Telecommunications issues in Cambodia comparing with the rest of the world

2004

by

Vann Chaom Mony, Pol

 

 

 

 

  Table of Contents

 

ABSTRACT.. 3

The Birth of Telecommunications in Cambodia.. 5

Telecommunications affect the welfare of everyone. 5

Transportation analogy.. 6

In places where the telephone penetration is lower the benefits of investment in telecommunications may be greater   6

Community Information Centers. 6

Telemedicine and the sale of local craft over the internet 7

Put WIFI Technology for rural remote area school 8

Use Electronic Media for Democratic Education. 8

Is Natural Monopoly a good Model?. 9

Bypassing Local Telecommunications Monopoly. 13

Bypassing local news facilities. 15

Cross Border Competition. 17

Overlay Network Should Be Temporarily Implemented. 17

Satellite communications as an alternative to International cable systems. 18

A Race for Satellite communication in the Asia-Pacific Region. 20

Telecommunications foster telework for home office workers. 22

A need for regulation.. 25

Interest of Regulators. 25

Dynamics of Deregulation.. 26

Pressure from multilateral, regional or global organizations. 27

Regional Telecommuncations Organization: Asia-Pacific Telecommunity. 27

The Role of the ITU: No international regulations enforceable on individual country. 28

Cross subsidization issue. 29

Radio Frequency Regulation.. 31

Regulation of Internet Telephony.. 32

Issues of Competition.. 36

Cream Skimming and Duopoly can make Monopoly Stronger.. 37

Technology Development is a Moving Target for Regulators. 39

Investment without Capital. 40

STEPS TO PRIVATIZATION.. 41

DIFFERENCE STRATEGY FOR DIFFERENCE COUNTRY.. 41

Public enterprise where government still use political quota for Post and Telecommunication staff 42

Privatization in Germany. 43

Privatization in Japan. 43

Privatization in Cambodia. 44

MICROECONOMIC AND MACROECONOMIC FACTORS OF PRIVATIZATION.. 45

THE TREND THAT RESHAPE OUR WORLD.. 46

Consolidated Information Systems, Internet Telephony and analog phone systems  46

Convergence of Technologies and Services. 48

Globalization of Markets and Production.. 48

Information/Knowledge Haves and Have-Nots. 49

Barrier to the Development of Information Society Is neither Technical nor Financial, but Psychological  50

Lack of telecommunication does not necessarily means the lack of purchasing power   52

Privatization without freedom of information exchange. 53

Social Trend: Displacement of job.. 54

References.. 56

ABSTRACT

 

 

            Cambodia connected to the world telecommunication systems in 1879 by the French Military Officer named Auguste Pavie who led a team of workers to install a telegraph line from Phnom Penh to Saigon, now called Ho Chi Minh City, and then another line to Bangkok, Thailand.

            This thesis analyzes the issues of telecommunication in Cambodia by comparing the scenario to other countries that may have similar problems and offers some solutions to challenges they have made to modernize their telecommunication sectors.

Telecommunications are seen increasingly involved into the fabric of society and as public goods. Its applications ranges from news and information exchange, education, telemedicine, e-commerce and virtual reality. The problem is how policy makers, regulators and telecommunication operators come together to choose the best strategy for the country, region and the world. The more people are connected, the more globalization tends to be and it is even more difficult, and perhaps not possible, to control information flow just by demarcating the geographical areas for political administration. Problems happened at the Persian gulf can spread instantaneously to the Asia-Pacific, and Cambodia is not immune to this problem. As in 1990, financial institutions in Singa­pore lost millions of dollars in the first few minutes of the Gulf War because they could not receive updated news (Hudson, 1997, p. 51).

Telecommunications policy makers tried to adapt some strategies, such as natural monopoly, regulation, deregulation, and privatization, so that their national telecommunications systems can favor their political agenda or to modernize and keep pace with the change of technologies. The world organization such as the International Telecommunication Union (ITU) and the Asia-Pacific Telecommunity (APT), also works as advisors and try to give recommendation, rather than enforcement, to every country leaders. It is up to the county leaders to adopt the change, because, according to the ITU mandate, ITU and others world organization can only give influence as far as technological change rather than structural change. The structural change that can give a fast road to development is only happen when local authority and policy maker can choose the right policy at the right time.

Many issues challenge the effectiveness of regulation and privatization. The issues can be monopoly and duopoly, cream skimming where telecommunications investors focus only at populated areas, radio frequency control, cross border competition, internet telephony, cross subsidization and the fast technology development itself. Some policy makers see the challenge as opportunity to update their regulation to be on par with technological development. A challenge such as the Internet Telephony, where the Cambodian government sees it as an obstacle to state revenue collection the Thai government, however, embraces this technology and tries to monitor the technological update by saying that the definition of Internet Telephony is still changing (Utsumi, 2001).

Managers and policy makers should consider the development of infrastructure regulation and management style to adapt with the advance of technology. As Roland Fletcher, an archaeologist working on the Greater Angkor Project said that no matter how big is the infrastructure, if it cannot support the growing demands, everything would stop (Leitsinger, 2004).

The Birth of Telecommunications in Cambodia

 

 

The person attributed to the birth of telegraph cable in Cambodia was the French Military Officer named Auguste Pavie. He concluded the last great nineteenth century mission of exploration related to the Mekong region. He was born in 1847 to a modest family in the Breton town of Dinan. Joined the army in 1864, the French colonial administration sent him to work as a member of the marine infantry of Cochinchina in 1869. He reached the rank of sergeant major when coming back to France to serve the Franco Prussian War and returned to Cochinchina in 1871 to joined the colonial administration's post and telegraph service. He was working for almost a decade as the chief of telegraph office in the Cambodian provincial port settlement of Kampot. The Provincial Governor soon recognized him as a man who was very well acquainted with the Cambodian affair and felt that he deserved a higher mission than those of a telegraphist in a small port settlement. Most importantly, the first civilian governor of Cochinchina, Le Myre de Vilers, a man closely linked to the colonial lobby in Paris who acted as Pavie's patron for many years, recognized his talents. Before he successfully constructed a long telegraph line from Phnom Penh to Bangkok, with enough support from the French colonial power, Pavie and his workers laid the first cable from Phnom Penh to Saigon in 1879. It was the first telegraph cable in Phnom Penh, the capital city of Cambodia. (Osborne, 2000, pp. 129-30)

Telecommunications affect the welfare of everyone

 

Telecommunications are seen increasingly involved into the fabric of society and as public goods. The wireless communications that depend on public domain radio spectrum and wire line communications infrastructure which span across the globe, become more reliable that connect almost all institution around the world. In addition, we experienced that telecommunications technology affect the welfare of practically everyone that prompt various powerful groups to organize and lobby to protect their own interests (Housel & Skopec, 2001, p. 76).

Transportation analogy

In Cambodia, the ISPs count the volume of data exchange in the internet pricing system. Even if a subscriber connect with the same speed, the more the data exchange, the higher the internet charge. This is similar to Housel's analogy to transportation system where a package delivery will be slow if more vehicles are in the same road. However, everyone wants a faster delivery system in analogy to faster data exchange within a limited internet gateway. To satisfy the customer, local ISPs have to rationalize the volume of data exchange that is similar to converting a freeway into a toll road. (Housel & Skopec, 2001, p. 103)

In places where the telephone penetration is lower the benefits of investment in telecommunications may be greater

 

The benefits of investment in telecommunications can be greatest in rural areas where penetration of the telephone line is lower than in urban areas (Hudson, 1997, p. 200).

Community Information Centers

 

In 2003, the Asia Foundation in cooperation with USAID and Microsoft established a network of Community Information Centers (CICs) in 22 provinces and municipalities across Cambodia, reaching every major population center in the country. The goal of the project is to create a communication network that allows NGOs, political parties, government officials, and development organizations to increase information sharing, communication, and collaboration between provincial and headquarters offices, and between organizations. A key element of the project is the development of a local-language web portal (www.CambodiaCIC.org) that provides user-friendly access to a wide variety of news and development-related information, such as Mekong River flood levels, human rights contacts, weather, prices of goods and services, job listings, and tourism figures (The Asia Foundation, 2003).

Telemedicine and the sale of local craft over the internet

 

Satellite Internet connection enables telemedicine aid to isolated Cambodian villagers linking one of the poorest, most remote villages in Asia to expert medical attention at a leading medical centre. It occurred on February 2001 between Robib in northern Cambodia, whose per capita annual income is just $37 a year, and Massachusetts General Hospital's telemedicine department in Boston with the co-operation of the charity Sihanouk Hospital Center of Hope in Phnom Penh.

Thanks to Krisher's two nonprofit organizations, American Assistance for Cambodia and Japan Relief for Cambodia. With donations solicited by Krisher and matching funds from the World Bank, the two groups have been building Internet-linked rural schools in which Cambodian children learn how to connect to the rest of the world through e-mail and the Web. Robib's Wakako Hironaka School - named after the donor, a Japanese parliamentarian - was the first fruit of Krisher's project. Solar panels and generators power the computers there; a satellite dish donated by Shin Satellite of Thailand provides the Internet link.

