Govt key to lower internet prices

This map of Cambodia’s fibre optic network shows the country is reliant on Thailand and Vietnam for its internet access. Planned extensions to the network are also shown, one of which will travel through Laos and connect to Yunnan province in China. A submarine cable is also planned to link Cambodia to the Asia-America Gateway. graphic courtesy national ict development agency

The Phnom Penh Post

Written by Nathan Green
Tuesday, 31 March 2009

Government plans to connect to the Asia-America Gateway may improve internet reliability, but local service providers are worried the new connection may still carry a high price tag

Cambodia is one of the most expensive countries in the world when it comes to using broadband, according to a recent report by the International Telecommunication Union (ITU).

In its latest ICT Development Index report, Cambodia ranked as 125 out of 154 countries in the costs of using broadband internet, and one of only 30 where the cost of broadband exceeded monthly per capita gross national income.

According to the report, which was based on 2007 pricing, broadband prices were 201.2 percent of monthly national income, compared with 6.3 percent in Thailand and 25.8 percent in Vietnam.

And it is not just the poor who are hit hard by high prices. Ted Perrein, managing director of Conical Hat Software, said the cost of broadband access was one of the biggest obstacles businesses faced in Cambodia.

"Reliability is all right, but the pricing is an issue. It is one of the big disadvantages of working in Cambodia, but most companies incorporate that into their business plan."

ITU spokesperson Ivan Vallejo said inadequate infrastructure and the lack of a competitive environment to foster the emergence of several internet service providers (ISPs) was a key reason for high broadband prices in most countries.

In Cambodia, the lack of competition is not an issue, at least at the ISP level, said Gary Wong, chief marketing officer at Online, one of Cambodia's largest ISPs. While exact numbers are hard to come by, around 37 ISP licences have been issued, and around 10 major ISPs are operating.

"Cambodia is a very price-sensitive market but we have to be prudent," Wong said. "Everyone is going into a price war at the moment, but if they sacrifice quality, then what happens next? We cannot go below our costs - we are not a charity."

To cut costs, the company was looking to invest more in its infrastructure to boost its contention ratio, or the number of subscribers it can provide service to for every megabyte of bandwidth it purchases from wholesalers. But Wong said efforts would be futile without government commitment to making prices cheaper to ISPs on the wholesale market.

Better links
Key to this was the greater cooperation with neighbouring countries through the Asian Development Bank-funded Greater Mekong Region Superhighway and developing a link to an international gateway to put pressure on operators in Vietnam and Thailand to offer cheaper access.

Cambodia currently relies heavily on bandwidth from these two countries, and that reliance comes with a hefty price tag. While wholesale prices within Vietnam are around $400 for every two megabytes per second of bandwidth, ISPs in Cambodia must pay between $1,300 and $1,400. A year ago, before reforms in Vietnam boosted competition, they were paying between $2,000 and $2,300. By comparison, the same bandwidth costs around $110 in Singapore and $50 in Hong Kong.

Mao Chakrya, director general of the Ministry of Posts and Telecommunications, said the government and donors were investing heavily in upgrading and expanding the country's fibre-optic backbone and linking into the superhighway. As a key part of that, a new fibre optic link through Laos to China's Yunnan province is due to be connected in May, and planning had begun for another link from Kampong Cham to Vietnam, connecting at Smach on the border.

"We are working and fighting to reduce the price for voice and internet," he said. "Right now, as you see, we don't have a submarine cable into an international gateway so we rely on the prices set by telcos in neighbouring countries."

Chun-Wai Mah, sales director at Alcatel-Lucent Cambodia, which recently won a contract to build a nationwide mobile WiMax broadband network for CHUAN Wei (Cambodia), agreed that Cambodia was at the mercy of other countries when it came to broadband prices. "Cambodia needs its own international gateway out of the country," he said

"By having one you could really reduce dependency on telcos in other countries and help reduce the price so mass consumers are able to access the internet."

Respite is on the way, with local firm Telcotech winning a bid in 2007 to link Cambodia via a submarine cable to the Asia-America Gateway, a cable system connecting Southeast Asia to the US that will allow Cambodia to bypass neighbouring countries and connect directly to the World Wide Web.

But Sok Channda, CEO of the ISP AngkorNet, said the link would improve reliability of service by providing another link, but she was pessimistic about how much impact it would have on prices.

"It depends on the government," she said. "If they control the link, how much will they charge us is the big question."

The government's track record on pricing was cause for concern, she said, with transmission charges on the fibre-optic cable on the Cambodian side of the border, controlled by state-owned Telecom Cambodia, a major component of broadband prices.

ISPs must not only pay for transmission charges from the border to main centres, but also to connect customer premises to the nearest hub, and those hubs to AngkorNet's data centre. ISPs must pay Telecom Cambodia $15 a month for every connection to a customer's premises, a significant portion of the total bill charged to customers.

AngkorNet was building its own fibre-optic network to bypass the government, but that would take time and significant capital expenditure, she said.

"We are trying to bring down the price so that all Cambodians can access the internet as we need this for our development. We have already brought down the prices a lot from three years ago when we first started, and I hope we can bring it down more. But lower prices need to come from the government."