Vietnam PM orders controls on free call apps

TN News

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Vietnam's Prime Minister has asked the communication ministry to work on regulations for free call and message apps, in response to claims by major telcos that they are losing millions of dollars a month.

News website Dan Tri reported Wednesday that PM Nguyen Tan Dung has ordered the Ministry of Information and Communication to draft regulations for managing free smartphone apps such as Viber, Wala, or WhatsApp, all of which run on Internet connections.

Vietnam's leading Internet content provider VNG has been pouring money into advertising Zalo, while other apps like South Korea's Kakao Talk and Japan's Line have also become popular in the country over the past two years.

The apps are referred to as over-the-top (OTT), as they do not come from the traditional telecoms or Internet service providers, but piggyback atop established Internet connections.

Vietnam's major telecom companies, MobiFone and Vinaphone, raised their 3G fee last April by 25 percent to match the fee charged by military-run Viettel, the country's other major telecom.

The companies justified the increase as a compensation for losses they have incurred due to the apps.

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, which owns 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.

All three telecom companies have asked the ministry to bar the apps until methods are established to control them.

But so far the ministry has rejected the request, saying there's no reason for Vietnam to go against the global trend.

The companies' losses have not been confirmed by an independent third party.

Vietnam's providers of such apps, including VNG, have offered to cooperate with the telecoms to provide value-added services and share the profits. However, no such deals have been signed as yet.

UK-based market research and analysis company Ovum has predicted that mobile operators will lose $32 billion in traditional SMS revenue to OTT apps in 2013, and that the figure will increase to $86 billion in 2020, according to a report in The Wall Street Journal.

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