The villagers are also able to participate in e-commerce: Robib has set up its own website, www.villageleap.com, through which it sells handcrafted silk products to overseas buyers. The venture has so far raised more than $6,000, and the money is to be used to set up a pig farm. "The Internet is helping develop a whole village in a remote area of Cambodia," says Krisher. "This is the answer to (Microsoft founder) Bill Gates's question of how a computer can benefit someone earning a dollar a day."  (VIRTUAL MEDICAL WORLDS, 2001)

Put WIFI Technology for rural remote area school

 

The creative use of the WIFI technology also helps Ratanakiri to connect to the world. It is one of the world remotest frontiers. It is a two days drive from the capital Phnom Penh on a bumpy dirt road. Berna Krisher also has a project there. There is no paved road in this province. No electricity outside of the provincial town and running water is a luxury. The e-mail is downloaded wirelessly from the internet into a computer chip inside a box on a motorbike and then offloads into a computer at a remote area school. The wireless system was developed by a Boston based company, First Mile Solution, building on the WIFI technology that become commonplace in offices and homes in the developed world. (RAMGOPAL, 2004)

Use Electronic Media for Democratic Education

 

The United Nations (U.N.) tried to use the electronic media to spread the word Democracy. However, it was still a major challenge for them in an attempt to teach indigenous tribal people the concepts like pluralistic democracy in the run up to elections scheduled for May 1993.

Kong Khil, the village headman of Katie, scratches his head and smiles humbly when asked if he understands the word democracy. "It's not a Phnong word so I don't really know what it means," he said after watching one of the United Nation's traveling election education shows (Burslem, 1993).

The new meaning for good governance is pluralistic democracy. It seems to be in contradiction to the customary proceeding of the local tribe people such as the Phnong in Cambodia. They used to the peaceful election of their leaders according to consensus and a mixture of age. It presents a major challenge for U.N. officials attempting to teach them concepts like pluralistic democracy in the run up to elections scheduled for May 1993.

Few newspapers reach the province and until a U.N.-operated radio station began broadcasting last year, the only access most of the tribes people had to any news came from government-run radio. However, the price of radio and batteries remains out of reach of most of the Phnong (Burslem, 1993).

Is Natural Monopoly a good Model?

            As Dr. Heather Hudson pointed out, during the early days of telecommunications, the sending of pulses and then words over wires and the air marked the astonishing discoveries of inventions. The inventions followed by legal disputes over patents and competition for customers. The trick for market expansion led providers to invent incompatible telephone standards that restrict calls from one service provider to another. Complicated wires strung around customers building in New York showed the sign of competition, and the results were frequently chaotic. With the growing discontent by inefficient services, customers began to feel that “telecommunications should be con­sidered a natural monopoly”. They prefer that one provider can serve as much kind of services as possible. (1997, p. 65)

The wire line network that can serve many purposes at the same time is still difficult to implement, at least in developing countries, even if it is theoretically possible. The most difficult task to implement is the regulation and fair legal proceeding. Everyone can see that a customer premise has to connect the telephone line, the cable TV and electricity to different companies. To lay out a wire line network, the only option would be to rebuild the trunk lines and construct new drops from the trunk line to the homes. Rebuilding trunk and drop lines would be extraordinarily expensive and difficult. First, the sheer lack of capable people needed to complete the task makes the execution of such a strategy almost impossible. Further, continuing difficulties on the definition of land rights and titles would make any such work a serious business risk; one day, the line is on a plot of land owned by the company or rented by the company, the next day the land may be in completely different hands. As a strategic business decision, wireless access is much safer and much more capable of meeting changing demand conditions (Regli, 1997, p. 215).
            The wireless network seems to be free from problems attributed to wire line network. Nevertheless, there is still issue of redundancy of service that is in contradiction to natural monopoly. In Cambodia, there are three mobile phone companies and advisers state that the service is redundant at the profitable area while it is not available at remote rural areas.

There is a presentation by a telecommunications consulting company, David Butcher and Associates (2001, p. 23), who advised the Cambodian Council of Development to implement the natural monopoly model of serving rural mobile systems. The presentation states about “... a fair regime to require operators to share facilities...” They recommend that every mobile phone relay tower accept calls from others telephone company and try to establish a fair process of dispute resolution. Service providers and Cambodian regulator cannot implement this resolution if the fair judicial system does not exist. There were also reports from the Phnom Penh Post, a local biweekly English language newspaper, about the alleged controversy over interconnect payment (McDonald-Gibson, 2002) and the blocking of phone calls from other operators by MOBITEL, Cambodia's largest mobile phone operator (Watt, 2004).

There need to have incentives for providers to encourage interconnection in order to reduce redundancy of service. One scholar, Brian J. W. Regli, provides the "sticks and carrots" idea to the Russian government as an incentive to facilitate interconnection.

Regulators can enforce the legal sanction against companies who are not willing to open their infrastructure for interconnection. The “sticks” is the term used as a strong signal to telecommunication providers. They need to unbundled their facilities for competitor and make them understand that it is an advantage for future development and for the benefit of the people. The "carrots" enforcement model is more lenient but it is a long-term advantage. While regulators take position against the monopoly system, they should also provide incentive such as “specific tax advantages” and encourage them to increase their service at rural areas (Regli, 1997, pp. 216-7).

However, some scholars dismiss natural monopoly as a basis for communications policy. "A liberalized market where competitive entry is possible clearly allows the limits of natural monopoly to be tested continually and in ways that regulators may not be able to foresee." (Dordick, 1994, p. 438)

With the advancement of infrastructure technology such as broadband, fiber optic and cellular phone, the economic incentives of "Natural Monopoly" to share in one large "network club" decline. "As the economic incentives to share in one large 'network club' decline, alternative arrangements become more viable," (Noam, Komatsuzaki, & Conn, 1994, p. 27) the service providers are increasingly finding the natural monopoly more difficult to implement in terms of the rising or R&D costs, and the shorter cycles of innovation (Noam, Komatsuzaki, & Conn, 1994, pp. 174-5).

Even more convincing to the opponent of natural monopoly, the development of computer technology allows faster and more reliable of multimedia data exchange. The latest technology allows the internet telephony to carry clear and full-duplex voice communication that makes the natural monopoly policy to become unnecessary (MacKie-Mason & Waterman, 1998, p. xix).

            The case of telecommunications in the United Kingdom that transformed from duopoly to fully competition sectors shows that even if it creates the redundancy of services, the benefit of innovation, better marketing technique, larger volume sale, and improved efficiency can offset the perceived duplication and overinvestment scenario (Hudson, 1997, p. 147).

One of the best policies is that the government should encourage local companies to adopt new technology as early as possible, while still keeping older technology for lower investment users so that they can still have choice for upgrade and still within the mainstreams (Hudson, 1997, p. 256). Another the problem that faced the wire line and wireless telephone provider is that they cannot or unwilling to use the prepaid card system which is already popular for Cambodian wireless GSM telephone service, where the credit card and online billing systems still not exist. In the old billing system, customers need to spend their precious time to pay the monthly telephone bill directly at the telephone office as appose to buying the prepaid phone card along the street, even if sometimes the bill is less than ten dollars per month. Currently, the landline telephone operator in Cambodia, which is a state owned company, still practices the old way of billing system. Even if copper wire telephone network is better than wireless connection in providing higher bandwidth data transfer through broadband DSL connection, the traditional payment transaction system can discourage customers from using the wire line telephone that is needed for cheaper telephone service and for internet connection.

Bypassing Local Telecommunications Monopoly

 

Microsoft Chairman Bill Gates once said that "If there's any area I have a concern for the industry ... it's in the area of high-speed connections to the Internet." (Ford-Livene, 1999, p. 577) Despite technical development in the information technology, businesspersons and consumers are commonly not satisfied with their internet service providers that provide them with slow data exchange speed with expensive price. They complain that their regulators and authorities are slow in adopting new law to keep pace with technological change (Regli, 1997, p. 52). The lack of internet bandwidth to customers premise make them to invent the term as Ford-Livene put it “World Wide Wait” (1999, p. 577).
            People think that the monopoly utility model that supposed to protect the public interest can create bureaucratic problem that impede them from accessing the service, and then to slow the growth of economy. With disappointment to their regulators in coping with telecommunications bottlenecks, users are trying to find their way around. Such as in the United States, banks, retailers, and oil companies, they chose to use VSAT networks to bypass the public networks. In the developed countries, the VSAT is cheaper in comparing with wire line service for use with corporate industry. In less developed countries where few or none of the corporate industry exists, small businesses find it hard to depend even for a small bandwidth. With less investment on IT infrastructure, the services are usually less reliable, and with frustration, they turn to their providers to focus on reliable service, and sometimes even trying to find new technology to set up their own network. By trying to bypass local monopoly, it alerts local regulators to retaliate by directly banning the bypass itself and argue that it destroys the economy because it robs away the state revenue. Because telecommunication sectors is the profitable business, regulators charge that bypassing means doing “cream skimming” business by focusing their coverage only around populated and lucrative business area and force the local monopoly carrier to increase their prices to cover the lost of revenue. However, scholars recommend that regulators can liberalize their monopoly status by charging fair and affordable prices to make bypassing unnecessary (Hudson, 1997, p. 74).

