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Regulator gears up for mobile pricing showdown

Seatel employees seated for customer service in a company branch in Phnom Penh.
Seatel employees seated for customer service in a company branch in Phnom Penh. Hong Menea

Regulator gears up for mobile pricing showdown

Cambodia's telecommunications regulator yesterday stepped up efforts to avert a brewing price war between the country’s six mobile network operators, ordering the companies to submit profitability statements within the next 10 days and summoning all operators to a meeting at the end of the month where it will determine whether any laws have been breached and discuss possible punitive action.

The announcement by the Telecommunication Regulator of Cambodia (TRC) coincided with the latest salvo in a looming price war, with market newcomer South East Asia Telecom, or Seatel, rolling out the most radical promotion to date. The Singapore-based telecom has advertised it will exchange $2 for $2,000 worth of on-network calls and $1 for 2.7 gigabytes of data.

The price war began late last month when CamGSM, the operator of Cellcard, launched a promotion that allowed its customers to exchange $1 for $100 worth of mobile services. Following suit, Malaysian-owned SmartAxiata launched a package this month that allows subscribers to exchange $1 for $125 worth of mobile services.

TRC spokesman Im Vutha said yesterday that with Seatel’s actions and a potential price war looming, the regulator could invoke Article 78 of the Telecom Law. The article, used in cases of an operator found in breach of its licence terms, mandates the TRC to first warn, then suspend an operator of its licence. It also has the option to impose fines.

“We are looking at how we can use the law to help protect both customers and providers,” he said. “If the fighting continues we have to stop it.”

While Vutha admitted that suspending an operator’s licence was a drastic step that the government would prefer to avoid, he said operators had 10 days to submit profitability statements for review.

“After that we will investigate them and then we’ll summon all operators to explain themselves by the end of the month,” he said. “We will have a decision about prices by early March to see if these promotions can continue.”

However, Vutha conceded that the regulator was hamstrung and would have to rely on operators to transparently submit their reports.

“The problem with our regulations is that they are outdated,” he said. “As consumers have shifted toward using data we don’t know how to regulate and value its usage to determine the correct price structure.”

Anthony Galliano, CEO of Cambodian Investment Management, said that it would not be unheard of for the authorities to start exerting pressure to rein in or stabilise prices without updating regulations.

“The TRC has the power of law to determine tariffs, so arguably the law is current and empowers the TRCto establish prices on both data and voice,” he said. “The difficulty [in pricing] probably applies to ascertaining the profitability of data services.”

Galliano added that by demanding operators submit profitability statements on recent products, it would give regulators “a fantastic opportunity to compare costs and spot anomalies”.

“Nevertheless, I would expect operator costs will be decidedly inconsistent,” he said.

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