Every province in the country should enjoy widespread access to telecoms within two

to five years, provided a law subsidizing phone service to far-flung regions is passed

by parliament.

Koy Kim Sea, under-secretary of state at the Ministry of Posts and Telecommunications

(MPTC), said the provisions were part of the draft Telecoms Act, which will be presented

to the National Assembly early this year.

He said the legislation would include a universal service obligation offering subsidies

to companies operating in 'non-profitable markets' such as the north-eastern province

of Mondolkiri.

"We want the infrastructure to extend services to rural areas as much as possible,"

said Kim Sea.

The winning companies, which will be those which submit the lowest bid, must provide

telecoms services for a specific area. However, Kim Sea said, the government would

not set limits to the prices companies could charge customers.

Asked how the government would prevent 'price gouging', he said anyone would be able

to enter the market as the subsidies awarded would not amount to exclusive contracts.

He did not specify what the value of the subsidies would be.

The new Act comes amid sweeping changes taking place at the MPTC, which is trying

to shed many of its operations. Under the Act the ministry's regulatory body will

become the independent telecoms authority, with responsibility for enforcing and

implementing policies set by the MPTC.

Another change, contained in a draft sub-decree, will re-fashion the ministry's telephone

services into a new state-owned enterprise called Telecom Cambodia. Kim Sea said

the company could be operating as soon as March.

"We hope the new enterprise will have the ability to raise funds to construct

the infrastructure that's required," said Kim Sea. "It has great potential.

We are confident it will be profitable."

Low salaries, poor morale and infrastructure gaps meant the telephone service has

struggled, he said. Although it was generating annual revenues of around $25 million

in recent years, much of that went to the Treasury and was spent in other areas.

The result is that the country's aging communications equipment, large amounts of

which were inherited from UNTAC, requires millions of dollars of upgrading.

However private sector competitors in the country's small fixed line market said

they were not overly concerned at the birth of the new company. Telecom Cambodia

is thought likely to retain most of the MPTC's 20,000 customers, around half the

market.

CaminTel, a joint venture started in 1995 between the ministry and IndoSat, an Indonesian

telecommunications company, has around 8,000 fixed line subscribers. It is already

laying the groundwork for aggressive expansion.

"We plan to have up to 10,000 customers [in 2003]," said CaminTel's general

manager Son Kah. "We had no profits at all before 2002. We think that next year

we will have more and more traffic."

He said the company's subscriber list had quadrupled last year from only 2,000 customers

in 2001. That had sparked plans to expand the limited service to provinces such as

Preah Vihear where there are very few phone lines.

Although each province has a communications link, said Son Kah, that often amounted

to just a handful of public phones in the provincial capital. The growing demand

for the internet, business services and residential connections was fueling expansion

in remote areas.

But another player in both the fixed line and cellular markets, Shinawatra, felt

that expanding its fixed line service would prove difficult.

Shinawatra's fixed line business has 5,000 customers, but deputy general manager

Jiroj Frinamwont expected the company would run into numerous difficulties if it

was to expand the fixed line network.

"Using a cable in this country is quite difficult, and in some places impossible,"

said Frinamwont, citing difficulties ranging from bureaucratic delays to transmission

costs and cables damaged by road crews. "Sooner or later, wireless will go to

these areas, and people will switch because the service is more convenient."