Regulators around the worlds seem to understand that they cannot stop bypassing only by revenge. They seek a reconciliation method by allowing some kinds of competition. Such as in the United States, they ordered the divestiture of AT&T into two sections: customer premises equipment and long-distance services. This divestiture allows more companies to establish by filling the gap that AT&T alone cannot serve (Regli, 1997, p. 52).

In Cambodia, the use of VoIP for international call from capital city or towns and the use of portable VHF two-way radios for rural communication are examples of bypassing the local telecommunication monopoly. The problem is that international call is much more expensive than VoIP and most of rural communities do not have even mobile phone service available, let alone for landline telephone infrastructure. The VHF radio is still a cheaper solution than the mobile phone service for business enterprise that needs constant communication.

The VoIP service is a big controversy in Cambodia. The Cambodian Ministry of Post and Telecommunications tried many times to block this service around the Internet Café. The crackdown happened at least a second time on March 1st 2002 for internet cafés that provide cheap internet telephony service. The Internet Telephony service available at local internet café cost only about US$0.10 per minute to call to Europe or US. The cost of the international phone call through the privately owned Tele2 gateway, the tariff is about US$2.31 per minute and it costs about US$1.5 if going through the state owned international gateway (Sann & Ma, 2002).
            Telecommunications bypassing did not stop from using the VoIP, the illegal Telecommunications Satellite that costs the state nearly a half million dollars a month also reported to be confiscated.

A local English newspaper, the Cambodia Daily reported that a group of authority including the police and staff from the Ministry of Post and Telecommunication discovered in a residence in Phnom Penh a telephone system used illegally for receiving international call through satellite without passing through the government international gateway (Kasem, 2002).

Bypassing local news facilities

 

Satellite Telecommunications technology can provide channels for TV broadcasting service for oppressed people who are hungry for the news. They see this technology as their savior. However, local authorities such as in Southeast Asia see this technology as a threat to their control of power. During the demonstration against President Suharto’s government, the Indonesian local TV companies did not allow reporters to beam their news from Indonesian facilities; they need to fly their video tape out of Indonesia to neighboring countries. “The easiest thing in the world is to shut down a feed point, especially in countries where the infrastructure is limited," says the BBC's Southeast Asia correspondent, Iain Simpson. "But communications in Southeast Asia is now so good that unless you can stop everyone going out of an airport and check to see if they are carrying a tape, there is no way you can stop pictures getting out because you can fly it to another country and feed it from there."  (Atkins, 1996)

Similar to Indonesian protest against President Suharto's government, whenever there is civil unrest or even a peaceful demonstration by students and workers, the Cambodian television never broadcast any events about those local protests. There are about six television stations in Phnom Penh, the capital city of Cambodia. The government official owns most of those stations. As William Atkins quoted in his article the BBC's Southeast Asia correspondent, Iain Simpson "Governments in this region are very worried about losing control. Whether that loss of control comes through global satellite broadcasters or the Internet or alternative political parties within their own country, governments want to cling on to power. The idea of single party states and single party rule is not dead in Southeast Asia by any means." The article also quoted Star TV, which bases in Hong Kong, has come under greatest international scrutiny in this regard. In a famous speech in 1993, Murdocb, the Hong Kong tycoon and owner of Star TV said, "Advances in the technology, of telecommunications have proved an unambiguous threat to totalitarian regimes everywhere .... Satellite broadcasting makes it possible for information-hungry societies to bypass state-controlled television channels." William Atkins mentioned at the end of his article in 1996 that “The challenge lies with local producers and network operators...” which is also true in Cambodia. The local television has a spectacular growth in the amount and type of programming available, from soap opera, Karaoke, music concert to beauty contest, but never shown about real political debate. Therefore, it depends on all stakeholders, governments, local human right advocates and producers to uphold the concept of freedom of information.

Cross Border Competition

 

            The cross border competition among telecommunication companies are widely known across all continents. Just look for examples of cross border competition between the Canadians-US border and the comparatively small strip of Thai-Cambodian border, the demarcation of borderline cannot stop the telecommunication services from invading each other’s territories, albeit with different levels of technology.

            The large coverage of satellites footprints allow the US telecommunications providers to serve Canadian callers by routing the call, for example, from Vancouver to Toronto, through the US networks without going through the Canadian providers. The Canadian callers found that it is cheaper to make a long distance call through the US networks rather than their own national systems (Hudson, 1997, pp. 149-50).

The Thai telephone system that is usually called InterPhone has been very popular among various provinces along the Thai-Cambodian border such as Banteay Meanchey, Siem Reap, Battambang and Pursat. This service has started during the State of Cambodia regime, which was before the United Nations sponsored election, and it is continuing to provide this service until today without paying tariff to the state budget. The service that is based on the Wireless Local Loop technology is using an antenna pointed to the Central Base at the Thai side near to the Cambodian border, without going through the Cambodian telecom international gateway (Peou, 2004).

Overlay Network Should Be Temporarily Implemented

 

            With the fast development of technology, the price for connecting to the telecommunications network is still high with a limited investment from consumers. This problem can widen the gap with the telecommunications haves and the have-nots. All around Cambodia, especially businesses at rural areas, people who need constant communications between their partners, are still using VHF two-ways half-duplex radios to communicate, and at the same time excluding themselves from the mainstream mobile phone networks, which is more expensive and cannot support their business operation.

            Among the very low density of telephone users in Cambodia, especially in rural area, 66.2% of them are using the mobile phone (Hudson, 1997, p. 23). To keep pace with telecommunications technology and to increase users’ subscription, during the last decade, mobile phone operators tried to upgrade their systems from analog to GSM cellular phone. With the increase of mobile phone subscription, people who use VHF radios are still cannot afford to use mobile phone for their daily operation. To bridge the gap of these telecommunications users, there should be a policy to reserve with a much lower tariff of the analog mobile phone service so that the lower investment subscriber can upgrade their systems with their own pace. This “overlay network” can still connect with the mainstream telecommunications systems while allowing for upgrade at a specific target date. (Hudson, 1997, p. 256)

Satellite communications as an alternative to International cable systems

 

            There are two telecommunication satellite systems in orbiting around the world. The geostationary (GEO) and the non-geosynchronous low-earth orbiting (LEOs) satellite systems. Each of them has different uses. In contrast to the geostationary satellites, which appear stationary above the earth, the low-earth orbit satellites, orbit in lower altitude, allow small receiving antenna to receive the signals. As the LEOs satellites appear moving above the earth, users can use it for intermittent telecommunication purposes. One of the organizations that take advantages of this moving LEOs satellite system is the Volunteers for Technical Assistance (VITA) who placed the smallest VitaSat in orbit and pioneers the “store-and-forward” data messaging systems to link medical schools in Africa who work within the Healthnet project (Hudson, 1997, p. 386).

            In areas where telecommunication infrastructures are inadequate, TV reporters can use Satellite systems for TV broadcasting. The year 1993 was the first general election in Cambodia since the 1970s. Two decades of wars left Cambodia with weak telecommunication infrastructure. The United Nations Transitional Authority in Cambodia (UNTAC) supported the 1993 election that composed of many international peace keeping forces from around the world. This newsworthy event produced the need for a telecommunication system that can broadcast live TV program and breaking news to all viewers around the world.

The only international gateway to the world was through a slow bandwidth satellite earth station built by the Soviet Union during 1987 that pointed to the Intersputnik satellite (Wikipedia: The Free Encyclopedia, n.d.). To satisfy TV broadcasting need, Richard Hradsky-Fisher, the technical coordinator for BrightStar Communications, which was a branch of Reuters Television, set up a 1,500 kgs satellite antenna to beam live TV broadcast to the world (Hayes, 1993).

Currently, Cambodia has two telecommunication international gateways, both of them use satellite connection that allow users to make international phone call through access code 001 and 007 and for internet connection (Postlewaite, S., 2000, September 29; Ingram, K., 2001, March 16). Even if around provincial towns and capital city, some people can have cable TV to their home, only a few can afford a satellite TV antenna. The Cable TV operator itself also needs to receive movies and news channel from Star TV and the Thai UBC TV satellite.

A Race for Satellite communication in the Asia-Pacific Region

 

The Asia-Pacific Region, which is a vast region with more than 3 billion population and low teledensity, is attracted to satellite communication investment (MacKie-Mason & Waterman, 1998, p. 236). The International Telecommunications Satellite Organization (INTELSAT), which was created during the 1960s and was the world dominant, now faces competition by the growth of regional or national satellite systems (Field, 1994). Until recently, there are at least eight satellite systems in the region such as Palapa from Indonesia, Insat from India, Chinasat from China, Thaicom from Thailand, Koresat from South Korea, Measat from Malaysia, Mabuhay from the Phillipine and Lstar from Laos (MacKie-Mason & Waterman, 1998, p. 237).

This growth of satellite telecommunications investment, however, does not really mean beneficial to the Asia-Pacific people, especially at the Least Developed Countries, as one telecommunication policy expert, Dr. Heather Hudson attributed to the restrictive policy and the lack of local infrastructure (MacKie-Mason & Waterman, 1998, p. 235).

