Some towers don't make money, but technically they improve network quality and coverage."
PHNOM Penh’s skyline may be famed for its golden pagodas and burning sunsets, but the sea of mobile-phone masts looming over the city is indicative of a more modern Cambodia.
As the Kingdom pushes forward in the creation of a developed economy, virtual warfare has broken out within the telecommunications sector.
Low mobile-user penetration, a technology-hungry young population, and the lure of available radio spectrum has created one of the most crowded telco markets in the word.
Up until the mid-2000s, just three providers – Mobitel, Hello and Mfone – operated in Cambodia. Now, nine companies are vying for a hold on the Kingdom’s estimated five million mobile subscribers.
With this scramble for customers, millions of dollars in investments have been made to build domestic network provision for each firm – centered around a main switch, a base-station controller and a great number of towers to relay signals.
In such a fiercely competitive market, infrastructure sharing has been limited to a handful of sites. The capital – where many providers started the roll out of network provision – has become a forest of towering metal.
An industry expert, who preferred to remain nameless, told the Post that each network needs around 100 towers to cover the capital. A saturated Phnom Penh, therefore, could hold nearly 1,000 transmitters, each costing between US$30,000 and $40,000.
In rural locations, according to the expert, the cost of a tower could rise to $120,000 – that’s before power costs have been accounted for.
For many, the mass of Base Transceiver Stations (BTS) has become an indicator of the lack of sustainability in the market.
Gary Foo, marketing manager for Hello, a mobile operator present in the Kingdom since 1993, said: “Cambodia is one of the world’s most competitive markets.”
He believes that consolidation is on the horizon.
“We will really start to see telcos stopping business or operating at a minimum level of activity. It will have to come to that. But how soon it will come I don’t know,” Foo said.
This view has been reiterated by an industry insider, who preferred to remain nameless. He estimated that given the national average revenue per user of about $5 per month, the total market is only worth around $300 million per annum.
“Compare that to the cost of investment, it’s an equation that is working against operators. I believe there is room for three, maybe four, providers,” the expert said.
However, while the fight for survival continues, towers will continue to be built.
The scale of development can be best demonstrated by Beeline – which entered the Cambodian market last May. An annual report by its Russian parent company Vimplecom, released this month, stated that in 2009 the company built 552 base transmitter stations in Cambodia, covering 70 percent of the Kingdom’s population.
According to a map of its coverage, its network is concentrated around the densely populated south and thoroughfares leading to the north-west, as well as areas surrounding Siem Reap and Battambang.
The telecoms newcomer is not the only recent addition to the sector to focus on building capacity.
According to Smart Mobile CEO Thomas Hundt, his company plans to at least double the amount of users by the end of 2010 while enhancing and extending its coverage.
As major towns reach saturation point in the mobile game, rural populations are becoming increasingly important in the industry.
Hello aims to ensure customer loyalty through producing competitive pricing, but also entering growth areas of the sector. Foo states this has meant becoming active in untapped rural populations.
“That’s where the next area of growth is going to come from,” he said. “In provincial areas, there is less competition.”
The importance of rural mobile growth, and its impact on communities, has been illustrated by the actions of Vietnamese-run Metfone.
An industry insider, speaking on condition of anonymity, believes it is picking up first-time users by aggressively targeting such populations.
For instance, in September last year it switched on a tower on military-controlled Koh Tang Island, three hours by boat from Sihanoukville. Sitting atop the island’s highest point, coverage extends around 50 kilometres over open seas.
According to Managing Director Nguyen Duy Tho, speaking in December, the decision still made sense from a business as well as a social perspective.
“This is our business philosophy,” he told the Post. “Some towers don’t make money, but technically they improve network quality and coverage.”
The social impact of such expansion cannot be underestimated. The introduction of technology can spark economic growth and development.
According to Hamadoun Toure, secretary general of the International Telecommunication Union (ITU), speaking late last year, for every 10 percent increase in mobile teledensity, a measure of the number of phones per 100 people in a given area, there is a 0.7 percent growth in economic output in the area.
Mobile towers also demand sustained electricity supplies. According to Hello, the introduction of a tower can ramp up energy provision for a community by up to eight times. Anecdotes of children reading books under the lights of mobile towers have been bandied around the capital.
However, perhaps the days of the jungle of towers are dated, albeit not without a fight.
Article 50(b) of Cambodia’s draft telecoms law – which lawyers hope to be in place within the next 12 to 18 months – states: “A licensee shall share the facilities with other licensees”.
This has been interpreted by the private sector as a way to introduce sharing of mobile network towers and concerns have been raised that this could reduce incentives to build new BTS sites.
Formal feedback on the law, which is being considered by the government, reads: “The private sector is concerned that it may be premature to import concepts of facility sharing from more developed jurisdictions into Cambodia before market forces have had an opportunity to work.
“For now, the Private Sector submits that the long term interest of end users in Cambodia will be best enhanced by a regulatory regime which encourages the construction of further infrastructure.”
So, in the meantime, expansion is set to continue. But for how long, time will tell.