The information and communication technology (ICT) industry continues to grow at a rapid speed, pushing companies to digitise their systems in order to remain competitive. The Post’s Kali Kotoski sat down with Thomas Hundt, CEO of Smart and vice president of the ICT Federation, to talk about the current state of the sector.
How much needs to be continuously invested in the telecommunications infrastructure for it to keep up with rapid digital change?
That is a big question and it is hard to quantify that across the board because every network is at a different state of development. So for each network, investment needs to correlate with the size of the subscriber base a company is carrying and the amount of traffic.
But investment is happening everywhere across the ICT industry whether that is infrastructure in fibre-optic, submarine cables being deployed and physical towers being built.
What competitive advantage does digitising give companies?
On one side it is about efficiency and lowering costs, and on the other side it is about being able to respond to customer demands. If you are running your processes old school without all the technology available, you will not be competitive compared to five years ago when everything could operate slowly.
Nowadays, digitised customers expect rapid responses. If companies don’t grab onto this change, customers will walk away and choose the company that satisfies their needs.
But this digitisation is not for every industry for example infrastructure companies that some would say are artificially protected because they are a monopoly like the state-owned electricity supplier. They do not need to change because the consumer has no choice. But for those industries that are free and competitive, either you adapt or you are wiped out.
With a lot of banks and financial institutions beginning to adopt financial technology, or fintech, how can this help reduce operating costs?
Those that don’t invest in fintech, or don’t have the resources to do so, will have fundamental problems in the near future. And that naturally drives a lot of opportunities for ICT and fintech. But it also creates a lot of challenges.
For example, we need a lot more skilled professionals that understand IT to implement these solutions. However, currently the output and quality from the local universities does not meet market demand. Creating an effective IT labour force is the biggest challenge for the country.
How is the industry and the education system confronting this challenge?
One thing is a new fund that will come from the new telecom law that requires operators to contribute a 2 plus 1 percent of revenues for a universal service obligation fund and research and development and capacity building initiative.
The money from the Kingdom’s operators will be used to both construct infrastructure in areas of the country that are not commercially viable, and also fund university programmes. In general it is a very noble concept, but with the revenue burden imposed, we need a very transparent usage of the fund.
This burden should not be treated like a tax, but something that the private sector can monitor where its money is going through cash outflows. If it is used properly it would give the state roughly $6 million to fund university programmes and could bring a fundamental change.
Do you see any consolidation in the telecommunications or ICT industries in the future?
Well I hope there is. If you look at telecommunications, two companies would be sustainable. Meanwhile, in the ISP sector there are around over 30 licensed providers with only maybe 10 operational. This is the most obvious problem for growth as they clog up the system and make it difficult for a company to bundle telecom and ISP services under one entity.
Should Cambodia adopt the Information Technology Agreement (ITA), which is promoted by the World Trade Organization and drops all tariffs for the ICT industry?
Abandoning tariffs on ICT goods, especially mobile handsets that are subject to a 10 percent tariff, would be a very good move. Currently, the majority of handsets of Cambodia are smuggled and sold on the grey market, so only the stupid players in the market import legally. But this also drives up the costs for say, a new iPhone.
But more broadly speaking, with the prime minister wanting to digitise Cambodia, dropping tariffs would help promote the whole ICT industry and could spur investment. The revenue losses that the government is afraid of could be made up by the private sector. But this takes a very visionary government to see the benefits of the ITA and I don’t know if we have that right now.
This interview has been edited for length and clarity.