Despite the low access to the telecommunication systems by people from the Least Developed Countries, satellite communication businesses are still going on in this lucrative market. The motivation behind the investment in satellite telecommunication systems can be traced to the popular thinking of "national flag carrier" and the “flags of convenience” approach (MacKie-Mason & Waterman, 1998, pp. 240-1). The countries see the airline businesses that bear “national flag” as a popular policy and try to replicate to satellite systems, whereas the “flags of convenience” is a pure business approach that trade the orbital slots to investors in exchange for others concession (MacKie-Mason & Waterman, 1998, pp. 236, 240).

The adoption of “flags of convenience” to the outer space technology came after the controversial issue of “sovereignty in outer space” that created debates at the United Nations and International Telecommunication Union (ITU), especially for the geostationary orbital slots over the equatorial countries (Jasentuliyana, 1992, p. 186).

The geostationary orbit satellites are now popular in the regional satellite systems since it flies in circular orbit above the equator with the same rotational speed as the earth, from west to east, and makes it appears to remain stationary as the earth move ("Finding a Place in," 1985). This technique allows a powerful transmission toward the earth station antenna with a precise coverage.

Article 44 of the ITU Constitution, 22 December 1992, in the use of the Radio-Frequency Spectrum and of the Geostationary-Satellite Orbit, states that:

In using frequency bands for radio services, Members shall bear in mind that radio frequencies and the geostationary-satellite orbit are limited natural resources and that they must be used rationally, efficiently and economically, in conformity with the provisions of the Radio Regulations, so that countries or groups of countries may have equitable access to both, taking into account the special needs of the developing countries and the geographical situation of particular countries. (von Mangoldt, 1997, pp. 1379-80)

This means that countries, equatorial and others, cannot consider the orbital slots as their sovereign outer space where Geostationary-Satellite needs to fly over. However, countries can accept this policy in return for economic benefit of registering for orbital slots.

The fair statement of ITU policy can also creates the scenario of the “flags of convenience” such as the case in Tonga Island and Loas PDR (MacKie-Mason & Waterman, 1998, pp. 241-2). The Tongan officials allow the Tongasat Company to register the orbital slot and leased to another operator. The Lao PDR government established a 30 years concession to Thai Asian Broadcasting and Communications Network Company (ABCN) in the name of the Lstar satellite, which uses the Laos orbital slots.

Since there are two international telephone gateways in Cambodia, that both of them connect to the world using satellites (Postlewaite, S., 2000, September 29), there is still no indication that the Cambodian orbital slot was sold out yet. However, there is concern that the uncontrolled spacecraft launch and the unregulated and crowded satellite orbit, can increase the probability case of collision and radio interference (Jasentuliyana, 1992, p. 21)

Unless there is regional trust among all nations to refrain from adding satellite systems into space, by reducing the sentiment of the “National Flag Carrier Syndrome”, and to facilitate the share of satellite transponders, the concern among all scholars and scientists are imminent. The world telecommunication systems may face catastrophe since the satellite communication systems are already becoming a staple resource for human being (Hudson, 1997, p. 324).

Telecommunications foster telework for home office workers

 

Telecommuting, even if it is still a new venture, bring a lot of change to the definition of working place. Internet telecommunication adds the new meaning to the infrastructure, which was limited only to freeway and telephone. While there is an increase of internet usage, the transportation systems will also be jammed with cars and pollution. Nevertheless, if small and large businesses and workers cannot adapt to this change, problems may happen like the destruction of the canals infrastructure of the Angkor city. As Roland Fletcher, an archaeologist working on the Greater Angkor Project said that no matter how big is the infrastructure, if it cannot support the growing demands, everything would stop. Managers and policy makers should consider the development of infrastructure and management style to adapt with the advance of technology.

A group of archeologist who work on the Greater Angkor Project (Leitsinger, 2004) theorized that, similar to the medieval time, when canals infrastructure were used for communications, contemporary infrastructure now depends on freeways and telecommunication equipments. In Europe during the thirteenth century, groups of merchant and towns administrators supported the construction and maintenance cost for canals which were the main infrastructure for trade and commerce (Pirenne, 1937, p. 89).

The Greater Angkor Project blames the destruction of Angkor to the “ecological failure and infrastructure breakdown”. Angkor is the Cambodian temple built in the middle of the former Cambodian city during the ninth to the fourteenth centuries. The Angkor city spanned the area of about 1,000 square kilometers (385 square miles) with the population of about 750,000 people. The Greater Angkor Project, which is supported by the Australia's University of Sydney and the Ecole Française d'Extreme-Orient, believes that the growth of population and the complacency by rulers and people in maintaining the ecological protection, led to the destruction of infrastructure. The Angkor rulers and town planners allowed or could not stop people from cutting the trees for farming at the nearby mountain, which was the source of water. With fewer trees to protect, silt and sediment developed to block the canals and water flows. With no water, people could no longer do farming and could not communicate. The Angkor canal is like the freeways in the contemporary period, and the elephant path is like the telephone line, said Damian Evans, an archaeologist working on the project.

The destruction might not happen if the traditional Khmer rulers were looking for new ways of communication. It is similar to changing from water canals to horseback and elephant for transportation. With modern telecommunication infrastructure, telework or telecommute can be made possible by the broadband DSL technology. With a DSL connection, people can make the Internet Telephony or VoIP call that charges international call as local, document or presentation sharing, virtual reality and video conference. A group of proponent for telecommuting and researcher claimed, "Some home offices today are probably more technologically capable than many corporate offices were ten years ago." (Gibson, Blackwell, Dominicis & Demerath, 2002)

Internet infrastructure alone is not enough for efficient use of telecommuting practice. However, scholars also warn that employers need to change their management practices. Employees also need coaching and employers need to understand staff situation, flexible behavior, and be a good communicator. The Situational Leadership[TM] style, developed in the late 1960s by Paul Hersey and Ken Blanchard, is one of the management procedures to help staff and employers working together toward a successful organization of telecommuting workers (Gibson, Blackwell, Dominicis & Demerath, 2002).

 

A need for regulation

 

Interest of Regulators

 

            Even if competition can also means restrain from regulation, it is also justifiable to consider the concern of unfair competition through many issues that occur during the competition process. The problems can ranges from the lack of standards, unwilling to unbundled facilities, and the protection of consumer’s interest. According to experience in the United States, the multi-provider environment can create double standard treatment to different providers and some of them can charge unfair prices to consumers. With this concern in mind, developed countries such as the United Kingdom and Australia were trying to set up flexible regulation to control the environment. However, the New Zealand, instead of setting up the regulation committee, creates the consumer pro­tection and antimonopoly laws. Therefore, every dispute has to go through the courts that many analysts criticized about the lack of technical capacity in telecommunication policy (Hudson, 1997, pp. 150-1).

            Although there is concern about consumer protection laws that is not strictly enforceable due to the lack of “specialized expertise”, consumers in other countries such as the United Kingdom and Europe even face more problems than in the United States. Consumers have to wait longer to install a telephone line and if there is dispute with bill payment, they usually face disconnection without any responsibilities form providers. According to the regulators in the United States, “consumer problems, including billing and service disputes, do not disappear with competition” (Hudson, 1997, p. 151).

            However, regulators and providers in many countries are also trying to find common ground to come up with fair expectation and dispute resolution. By using various structures to enforce their agreement, their objective is to provide consumers with fair pricing and higher quality of service as well as infrastructure protection and development. They expect to offer telecommunications network for disaster relief and national defense and fairly allocate space and radio spectrum for the benefit of consumers (Housel & Skopec, 2001, p. 77).

Dynamics of Deregulation

 

            Although regulation is supposed to solve many problems such as consumer protection, infrastructure development, and to help ensure state security, sometimes later, providers can learn how to manipulate the regulation for their own benefit rather than seeking the long-term solution for the sake of all stakeholders. The debate is still going on around the two arguments: companies with protected market are not willing to invest for state-of-the-art technologies and services, and the price tend to increase because protected companies can overspend without cost-saving measures for their operation (Housel & Skopec, 2001, p. 82).

Deregulation can foster international integration. While competition requires some companies such as AT&T to divest, the divested companies can also merge with other companies that provide the same service in different geographical areas, especially for long distant carrier. They believe that by merging they can have stronger bargaining position, make their present in capital markets and can share the cost of equipment and network upgrade (Housel & Skopec, 2001, p. 89).

Pressure from multilateral, regional or global organizations

 

            Facing with globalization, countries find themselves that they cannot keep pace with the global competition if they do not review their policy on time. They also receive some kinds of pressure from international institutions such as WTO, ICANN and WIPO (Van Doodewaard, 2004).

European Union is also trying to enforce his mandate to his members such as France and Germany. Both countries have to separate their operators from regulators by 1998 and at the same time introduce the public network competition. This policy is a challenge to local government and unions who used to be powerful in setting their own mandate (Hudson, 1997, p. 150).

Regional Telecommuncations Organization: Asia-Pacific Telecommunity

 

            While the International Telecommunication Union (ITU) plays an advisory role to developing and least developed countries, it also has many regional organizations that can develop their own policies and standards and to coordinate their own radio frequencies band (Hudson, 1997, p. 411).

            In the Asia-Pacific region, there is the Asia-Pacific Telecommunity (APT) that bases in Bangkok, Thailand, and comprises of 28 member states, four associate members that are not autonomous states and 32 affiliate members that are telecommunications service providers (Hudson, 1997, p. 411).

