MPTC Minister So Khun says he would ‘forget’ free market
TELECOMS Minister So Khun said the government would enforce minimum tariffs in the mobile phone sector if operators could not come to an agreement on prices.
Contradicting comments by Ministry of Posts and Telecommunications Director Mao Chakrya in recent weeks that minimum tariffs would only be set with the full agreement of the private sector, the minister said Tuesday that the government would put aside its commitment to free-market principles in the sector to prevent price-dumping by new entrants from undermining existing investments.
“We will forget the free market for a while. We will fix the price,” he said. “We provide the right for them [to operate in a free market], but they don’t want to use this right; they want to fight each other, so the government needs to intervene.”
The government had called for operators to submit information regarding the costs of making calls on their networks by October 15 in order to draft a prakas, or edict, on tariffs in the sector. The deadline was extended to October 30 after only four operators complied by the initial deadline.
So Khun said the ministry was analysing the information and would set a minimum tariff if operators failed to agree among themselves.
The government will withdraw licences from any companies that refuse to comply with the tariff, he said.
A long-term watcher of the Cambodian telecoms market who declined to be named said the move was an attempt to “treat the symptoms rather than fix the problems” that had resulted from a muddled approach to regulation.
The proliferation of mobile-service providers in the past few years has undermined the business interests of firms that invested in building up telecoms infrastructure in Cambodia, he said.
Market leader Mobitel had invested somewhere in the vicinity of US$700 million in building a “world class” mobile-phone network, he said.
Guaranteed access through interconnect agreements meant new entrants could “cherry pick” customers in the more lucrative urban areas through discounted pricing with no need to develop infrastructure in unprofitable areas, putting Mobitel’s investment at risk.
“In Cambodia there have been many new entrants, and during my last visit many people were worried that the new entrants will undermine the businesses of companies that have served the country well and put a lot of money into infrastructure investment,” he said by email.
Mark Hanna, chief financial operator at Royal Group, which holds a minority stake in Mobitel, declined to comment. Mobitel CEO Jeff Noble and CEO Kay Lot have a long-standing policy of not commenting on regulatory issues.
Hello CEO Simon Perkins said price regulation was desirable “in the case of Cambodia's current situation” to allow operators to further invest in infrastructure to improve coverage and quality, which he said was “a particular weakness” with some of the new entrants.
“I have seen tariff regulation before, specifically in Vietnam, where the government wanted to encourage operators to improve coverage across the nation, rather than just ‘cherry-picking’ the heavily populated areas,” he said.
Operators can still compete with marketing offers and promotions, he said, “provided these fall within certain guidelines”, as well as on products and services, such as Hello’s BlackBerry offering.
Thomas Hundt, CEO at newcomer Smart Mobile, did not return a request for comment. Gael Campan, general director at Beeline, which is currently defending a lawsuit by Mobitel over alleged price-dumping, was also unavailable.