Vietnam government’s plan to control free call apps an ‘impossible’ task, experts say
A man uses his smartphone next to a billboard advertising an over-the-top service
The Vietnamese government has decided it should manage free Internet-based telecom tools like Viber, Line and Whatsapp because they are inflicting million-dollar losses on local network providers.
However, experts say the government will find it difficult to do this.
Prime Minister Nguyen Tan Dung has asked the Ministry of Information and Communications to draft regulations to manage free communication services on the Internet (over-the-top (OTT) services.)
Pham Hong Hai, head of the Telecommunications Department under the Ministry of Information and Communications said OTT services have seriously affected telecom companies, so they should be managed. Relevant agencies will consider managing the services, but would not cause difficulties to users, he said.
The country should neither ban all the services nor allow them to freely develop, he added.
Worried about the government’s new policy, some OTT service providers have said if their services are to be managed, the regulations should be transparent and equitable.
However, it is not easy to manage OTT services, experts say.
Nguyen Vuong Quoc Thinh, a telecommunication expert with French network provider Orange, said it would be impossible to ban all OTT services in Vietnam. It would face reactions from users and it is not a measure that local telecom companies expect to be taken.
The companies are not yet able to provide attractive telecom content services, so OTT apps help them reach more customers who subscribe to mobile Internet packages, he explained.
Network providers can also block OTT services on their networks if they want. However, this is unlikely to happen since the providers that ban the services may incur huge losses if others do not follow suit, he said.
Thinh said telecom companies the world over, not just Vietnam, have faced lower earnings from call and message services because of competition with OTT apps. Some countries want to manage the apps, but no specific policy has been outlined yet.
He said Vietnam’s OTT service providers should cooperate with local telecom firms to provide value added services and share the profit.
In fact, some providers like VNG have asked to cooperate with telecom firms, but no deals have been signed as yet.
A telecom expert who declined to be named said the government should not use administrative measures to manage OTT services. He said the government should manage the services only in terms of information security. It should ask providers of OTT apps to ensure security of personal information of the apps’ users.
He noted that other countries do not try to manage OTT services. Instead they facilitate OTT service providers and telecom companies to co-operate for mutual benefit.
OTT services run over telecoms operators' networks, so the telecom companies could offer users of OTT calls of higher quality. Users are willing to pay for this, he said.
Telecom companies could increase their revenue from selling mobile Internet packages, while OTT apps providers can earn more from advertisements, and added value services like stickers and incidental music, he added.
Increasing Internet fees
Vietnam’s leading Internet content provider VNG has been pouring money into advertising its Zalo app, and others like South Korea’s KakaoTalk and Japan’s Line have also become popular in the country over the past two years.
Viber has said it now has some four million users in Vietnam, and sees users increase by some
500,000 every month. Meanwhile, KakaoTalk and Line, which provide free calls and messaging for android phones, say they have over one million users each.
OTT servive providers said they expect to have some 15 million users in Vietnam by the end of this year.
Vietnam has 17 million smart- phone users, according to a Google report. The demand for communications is huge with 60 million people under the age of 30, the report.
The development of free call and message apps has seen Vietnam’s three major telecom companies lose millions of dollars a month, they say.
MobiFone said at a recent conference in Hanoi that it has been losing around VND1 trillion (US$47.45 million) each year to OTT social apps, while Vietnam Post and Telecommunications Group (VNPT), which owns both MobiFone and Vinaphone, said the apps have reduced its revenues by around 10 percent.
Viettel also mentioned big losses at another meeting with the ministry early this year.
“We will lose 40-50 percent of our revenue if all of our 40 million customers use Viber instead of traditional call and text,” said Nguyen Manh Hung, deputy general director of the military-run telecom giant.
Up to 80 percent of a telecommunication firm’s revenue comes from call and message services, he said.
All three telecom companies have asked the ministry to bar the apps until methods are established to control them.
One representative of a telecom company who did not want to be named said: “Our activities are strictly managed, while OTT services are not. Thus, it is not fair competition.”
But so far the ministry has rejected the request, saying there’s no reason for Vietnam to go against the global trend.
To offset losses they have incurred due to the apps, network providers are considering raising their 3G fees.
Bui Quoc Viet, head of the information and public relations department of the VNPT, said Vietnam has one of the lowest 3G fees around with 1/40th of the fee in Europe and 1/10th of that in China.
Earlier, local network providers had been offering prices lower than cost to attract customers. Since the number of the customers has risen significantly, they can increase the fees, especially in the context of booming OTT services in the country, some industry insiders say.
MobiFone and Vinaphone raised their 3G fees last April by 25 percent to match Viettel.
However, Viet said that network providers, to compete with OTT services in the long term, should develop value added and convenient services to attract and retain customers.
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By Bao Van, Thanh Nien News (The story can be found in the September 6 issue of our print edition, Vietweek)