According to the ASIA PACIFIC TELECOMMUNITY website (2004), Cambodia is still not a member or an associate member of this organization, whereas Thailand, Vietnam and Laos are already members. APT Constitution article two and four of the membership criteria states that any members of the Asia Pacific countries must first be a member of the United Nations Economics and Social Commission for Asia and the Pacific (UNESCAP).

According to the UNESCAP website, Cambodia already became member from 20 August 1954, and now listed as Least Developed Country. Laos is also a UNESCAP member and listed as Least Developed Country as well, but the question of why Cambodia cannot become an APT member, is still unanswered.

The Role of the ITU: No international regulations enforceable on individual country

 

            The ITU tried for the first time in 1988, through the World Administrative Telephone and Telegraph Conference, now replaced by the World Telecommunication Standardization Conference (WTSC), to tackle the problems of trade and bilateral agreement. While the United States wanted a very free trade regime in telecommunications, others wanted some control over regulation. They later agree that international standards and regulation should only be a recommendation and cannot be enforceable on individual countries telecommunication regimes. It is up to the individual countries to form their own bilateral agreements for their networks interconnection. Ironically, the ITU approach cannot directly solve consumer’s problem. The impact of ITU resolution is only through technical development rather than through structural reform. A structural reform can be more beneficial to consumers if it can enforce a lower tariff and can produce new services (Hudson, 1997, pp. 418-9; see also Hudson, 1997, p. 503).

Cross subsidization issue

 

Cross subsidization remains a controversial issue around the world, even in the developing country like Cambodia. The new invention of terminal equipment, switching equipment and transmission equipment allows the convergence of text, voice and video into digital form so that information providers can transmit their digital signals across all kind of media to their customers. Whether it is an old twisted copper wire traditionally used for telegraph and telephone transmission, TV cable, or even through the airwave, this invention allows one company to invade the market of another by means of service expansion or even cross subsidization. Cross subsidization means that if one company used to provide a traditionally defined service such as electricity or water supply, through their existing licensed “rights of way”, the company can lay out a telephone or internet cable to provide information service. To support the new internet service, the company can also appropriate some of their revenues from electricity or water supply to hire new staff or for marketing purposes. Some scholars termed this kind of cross-subsidy as “unfair” (Housel & Skopec, 2001, p. 91). The problem is still recurring in the midst of technology development. The immediate issue is the competition between telephone and cable TV companies.

In Cambodia, there is a cable TV company called PHNOM PENH MUNICIPAL CABLE T.V. (PPCTV) serving in the capital city of Phnom Penh that has a website still listed in the google.com as www.ppctv.com.kh. A Taiwanese company WILL SAME ENTERPRISE CO., LTD. (Liaw, J., n.d) also claims to establish a cable TV company in Phnom Penh. According PPCTV helpdesk receptionist, this cable TV operator is going to serve the internet connection to Phnom Penh customers (personal communication, June 17, 2004). If this is true, there will be competition between this company and local telephone and internet providers.

Due to the state of non-transparent economic transaction in Cambodia, as shown in the recent draft report from the World Bank, it is difficult to predict that this kind of competition will benefit consumers. According to the World Bank survey report of businesses operating in Cambodia, “… the rules of the game are not fair or do not exist...” and cost them 5 to 6 percent of their sales which is about US$120 million per year (as cited in REYNOLDS, 2004, June 11; see also Kasem, H., 2004, June 14 ).

The telephone and cable TV companies are trying to lobby the regulation, legislation or even the judicial power in favor of their service. The telephone companies maintain that their customers are being deprived of their right to receive video-on-demand service while the cable TV companies complain that they also face competition from VCD/DVD producers and over-the-air public broadcasting stations that provide free entertainment programs sponsored by marketing companies. The telephone company suggests that the problem is just a legacy one, arising from the old telephone operator who abused their monopoly power. While removing the cross-subsidy regulation seems to be appropriate, as Walter S. Baer recommendation, the economies of scale must be balance with the price of competition. Some regulation can inflate the price of competition and discourage the incentive to enter the market and a monopoly can charge an exorbitant price to their customers. If the price for connecting to a single integrated distribution network is too high, the customers should be able to receive two or more competing communication systems to their home rather than relying on a monopoly model (Baer, 1989, pp. 165-8).

Radio Frequency Regulation

 

Every free election requires all political parties to spread their messages to voters.

Radio is the best medium for all parties but it is already clear that the airwave is under exclusive control of the Cambodian People Party (CPP). The CPP holds the majority of parliamentary seats in the Cambodian National Assembly and run the Cambodian government since the UNTAC led election in 1993. The reason that radio wave is the most popular medium for all political parties in Cambodia to spread their messages is the security matter. Violence and oppression still control Cambodia political environment and there were reports about assassination of many opposition party activists by political reason, and still the opposition parties who receives virtually no frequency allocation. Printed media such as newspapers and magazine thrives in Phnom Penh, the capital city of Cambodia, but readership outside of Phnom Penh plunges, as literacy rate is as low as 16% at rural areas. TV is also the most popular medium, but it is also under CPP control. There are at least six TV stations in Phnom Penh; among them, the CPP exerts his control on almost all of them. The TVK or the “National TV” and TV 3 or the "Phnom Penh TV" belongs to the government with the majority come from the CPP. The CPP Secretary-General Say Chhum is the shareholder of Apsara TV or TV11, and Mr. Hun Sen, the CPP Deputy Chairman and is the Cambodian Prime Minister, run the Bayon TV and FM Radio 95. Funcinpec is one of the political parties that has parliamentary seat in the National Assembly is reported to have no more control on TV9. Cambodian people previously called TV9 as "Funcinpec television", owned by Mr. Khun Hang, the businessperson. Mr. Khieu Kanharith, who is the CPP official and hold the top office of the Ministry of Information, said that Mr. Khun Hang “does not want to be affiliated with a political party”. The CPP led government also runs TV5, which belongs to the military headquarters. All these TV stations, who also own FM radios, take almost all bandwidth within the FM radio frequency range (Fontaine & Chea, 1998).

Cambodian government is not willing to provide radio frequency license to independent radio broadcaster who are not supportive of the ruling party. The Radio Free Asia and the Voice of America tried in vain to apply for the FM radio frequencies. It is even more difficult for Human Right NGOs who advocate for progress in democracy to get a radio frequency license (VOICE OF DEMOCRACY, 2004; see also U.S. EMBASSY PRESS RELEASE, 2004, June 14).

Regulation of Internet Telephony

 

Mr. Anthony S.K. Wong, Chairman of the World Telecommunication Policy Forum 2001, stressed the important of economic benefit of IP Telephony (Detailed Agenda, 2001). He recommended that member states should consider the possibility of opening their communication services market with respect to IP Telephony by adopting a competition-oriented approach in order to achieve clearly defined public policy goals, taking into account, among other things, the concept of technology neutrality for fully- substitutable services. He stresses:

a) that IP Telephony applications are best supplied in a market in which consumers have choices among multiple, alternative sources or means to address their needs, because only then will citizens, businesses and the overall economy reap the benefits of innovation and cost effectiveness; b) that government regulation should aim to foster an effective competitive environment and that regulation may be appropriate where there is market failure or when public interests cannot be adequately met by industry (e.g. universal access and service); for some countries, there may be other reasons for regulators to intervene, for example to ensure the rebalancing of tariffs; (Wong, 2001)

The ITU Secretary-General, Mr. Yoshio Utsumi, cautioned that countries that try to prohibit the use of IT Telephony might run the risk of "ill-prepared for operating in the future global environment." (Utsumi, 2001; see also Detailed Agenda, 2001)

Some countries regulator who commission protected state owned operators see the IP Telephony as their main rival rather than as an innovative technology development. However, ITU official sees this policy as the risk that can slow down their development opportunity. There are countries such as Egypt, Gambia, Hungary and Thailand who embrace IP Telephony (Utsumi, 2001).

Most of the developing countries concern that IP Telephony service can reduce revenues from their states owned operators. To satisfy the state owned telephone operators, regulators in those countries ordered ISPs to block access to websites that provide IP Telephony call. However, countries that embrace IP Telephony argue that they cannot miss the opportunity that IP-related technology can provide them. Proponents of IP-Telephony feel that this technology is still not mature and did not have enough evidence to judge that it can produce market failure. They also see this new technology as a pressure to lower the price of current telephone tariffs and then increase consumer welfare. They hope that open usage of IP-Telephony will encourage more purchase and upgrade of IP-based networked equipment (Utsumi, 2001).

            As IP-based technology come into third generation, it becomes a challenge for regulators to adapt to change. The third generation IP-based telecommunication equipment can produce the same service even if connecting to different media. For example, it is not different between a computer that connect to the internet to provide cheap IP Telephony, and a digital cellular phone that allows user to browse internet and send e-mail, while can make the telephone call at the same time. A cable TV network operator can use her systems to provide telephone service as well as providing fast internet connection and at the same time provide interactive TV. A telephone operator can also use her telephone network to provide interactive TV as well as fast internet connection. Both of them can convert their antiquated copper wire network and coaxial network into broadband wireless and fiber optic network that allow them to provide the same service. This trend converge all technologies into one platform. For regulators who try to be lenient and streamline at the same time, they face difficulty of choosing between old regulations and making a drastic change. Nevertheless, the “sector-specific regulation” seems to be obsolete (Utsumi, 2001).

