November 2003 updates

Illegal international telephone gateways continue in Cambodia
By Norbert Klein in Phnom Penh, Cambodia. November 2003

Three sites operating illegal international telephone gateways were raided on 19 November 2003 by the police and officials of the Ministry of Post and Telecommunications. Several months ago, a similar intervention stopped another illegal operator who had invested over US$ 50,000 and still had hoped to operate a profitable business by circumventing the two officially sanctioned gateways.

These illegal activities have a sound economic basis, and the result of the services they were offering was actually not so much different from what some international finance agencies had advised: expand access to telecommunications as a development tool, and keep the real cost of telecommunications as low as possible, to facilitate the development of businesses to increase wealth in the country.

Consultancies on behalf of both the International Telecommunication Union and of the World Bank have commented on the problematic Cambodian situation, where the highest telecommunication costs and the lowest incomes co-exist. Several consultancies have pointed to conflicts of interest, as the Ministry of Post and Telecommunications is an integrated policy, regulatory, operational, and asset management agency, with "unsuitable public service administrative structures being used to run a business," as a World Bank funded study said.

A key problem is the critical gap between the actual cost of delivering international telecommunication services and the officially levied tariffs, estimated to be several times higher. Analyzing this situation, the study had predicted the present illegal activities back in 2001: "Unless tariffs are brought closer to costs, other legal or illegal methods will be found to exploit the gap – the main threats are Voice-over-Internet-Protocol and illegal gateways." And the solution proposed: "Bring tariffs closer to costs."

The raid on the gateways was followed on 28 November by raids on computer shops, confiscating hardware for Internet voice calls and prepaid cards to use computer-to-phone voice services. A political group stated: "The raids, confiscations, and arrests are purely commercial intimidations designed to force all international telephone calls to go through the gateways 001 and 007... that maintain prices of overseas phone calls at an artificially and appallingly high level."

An (illegal) international phone call to the US through the Internet in any of the many Internet cafes costs five or six US cents per minute, while the price using a telephone is around, or more than one dollar per minute.