People in Cambodia respond differently to fires these days. A few years ago, when blazes broke out, people would fire guns into the air - the quickest way to summon help in a country so torn by decades of civil war that it has practically no telecoms network. These days, Phnom Penh residents are more likely to reach for a mobile phone to call for help.
One of the fastest-growing mobile markets in Asia, Cambodia now has the world's highest market penetration for handphones. They account for about 70% of all telephones in the country. Mobile networks are cheaper and faster to set up than traditional land lines, so communications technology appears to have skipped a generation in Cambodia.
It sounds like a mobile company's dream - except that there are so many rivals. At least six networks are vying for customers. They are entrenched in such a heated phone war that analysts say only two, maybe three, will survive.
"By worldwide standards, it's incredibly competitive, probably one of the most competitive in the world. In Singapore, there are only two operators. In Britain, they have three or four," says Iain Williams, general manager of MobiTel, a subsidiary of Luxembourg-based Millicom. MobiTel, the company with the most customers in Cambodia - about 40,000 - is locked in a court battle with its closest rival, Bangkok-based Samart Communications (which has about 20,000 subscribers), over its method of pre-paid phone cards.
Introduced by MobiTel in March 1998, the "scratch cards" allow customers to purchase cards with a stored value of US$10-$50 (Cambodia's currency, the riel, is so weak that the country's economy is dollar-based). They scratch off a seal to reveal a credit code to punch into their phones to make the calls. Customers seem to like the elimination of monthly fees and the "pay as you talk" control. "I can buy cards for as much or as little as I want. It's up to me," Phnom Penh restaurateur So Vathy says. "And there's no need to owe the company."
The cards have helped MobiTel to increase its market share to almost 50% while reducing one of its highest operating costs: bill collection. But Samart, with 25% of the phones in use, in September launched its own, similar pre-paid system. MobiTel sued, claiming it had the patent for the scratch-card system in Cambodia.
"We've invested hundreds of thousands, not just in advertising but in educating the public how to use the system," Williams complains. "Anyone else who comes in afterwards just gets a free ride."
Samart's CEO in Cambodia, Somchai Lertwisetheerakul, counters that the pre-paid scratch system is common throughout Asia and cannot be patented. And, he says, MobiTel was never granted a patent anyway. He says his lawyers will present evidence that the rival only applied for the patent, but never received it.
The case is pending in Phnom Penh Municipal Court. Samart won a recent round. Cambodia's Supreme Court refused to uphold an injunction MobiTel had requested while the patent case went through the judicial process. With the injunction lifted, Somchai says Samart will start selling the pre-paid cards immediately. He expects to win the patent case and plans to immediately go after MobiTel's customers. "Next month we will launch a super-aggressive campaign for the market," he says. "The key success factor for all mobile companies is to expand the customer base." Offering free switchovers from MobiTel, the Samart campaign is to feature per-minute rates as low as 3 US cents - down from 23 cents - but only for calls within the Samart network.
Observers expect the result will be the second mobile price war in a year - good for bargain-hunting customers, but bad for the companies' bottom lines. "We're all facing increased competition and more costs," Somchai says. Bangkok-based Shinawatra is trying to survive by chasing the low-end market, offering bargain phones and ultra-low per-minute rates.
The networks are battling for larger slices of what is still a small market. Cambodia's entire mobile market consists of about 80,000 customers (the population stands at 11.5 million) whose total spending is about US$1 million annually. Still, the market is fast growing; the number of mobile customers has quadrupled since 1996. And while observers say the government-owned land lines will eventually make more inroads, they expect the mobile market to continue to expand as businesses invest in a Cambodia that is enjoying its most peaceful, stable period in decades.
"A million subscribers is entirely possible," Williams says. "Everyone here is investing in the future." But not all networks will survive to enjoy that future.
While mobile phones may be bringing a quick response to fires, the phone companies themselves are trying not to get burned in one of the most heated markets in the region.