            The convergence of technologies can also mean that IP-based equipment can serve a convergence of product, the multimedia. When connect to the internet, a small IP-based equipment, can exchange voice, text, image and video at the same time. ITU official recommend that countries should simplify regulation to favor investment in IP-based equipment (Utsumi, 2001). While IP Telephony can provide cheap telephone call to low income population, operators, with facilitation from regulators, should also consider as much as possible the convergence of product by upgrading their network to facilitate a variety of equipment connection, from slow HF radio modem for e-mail messaging, analog telephone, digital GSM telephone, Personal Communication Service device and Video Phone.

            Considering the United States experience in telecommunication sector, the Federal Communications Commission (FCC) encourages other countries to remain open to the growth of IP telephony since the benefit will happen in the long term. The words “telecommunications” and “the internet” is becoming a complement to each other because one depends on another and the IP Telephony operator can become the same person who serves both sectors (Ness, 2001).

To ensure sustainability of the telecommunication sector, the US regulator uses revenue from ISPs lease of cable from telecommunications carrier to help subsidies the Universal Service Fund (USF). The Universal Service is the goal of providing telephone service to everyone, traditionally by providing basic telephone service to every household. The US Congress made this decision in 1998, which arises from the Universal Service Report or the Stevens Report. The Internet Service Providers (ISPs) are exempted from direct contribution to the USF (Hudson,1997, p. 503; Ness, 2001).
            The experience show that the USF grow in parallel to the growth of ISPs. As the US internet users grew from 6% in 1993 to 42%, the US economy also grew accordingly. Susan Ness, the FCC Commissioner wrote to the ITU, “The Internet has been fruitful for our society in ways we and the builders of the legacy networks never imagined.” (Ness, 2001)

In liberal countries where technology always leads the markets, the law and regulation usually cannot catch up with the progress. Therefore, it is important that policy makers be sensitive to the fast change of technology. They should update the regulation according to the change of the marketplace. In terms of the Internet and the IP Telephony, the definition of the IP Telephony can change rapidly according to technological change (Ness, 2001).

The FCC tries to preserve the unregulated status of IP telephony by adopting the case- by-case approach. The main reason is that the definition of IP telephony continues to change according to technological changes. One example is the Net2Phone VoiceLine service from the Net2Phone Company that provides internet phone service through a telephone adapter connected to the internet broadband service. The VoiceLine telephone adapter is a specialized computer hardware that allows subscribers to have a local U.S. phone number, a U.S. toll-free number, or a U.K. toll-free number that make no difference between traditional circuit switched number and IP phone number. If subscribers make the call among themselves using technology similar to VoiceLine service, the connection can bypass the circuit switched telephone network altogether. Therefore, the definition of IP telephony can become PC-to-PC communication rather than PC to Phone (NET2PHONE, 2004).

However, the Cambodian Ministry of Post and Telecommunications (MPTC) considers VoIP as illegal as stated in its website, "Any use of telephony via Internet or any business which offers telephony service via Internet is strictly prohibited. Any person who violates the above shall be penalised according to the law." On March 2002 was a second time that MPTC enforced this regulation. In the Least Developed Country like Cambodia, the internet service is still much more expensive than the Developed Country. One hour of dial up connection can cost about US$3.00 and mostly not affordable for household use, so people need to depend on public internet café to make cheap, but illegal, international call through IP Telephony (Phan, 1998; Sann & Ma, 2002).

Issues of Competition

 

 

            Naturally, a small company cannot just start to compete with a long established giant, the rules of the game is not as simple as opening the door for competition. The big company can have many tricks to undermine the good intention of free market economy. The dominant carriers may not have the will to unbundled the facilities and allow equal access, and they are reluctant to share technical information and network design. Then the small companies are at the disadvantage in terms of planning and operation

(Hudson, 1997, p. 146).

Cream Skimming and Duopoly can make Monopoly Stronger

 

            There is also problem of scarce investment in telecommunication in remote rural areas. The case in New Zealand shows that despite legally opening the door for investment, many operators are cramming only at populated areas. Therefore, there are few competitors at rural areas. The case in Alaska, the United States, can be different, villages and cities at this under populated place can still receive services from two long distance carriers (Hudson, H., 1997, p. 147).

            There is a great dilemma facing policy makers whether allowing duopoly or opening to unrestraint competition. Duopoly, where only two competitors in one sector are allowed, can produce the problem of duplicating and even worst; operators are reluctant to compete over the price. Both of them seems to collude over the price so that consumers have no choice, but only to accept whatever offered by providers. When opening to more investors, providers can form themselves into alliance. Again, smaller investor can sell their companies to stronger competitor that becomes a new monopoly (Hudson, 1997, p. 147).

The duopoly problem in Australia, the newly formed Optus Company had to compete in unequal term against the old established Telstra. Optus had to depend on Telstra network that was formed eight decades earlier and were reluctant to un-bundle its facility (Barr, 2000, p. 83).

Cambodia also faces the duopoly of international telecommunication gateway as well, where the two gateways still charge a high tariff of internet and international call. Because government officials are free to bend the rules and regulation, instead of a transparent bidding process, the privatization favors companies who have connection with high-level authority than to regular investors (Ingram, K., 2001, March 16). Despite the alarming comments from opposition lawmakers or members of parliament, the regulators themselves are also sharing the majority of parliament seat, and political power rather than any written contract or law, can make every decision.

This frightening factor sees a monopoly that can provide all services to consumers who have no choice. Even if the convergence of technologies allows customers to avoid the natural monopoly because they can have access to many services such as telephone, internet, and video on demand on a variety of media, such as wireless and wire line, however, the new monopoly can provide all services conveniently at only one media, but with a rigid price.

            In this regards, the existence of consumer protection laws and a neutral agency to monitor consumer problems is very important. There are still customer protection issues, even in developed countries such as the United Kingdom and Europe. Users need to wait longer than in the United States for installing a new telephone line. Even if itemized billing is in place, consumers are still facing disconnection if there is a dispute over their bills and there is no penalty to providers. Therefore, consumer protection is more important than just unrestraint competition (Hudson, 1997, p. 151).

While unrestraint competition can be a problem to the free market economy, regulator can enforce regulation through appropriate licensing. Licensing should not be a way to create monopolies, but it should ensure a high technical standards and open interconnection to competitors (Regli, 1997, p. 206).

Technology Development is a Moving Target for Regulators

 

High technology development can also be a challenge for regulators. The development of technology is becoming a moving target for them, can create more challenges than opportunities. Pressured by telecom operators as well as consumers, regulators are given the task of making the rules of the game as fair as possible. The British Telecom, OfTel, by trying not to disturb the innovation, acts moderately toward regulation (Skidmore & Miller, 2003, p. xix).

The invention of mobile phone that can surf internet can render the fix phone service obsolete if no DSL broadband internet technology comes to rescue. The unforeseeable problem appears as the WI-FI technology and the broadband satellite connectivity arrive too soon and seem to be unregulated. It gains the market share at the expense of fix landline service, because, as appose to mobile service, landline infrastructure such as fiber optic cable, need a large capital investment to realize the benefit.

The landline network can seek revenge, for example by blocking the interconnection. Unbundling of facilities to create an equal access from various competitors is also a challenge.

More regulation problems will appear when the new invention allows users more choices over content and when their livelihoods become more dependent on this technology for their basic living. Access to contents that is harmful to society such as illegal financial transaction and gambling is just part of the problems. The problem can be equally harmful when an unscrupulous service provider who can invade the customer privacy for marketing purposes (Skidmore & Miller, 2003, p. xix). The worst scenario will happen when the organized crime group can also take advantage of this privacy invasion by illegally obtaining consumers data from a service provider.

Investment without Capital

The issue of "investment without capital" is also happening in Cambodia. One example of the non-transparent process appeared during the transfer of ownership of the telephone service from the Australian telecommunication operator, Telstra, to the Cambodian government. The Cambodian government offers this ownership to the AZ Company with an obscure bidding process. The owner of the AZ Company also has a strong connection with the highest government official (Ingram, 2001; Marcher, 2000).

Another government official who has influence over telecommunications regulation, such as the telecommunication minister, with supports from others high ranking government official, can also work as a paid advisor to a local mobile phone company, the Mobitel, that own the largest mobile phone market share in Cambodia (Carmichael, 2001; Ingram, 2001).

It is similar to the Russian newly developed free market economy, "... following the patterns of interaction during the communist period, most of the managers have close ties to the political system at the regional and local level... every company concentrates on applying existing models of telecommunications services to skim the cream from the telecommunications market." (Regli, 1997, pp. 197-8)

As researchers Paul Skidmore and Paul Miller suggested, the problem could only be contained when there is cooperation between all stakeholders, from regulators to all operators and consumers. As the two researchers stated that, "When it comes to regulation, the future's not black and white, it's grayscale." (2003, p. xix)

 

STEPS TO PRIVATIZATION

 

 

            Most policy advisers who are experts in telecommunications believe that monopoly in this sector is an obstacle to technology development, since technologies drive the markets and markets drive regulation (Regli, 1997, p. 206; Skidmore & Miller, 2003, p. xix). In this regards, government need to take steps to privatize their telecommunication monopolies. For sustainability of state infrastructure and people welfare, service efficiency and technological development need to go hand in hand with state revenue. Privatization strategy in some countries involves totally separation of telecommunication operators from the government department that requires this sector to raise its own capital with its own management policies. Some other countries are still working on creating an autonomous government entity of telecommunication sectors, which is within the reach of the government hands (Hudson, 1997, p. 68).

