The top two managers at newly formed Internet service provider City Link were ousted on Friday, the managers said Tuesday.
Both men said that the owners of the company—until recently a closely guarded secret—are in fact the staff association of the Ministry of Post and Telecommunications, the ministry charged with regulating and licensing ISPs.
“On Friday my five-year contract signed with the Staff Association of the Ministry of Post and Telecommunications was terminated. The Staff Association took direct control of the running of the company,” former CEO Paul Blanche-Horgan said Tuesday.
Blanche-Horgan, formerly the head of Cogetel’s Online ISP, said that a “Mr Victor” from Camintel is now CEO of City Link.
A staffer answering the phone at City Link confirmed that people from the Ministry of Post and Telecommunications have taken over the company. No one at the company on Tuesday would give any other information.
Former chief technical officer Mike Gartner confirmed that he is no longer with the company and that a new CEO has been introduced to the staff.
“The Staff Association has said that they are preparing termination notice,” he said. “We are still in negotiations with them.”
Gartner would not say how the staff association of a ministry, where an average staffer earns some $30 a month, was able to pay the $450,000 start-up costs of City Link.
But he denied the ownership by MPTC staffers led to any sweetheart deals.
“We developed a legitimate business plan, and it was not based on any connections, on anyone in the ministry doing any favors,” he said.
The ex-CTO said that City Link was able to undercut its only DSL competitor, Online, because both managers understood Online’s weaknesses.
“I used to work for Online so I know their profit margins, and you can keep prices that high but Cambodia will never develop,” he said. “We created City Link to expand the market. We knew that we could do it for cheaper.”
Gartner said Online’s technology was at least three years old and prices for technology were cheaper now.
Gartner added that he does not know why management was replaced, but he does believe his and Blanche-Horgan’s contracts could not have been terminated for mismanaging the company.
“City Link had 140 DSL customers after two weeks. Online has 800 customers after three years,” he said.
On Tuesday, Peter Booth, the general manager of Online, said that his company prices its DSL service at the lowest sustainable price and that his company has not seen mass defections of customers to City Link.
“The prices in the market are determined by constraints on amount of fixed telephone lines, low economies of scale, taxes and duties on the import of equipment and licensing fees by the Ministry of Post and Telecommunications,” he said.
He added that only when there is greater investment in infrastructure, especially adding to the 25,000 fixed phone lines, will Internet prices come down to levels seen elsewhere in the region.
“Until then, the six service providers are just fighting over the same customers,” he said.
Booth said he would not comment on City Link.
Instead he highlighted a new My DSL-E plan from Online that charges $99 per month for 128 kbps service with 800 MB of data compared to City Link’s $59 plan that offers 500 MB per month.
Tim Smyth, a leading telecommunications business expert with Indochina Research consultants, said having staff members of the MPTC, which regulates the Internet, own an Internet company could create a conflict of interest.
“The potential is always there,” he said, adding that any under-the-table discounts given by regulators to their own company would be very hard to prove.
Opposition lawmaker Son Chhay said Tuesday that the ministry employees should focus on filling government coffers.
“They should be more concerned with making the Internet market more competitive and collecting fees for the government than conducting their own business,” Son Chhay said.
MPTC Minister So Khun could not be reached for comment Tuesday.