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When a call originating in one Service Provider is made to another Service Provider, an "interconnection" between the two systems is made. This interconnection may be made over a dedicated interconnection line that the two Service Providers have installed between themselves. If there is no dedicated interconnection, or if the dedicated interconnection lines are full, then the interconnection is made through the Ministry of Post and Telecommunications.
An interconnection through the Ministry can be disrupted by the unavailability of a line from the originating Service Provider to the MPTC, technical problems within the MPTC (lack of capacity, disruption, poor quality lines) or unavailability of lines from MPTC to the called Service Provider.
Whether through the MPTC or over a dedicated interconnect line a Service Provider that calls to a second Service Provider must pay an interconnection fee to the second Service Provider. This fee was initially $0.14, then $0.07, and now only $0.01 per minute. In practice, calls from one Service Provider to a second Service Provider roughly equal the number of calls from the second Service Provider to the first Service Provider. Only one of the two Service Providers needs to pay the difference between the two amounts. (For example, if A owes B $10 for 1,000 minutes of calls from A to B, and B owes A $11 for 1,100 minutes of calls from B to A, then B will owe A only $1)
The original high interconnection fee ($0.14 or $0.07) was beneficial to service providers, detrimental to the interests of consumers, and therefore supported by most service providers. Each Telephone Service Provider charged more for Out of System connections that for In System connections, generally at least $0.20 more and sometimes more than $0.90 more. However, as discussed above, the Telephone Service Provider often did not even have to pay the interconnection fee, they only collect it from the customers! The $0.20 to $0.90 was a rich profit at the expense of the consumer! There was a tax on interconnections of $0.005 per minute collected by the MPTC. The $0.005 tax was paid to MPTC whether the interconnection was made through the MPTC or across a dedicated interconnection. The motivation for companies to install dedicated interconnections is not financial but better quality and quicker connection.
The MPTC has now reduced the interconnection fee to $0.01. MobiTel has opposed this change, while other telephone service providers have come out in support of the reduction. Why? MobiTel has over two thirds of the telephones in Cambodia. They rarely have to pay an interconnection fee because at least 2/3 of MobiTel calls are to MobiTel. Other providers though have to pay MobiTel 2/3 of the time. Other providers realized that the high interconnection fees prevented their customers from calling 2/3 of telephones (MobiTel).
Charging the interconnection fee to customers was losing business for the other companies. Shinawatra, Samart and CamTel dropped interconnection fees between themselves. This reduces costs for their customers calling between the three networks and should allow low $0.18 a minute or lower rates.
With a low $0.01 interconnection fee, other companies should be able to lower their out of system rates and offer a cost to call into MobiTel lower than what MobiTel charges its own customers for an in system call. This will threaten MobiTel's virtual monopoly and it is the reason that MobiTel opposes reduction of the interconnection fee.
It is interesting to note that the interconnection charge is never more than $0.01/min. If a 012 in Siem Reap calls a 011 in Kampong Som the interconnect rate is still $0.01/min. 012 may charge their customer $0.33/min, but they pay only $0.01/min plus tax for the connection. The reason for this has to do with the passing of information between Service Providers. Look first at how a Hand phone Service Provider charges its customers for calls between telephones. There are three ways that charges can be billed:
1. A company can say that all calls within the system are billed at local rates. The company does not track, for billing purposes, where the hand phone is or where it is calling. This simplifies the accounting for the company. There is a move by hand phone providers to this method of billing. MobiTel and Shinawatra 011 each offer this benefit.
2. A company may look only at the registered location of the telephone that makes the call and the registered location of the telephone that receives the call. If the registered locations are not the same, the inter-provincial rate is charged. This allows the company to charge higher per minute rates, without having to have complicated call accounting equipment. This billing system, in addition to being exploitative, is inaccurate. A Phnom Penh registered 015 located in Phnom Penh that calls to a Battambang registered 015 phone, also located in Phnom Penh, will pay the inter-provincial rate. Similarly, a 015 telephone registered in Phnom Penh that calls a 015 registered in Phnom Penh, but located in Kampong Som, pays only the lower local connection rate, not the higher inter-provincial rate.
3. The telephone company can link the call accounting equipment to cellular switching equipment in order to determine the location of the calling and receiving telephones, and then bill according to the relative location of the two. This is more common in larger countries with larger Service Providers. It also requires exchange of information between providers.
The switching equipment of a "cellular" telephone system knows where each of the telephones in its system is located. Each hand phone communicates regularly to the system, letting the system know which antenna it is closest to and on which antenna to call the hand phone for an incoming call. This information is not provided to other Service Providers though. If MobiTel places a call to Samart, Mobitel does not know the location of the Samart telephone. They may charge you the $.033 per minute Out of System National Rate, but this is based on the registered location of the receiving telephone, not the actual location of the telephone. The fact that they make a 100% profit on the call does not encourage them to remedy the situation.