DIFFERENCE STRATEGY FOR DIFFERENCE COUNTRY

 

                A UN research found that the growth of telephone users in developing countries leads to three times the growth of economy. However, not every country can have the same strategy; as their differences in priorities, urgency and starting point are so dramatic. Nevertheless, all of them need to upgrade their infrastructure and service efficiency. Surveys by the International Telecommunications Union found that more than half of the world’s populations live in countries that have less than one telephone line to a hundred citizens, even if consumers and investors are ready for investment. The investment target in India is to add 10 million more telephone lines by the year 1997 to the current eight lines per thousand people. They expected that the US West Company would be the leading new investor. The government encourages new investors to upgrade the existing infrastructure rather than to build a new one by charging only US$20 million application fee and a 35% share of revenues. Singapore, which already has advanced infrastructure, seek to become an international hub of telecommunications traffic in Asia to rival those of Hong Kong, Japan and other neighboring competitors (Beardsley & Patsalos-Fox, 1995).

Public enterprise where government still use political quota for Post and Telecommunication staff

 

            In countries where powerful constituencies such as unions are opposed to selling off the telecommunications operator, the government can use the intermediate strategy by putting into autonomy of the public enterprise. Others government owned industries such as the national airlines can also work on similar strategy. Without having to give up its government ownership, the telecommunications sector can run on business principles, able to reinvest its own profits and still under the government ownership. Similar to the case in Cambodia, the State-Owned Enterprises need to hire the government civil servant according quota set by the government policy makers. Therefore, they do not have the authority to set pay scales or perfor­mance incentives (Hudson, 1997, pp. 68-9; see also TITH, 2001).

In Europe, the United Kingdom was the first to adopt this restruc­turing strategy: they split the British Telecom from the Post Office to become a Crown corporation before being privatized. Several developing coun­tries have taken this intermediate step of privatization. Others have gone a step further by inviting private investment in joint ventures with government-owned operators. European and American carriers are investing in telecommunications operations in Central and East­ern Europe, Asia, and Latin America (Hudson, 1997, p. 69).

            Some government owned enterprises are vulnerable of being used as a dependable source of fund by the government. In countries like France, Germany, and Australia, the government allows some competition without privatization, even though it appears to be a transitional strategy. There are now plans for full privatization (Hudson, 1997, p. 148).

Privatization in Germany

 

 

            In Germany, reunification is the highest priority. The government ordered the Telekom to finance part of its revenue to the reunification policy. The German Telekom needs to cover part of the cost incurred by the post office and the postal bank and to surrender 10 percent of its revenue to the ministry of finance. However, started from 1996, this company needs to contribute to the state through taxes and share profit distribution like a private company (Hudson, 1997, pp. 126-7).

Privatization in Japan

 

 

The Japanese telecommunications sector is run and supported by two state own companies, the Nippon Telegraph and Telephone Public Coporation (NTT) and the Kokusai Denshin Denwa Company Limited (KDD), with no independent regulator. The government controls the regulation and the coordination of this sector through the Ministry of Posts and Telecommunications (MPT) and through the policy support from the Ministry of International Trade and Industry (MITI). Despite being regulated, controlled over policy and at the same time operated by the government institution, the Japanese telecommunications sector is also receiving better treatment by being gradually privatized with less regulation. Through privatization process, instead of being divested into smaller firms of AT&T style, the NTT get a large number of trading and engineering companies as shareholders and the government still owns most of the business. More than this, the Japanese government allows the use of public funds for research and development (R&D) of new technologies so that its Telecommunications companies can market their product internationally (Hudson, 1997, pp. 105-117).

Privatization in Cambodia

 

The David Butcher and Associates Consultant Company recommended to the Cambodian government that Telecom Cambodia should be a commercial entity with operational autonomy, and eventually private (Final Report, p. 12), but there is no indication that any implementation is taking place yet.

According to TITH CHANTARINNE, the Billing Officer of the Ministry of Post and Telecommunications (MPTC) of Cambodia, the MPTC is the regulator and at the same time operator of Cambodia telecommunications service. Even if the mobile phone services are provided by private sectors, the MPTC retain ownership of the fix wire telephone service (TITH, 2001). The controversy over allegation of the conflict of interest by the government official appeared in the media when a member of parliament of the opposition party questioned the acceptance of the MPTC minister as a paid “honorary advisor” position to the Mobitel's board of directors. Mobitel is the largest mobile phone private company in Cambodia (Carmichael, 2001).

MICROECONOMIC AND MACROECONOMIC FACTORS OF PRIVATIZATION

 

            There is still different point of views among telecommunications experts on the criteria of State-Owned Enterprises (SOEs) in telecommunication sectors for privatization. Some of them set the criteria according to microeconomics analyses. Others try to look from the macroeconomic factors. Proponent of the microeconomic analyses argued that SOEs that fit the criteria of privatization are only those firms that could improve efficiency through a change in ownerships. The more SOEs that are relatively inefficient and performing poorly, the more they are appropriate for privatization. This means that countries with inefficient state owned companies are likely to sell out than with the more efficient one (Molano, 2000, p. 737).

            However, proponent of the macroeconomic analysis suggested that civil servants are interested on political benefit and income redistribution rather than efficiency. They argued that, “the greater the political control, the lower the level of efficiency”. Civil servants try to monitor their entities not because of efficiency purpose, but to seek more control on political power. The intense focus on efficiency can minimize the important of macroeconomic factors, even though the microeconomic explanations of the privatization process provided fundamental insight into some of the driving forces. One group of scholars who examined the impact of government budgetary dynamics on the privatization process argued that, “there was a strong link between privatization and fiscal performance in developing countries”. The developing countries that tend to have large deficit are motivated to have privatization policy. Since they are severely lack of hard currency, auctioning off their salable public assets is the easiest option they can find. Therefore, contrary to the microeconomic explanation that predicts the sale of SOEs based on low efficiency, the higher the price of salable SOEs, which is the more efficient entity, will most likely be on the international auction table. Therefore, study of divestiture process should not limit on the firm efficiency alone, but should include three factors that are fiscal deficits, debt, and multilateral lending agencies (Molano, 2000, p. 737).

 

 

THE TREND THAT RESHAPE OUR WORLD

 

Housel and Skopek wrote in 2001 that, “As we move through the information age, profound changes in the way companies do business are being enabled by new information technology. The telecommunications industry, along with its products and services, is playing a central role in promulgating these trends.” Successful companies can take these changes as opportunity rather than being victimized (p. 262).

Consolidated Information Systems, Internet Telephony and analog phone systems

 

            Most countries as well as the United States, telephone operators still provide service for local loops analog telephone systems. The pure digital networks are still in transition in some countries. To serve the analog telephone users, the transmission central office need to convert the analog signal into digital for long distance transmission, and then converted back to analog signal at the terminating central office. This technology can preserve the signal quality for long distance call. However, some companies in Asia and Europe employ the digital signals on most of their networks (Housel & Skopec, 2001, p. 127).

            Many countries as well as in Cambodia, the transmission of voice over internet or Internet Telephony is very popular. Nevertheless, it does not mean that there is no obstacle to this technology. In the United States, some local telephone providers have petitioned the FCC to halt sales of Internet Telephony because they think that it has unfair cost advantage over conventional telephony. However, according to the FCC Commissioner, the United States regulator, rather than halting the sale, is supportive of this technology (Housel & Skopec, 2001; Ness, 2001).

 

In Cambodia, the use of VoIP for international call from capital city or towns and the use of portable VHF two-way radios for rural communication are examples of bypassing the local telecommunication monopoly. The problem is that international call are much more expensive than VoIP and some rural communities do not have even mobile phone service available, let alone for landline telephone infrastructure. The VHF radio is still a cheaper solution than the mobile phone service for business enterprise that needs constant communication.

In addition, because the slow growth of landline telephone systems, all customers are still served by analog signal and mobile GSM signal which are not fully VoIP. This scenario is contradicted to the trend of globalization that tends to foster internet telephony. This contradiction could happen because they do not want to or cannot lower the cost of analog service. The analog service which requires many levels of information translation, such as from analog to digital and digital back to analog at the operator systems, as well as complicated billing systems, can make the service cost higher than the digital systems. So the best way is to streamline the analog systems and gradually move to digital third generation internet based telecommunication systems, while at the same time establishing the international gateway for internet telephony service.

Convergence of Technologies and Services

 

The convergence of technologies makes it difficult for researchers to differentiate between telecommunications and information systems. It is similar to the function of ITU and ISO in maintaining technologies standard, as Dr. Heather Hudson wrote, “… Traditionally, the ITU has been the forum for developing telecommu­nications standards, while the ISO has dealt with information sys­tems. However, as the technologies converge, the work has begun to overlap. An example is the seven-layer Open Systems Interconnection (OSI) model, which is the foundation for many data communications protocols…” (Hudson, 1997, p. 400).

