said.
"They did it [on] their own [against] the MPTC."
Chhay says Camintel is an exemplar of inefficiency and incompetence, accumulating
government debt of $800,000 and a foreign debt of $7 million. He alleges massive
amounts of the company's funds have been siphoned off through corruption.
Internet cafes sprout across Phnom Penh in a lifestyle revolution.
In spite of this, Camintel's service contract, which was due to expire at the end
of February, was instead extended by the Government for another 25 years.
"You question why on earth, when it has not been performing well enough or even
fulfilling its basic contract requirements, they say, 'Well, now we'll give you another
25 years'," Son Chhay said.
MobiTel, Cambodia's largest mobile phone provider, has also created waves in the
internet industry with the March 1 launch of its TeleSurf wireless transmission project
in spite of the fact that the company lacks an ISP license. General Manager David
Spriggs told the Post the license was unnecessary, describing the new venture as
an "extension" of its other activities.
Son Chhay, however, attributes Mobitel's apparent bending of the rules governing
its operations to "special consideration" granted the company by Mobitel
"advisor" So Khun, who is paid between $2500 and $5000 monthly for his
"When I challenged [Khun] under the Civic Administration Law about the right
of the Government Cabinet to receive money [from private sources] ... he answered
me very proudly that he had done nothing wrong and had the right to receive the money,"
Kim Sea confirms that MobiTel requires an ISP license but says TeleSurf was established
in anticipation of a license being granted.
Cutting-edge cable stuck in the mud
In 1999 Rithy Panh filmed laborers laying Cambodia's first fiber optic cable, which
runs from Thailand, through Battambang, to Vietnam. His film, The Land of Wandering
Souls, charted the development of what Hun Sen heralded as the link that would allow
Cambodia to leapfrog into the information age.
"The Cambodian countryside can now connect with the modern world by using inexpensive
service provided by the 600km fiber optic cable," he declared.
Over a year later the 600km, $9 million cable, installed by French company Alcatel
as a gift from Germany, has failed to meet original expectations, plagued by a host
of technical problems and physical damage to the cable itself..
In late February the cable was damaged for the 12th time, severed by a bulldozer
from a Thai construction company contracted to repair National Route 1 in Prey Veng
So Khun announced the MPTC's intention to sue the company, Nopawong, for repeated
damage to the cable, but company officials claim the cable is not always mapped properly
and is difficult for workers to see because of mud from last year's flooding.
As a result the costly repair job is in limbo and further complications with the
cable are predicted.
Alcatel has come under scrutiny in the media, with reports claiming the cable was
not laid at the correct depth, but according to the company's Senior Country Officer
for Cambodia and Laos, the work was done in accordance with specifications.
Sirat Chum says the German government contracted Weideplan consultants of Germany
to provide design specifications for the project, which were then accepted by KFW,
the agency responsible for German aid to developing countries.
"Weideplan's specifications gave us the obligation to lay the cable ... at a
depth of one meter outside city areas, and a depth of 60cm inside the city,"
"The Cambodian media has reported that the cable should have been laid at a
depth of 1.5 meters, but we had to abide by the specifications from Weideplan and
the figure of 1.5 meters is inaccurate."
Son Chhay blames the cable debacle on a perceived lack of opportunity for private
and public profit and says the Government has discouraged research into the cable's
potential and has fostered the idea that the MPTC is not responsible for its upkeep.
"From the start, the Ministry ... has taken no interest in the cable,"
he said. "They have clearly put no effort into developing the cable because
it is free, it is a gift."
MobiTel claims the network is only suitable for high capacity telephone and mobile
traffic, although Telstra says it is being used for limited and costly internet access
in Phnom Penh.
Alcatel dismisses the criticism, claiming the cable is being used for telephone,
television and internet services in both Thailand and Vietnam, with a high degree
"The cable can do whatever you want it to do," Chum said.