Information technologies and services will merge to enable entrepreneurs to do everything themselves under one roof. Advertising, production, distribution, and communication media technologies are converging because when the product is digital it is possible to bring everything together in one place (Housel & Skopec, 2001, pp. 273-4).

Globalization of Markets and Production

 

Just as the distinction between local and long-distance calls is a historical artifact, the significance of international calls is disappearing. National monopolies are rapidly being privatized and entering into global alliances that render geographic boundaries meaningless. When the price of network equipment; such as internet switch, digital modem, and fiber optic; come down, people can replace the analog telephone systems completely. Some corporate offices already implemented this structure and later can expand to urban areas to replace conventional telephone systems for local voice call. The internet technology allows people to eliminate the analog telephone systems by replacing with Internet Telephony systems whose signal can share with others IP based communication systems. The immediate goal is to take advantage of the IP based networks by gradually replacing copper wire networks with fiber optic networks; and the long-term advantage is that such IP telephony systems will make the local, long distance, international distinction irrelevant (Housel & Skopec, 2001, p. 265).

In Cambodia, there are at least three mobile phone private companies and one landline Telecom Company that belongs to the state. And there are two international telephone gateways, one belong to the state and another belong to a private mobile phone company, the international call is still very expensive and the use of VoIP is also prohibited, even if not very strict, by local authority. The local authority who tries hard to join the WTO that foster globalization, made a regulation that seems to contradict the globalization process, banning the use of VoIP in the reason that it can reduce the revenue from Telecom industry.

Information/Knowledge Haves and Have-Nots

 

            Perhaps the most dangerous trend in the new economy is the emergence of informa­tion haves and have-nots. The price for entry into the new economy is, at a minimum, the cost for a computer equipped with a modem and printer. Families that must decide between paying their rent, clothing their children, and keeping enough food on the table will be hard pressed to purchase the minimum tool set for the information age (Housel & Skopec, 2001, p. 277).

These disparities represent the most dangerous land mine in realizing the benefits of the information age. A global caste system could develop unless access to the new means of production is open to the greatest majority of the population. As the infor­mation have-nots realize what they are missing, the potential for tribe formation and warfare becomes more real (Housel & Skopec, 2001, p. 278).

During the last century and continue to this century, the world change rapidly from industrial age to information age. In terms of social issue, perhaps the most salient problem is seen in Cambodia where average person who earn less than a dollar per day, according to recent ITU statistics (2004), Cambodia has the least computer owners in Asia.

Barrier to the Development of Information Society Is neither Technical nor Financial, but Psychological

 

The Bangemann report commissioned by the European Commission to find the barrier to the development of information society, shows that the biggest barrier is neither technical nor financial but psychological, “Europeans need to understand how important information and communication technologies are to the EU economy” (Hudson, 1997, p. 168).

It depends on people perception of information and telecommunication technology. The latest internet technology allows the exchange of popular entertainment and text applications such as interactive TV, Internet Telephony and even virtual reality. However, this application is still exist only in sophisticated corporate office and in cosmopolitan city of industrialized countries. We still not yet see the household usage of this application, especially in developing countries where the internet cost is still out of the reach of average people. Scholars intuitively agree that the internet and the conventional media such as TV are different; including timeliness, inter-activity and capacity, but the full convergence of the two is yet to materialize. Nevertheless, it also represents a "death-star" for potential competitors who are unable to prepare for the coming of the information superhighway (Atkin, Jeffres & Neuendorf, 1998, p. 475).

There is also a great distrust among people toward computer technology, which scholars attributed to the term “cyber phobia”. The fear of or anxiety to the technology is not because the technology is difficult to learn but because it may change the existing culture, power structure or habits (George, Sleeth & Pearce, 1996).

Researchers found out that there are five causes of phobic behaviors such as negative symbolism of technological change, because of technological change itself, manifested resistance, failure to recognize stages of change and acceptance, and failures of implementation (George, Sleeth & Pearce, 1996).

Negative symbolism may involve perceiving oneself as incompetent, by having the perception that adapting to the new order is not necessary or feel that their current skill is outdated. Frustration may happen from the perception that computers cannot think or that systems are faulty or somehow incomplete (George, Sleeth & Pearce, 1996).

People may show frustration from the early stage or even in anticipation of technological change. The frustration can happen during the transition period itself. It can happen when the person lost status or power, personal interaction, isolation, failure, job displacement or effects of computers on society (George, Sleeth & Pearce, 1996).

Manifested resistance is the underlying perceptions that include sensing or anticipate loss of control; insecurity, work overload resulting from learning a new order; altered status; learning unwanted new skills; financial loss; a challenge to self-organization; or that the new order impose forced changes in behavior, beliefs, or values (George, Sleeth & Pearce, 1996).

People need to recognize stages of change so that they can transform themselves. Stages in the change process need to go along with the acceptance as well. They need to identify need for change, unfreeze old order, learn new order, and refreeze new order. Awareness that the change process is going reasonably well can spare costly intervention into circumstances that will resolve themselves (George, Sleeth & Pearce, 1996).

Frustration may result from poor implementation. Scholars pointed out that implementation problems may come from failing to plan well the introduction of new technology and not involving people sufficiently in planning and design. They added that problems might arise due to a lack of direction to guide implementation. The response modes of poor implementation include puzzlement, resentment, feelings of inferiority or of helplessness, and task disorientation. When facing with hopelessness and helplessness, people may have the perception that the adaptation to the new technology is not important (George, Sleeth & Pearce, 1996).

Lack of telecommunication does not necessarily means the lack of purchasing power

 

According to the survey from the International Telecommunications Union, in lower-middle-income countries there are almost two and a half times as many TV sets as telephone lines, and in low-income countries, there are more than 13 times as many TV sets as telephone lines. Therefore, the lack of demand for telecommunication services does not means that people are always lack of purchasing power. It is because of the lack of telecommunications service rather than purchasing power. This problem usually happens in the low-income countries where authorities are interested in mass propaganda than freedom of communications for the people (Hudson, 1997, p. 220).

If there is a political will from strategic planner, they can implement the last mile telecommunication solutions such as mobile phone and wireless local loop telephone systems for rural area, by liberalizing the import of this technology and encouraging local operators to serve rural areas with nominal price. Rather than cream skimming the lucrative market at downtown area, telephone operators can preserve cheap analog technology for rural area with lower investment power.

Privatization without freedom of information exchange

 

In 1993, more than 3,000 international companies put Singapore as their hub of telecommunication systems, but fewer companies base their regional center in Singapore than in Hong Kong. However, Singa­pore has been aggressively marketing itself as an alternative to Hong Kong because of the uncertainty of the post-1997 political environ­ment in Hong Kong. Singapore has attracted several regional satellite uplink operators including HBO, ESPN, and ABN (Asian Business News), among others. Ironically, these operators can transmit from Singapore, but Singaporeans, who are not permitted to own satellite antennas, cannot receive their programs (Hudson, 1997, pp. 276-7).

In Cambodia, there is no other satellite antenna than the Thai owned UBCTV and a government owned internet Satellite Company that was leased from a foreign company (CAMNET, 2004). Therefore, there seems to be partially liberal in freedom of information exchange. However, in terms of Cambodian poor standard of living, even a short wave radio is difficult for them to afford, and most Cambodian are still information poor.

Social Trend: Displacement of job

 

In 1987, investors learned about the downside of instantaneous in­formation about global markets, as the plunge on Wall Street trig­gered massive selling in London, Tokyo, and Hong Kong. Investors have also learned to monitor satellite television for breaking news that could affect the markets. In 1990, financial institutions in Singa­pore lost millions of dollars in the first few minutes of the Gulf War because they did not have CNN (Cable News Network). They then persuaded the Singapore government to make an exception for finan­cial institutions to its ban on satellite antennas (Hudson, 1997, p. 51).

This scenario can infer that classifications of "information rich" and "information poor" may mean more than distinction based on GNP or other traditional development in­dicators. The past quarter century has been marked by dramatic technological developments in computers and telecommunications, and the grow­ing importance of information in all aspects of human life. Access to information, and to the facilities to produce, store, and transmit in­formation, is now considered vital to the success of the business (Hudson, 1997, p. 179).

Entrepreneurs will have to realize that even though the start-up costs for providing services on the Internet are relatively low, understanding the new framework for doing business in the information economy is even more important. The industrial age econ­omy based on acquisition of tangible assets via capital resources is nearly obsolete. The predictable and incremental growth as acquired by production capabilities is not the case for the information age (Housel & Skopec, 2001, p. 277).

A better metaphor for the new economy is a "jungle, mutational unpredictable growth" model, punctuated by periods of chaos followed by relative stability. Invest­ments in this new economy will be based more on the acquisition and utilization of knowledge assets and intellectual capital. Entrepreneurs will need to track the speed with which they transform these assets into value-producing revenue streams through the offering of new electronic services. They will need to create instantaneous market feedback mechanisms to ensure that their knowledge assets are producing value streams for customers and move quickly to acquire new knowledge assets or pare un­derperforming ones as the market's response dictates. Change will be the order of the day-and predictability of markets a thing of the past (Housel & Skopec, 2001, p. 277).

 

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