Vietnam - MIC forces network operators to offer higher profit ratio to CPs

VietNamNet Bridge – Mobile network operators would have to “give way” and accept higher profit ratios for content providers (CPs), if the draft decree on information technology services gets approval.

At present, the profit sharing ratios between mobile network operators and CPs are 70-30 or 60-40, which means that network operators are in the upper hand over CPs.

The profit sharing ratios, of course, do not satisfy CPs, who have been repeatedly complaining that the ratios are unreasonable. However, mobile network operators have been keeping a deaf ear to the complaints. Meanwhile, CPs cannot do nothing more but accepting the low profits, because network operators are the ones who provide infrastructure services.

That explains why the draft decree on information technology services compiled by the Ministry of Information and Communication (MIC) has been applauded by CPs. The article No. 11 of the draft decree stipulates that telecom networks must keep the profit sharing ratio transparent, and that CPs would get the higher profit ratio than network operators.

The tentative regulation has, once again, stirred strong debate between network operators and CPs. Pham Thuc Truong Luong, Deputy General Director of Tinh Van Group, said on Buu Dien that it is reasonable that CPs have bigger profit ratios than network operators.

However, Luong has requested MIC to stipulate more detailed regulations instead of the drafted general regulations. According to Luong, it’s necessary to stipulate that the maximum profit sharing ratio is 30-70 (CPs get 70 percent of the profit).

“An e-commerce website which accepts payment in credit cards would never accept to pay up to 50 percent of transaction fees to payment service companies or banks. Why do CPs, which use the channels of network operators, have to accept this, then?” Luong questioned.

At present, users have to pay 0.99 dollars only for an application on Apple’s App Store, of which Apple gets 30 percent of revenue, while the other 70 percent belongs to CPs.

Meanwhile, Vietnamese CPs now have to pay 50-55 percent of revenue to network operators. As a result, CPs have to sell goods at high prices to users.

Meanwhile, Bui Hong Yen, a senior executive of FPT Telecom, has voiced her disagreement with the fixing of the profit sharing ratios between network operators and CPs.

Yen said that in a market economy, service providers and clients have the right to choose the partners. The State can set up fee framework after considering the current conditions, but it should not ask the involved parties to make public the profit sharing ratios, because this depends on their negotiations, and this is the business secret.

Yen said that if the State wants to give more incentives to CPs, it should apply direct preferential policies instead of asking network operators to offer bigger profit ratios to CPs.

Nguyen Trong Duong, Director of the Information Technology of MIC, has admitted that the draft decree has been facing strong opposition from network operators, who believe that the state should not intervene in businesses’ operation.

Thoi bao Kinh te Saigon has quoted Lawyer Nguyen Huu Phuoc, from Phuoc & Partners law firm as saying that in principle, the state should not intervene deeply into businesses’ operation. In a market economy, business activities not only have to obey the laws, but also bear the influences of the economic laws.

However, Phuoc said, most of network operators are state owned enterprises, or the enterprises, where the state holds the controlling stakes. Therefore, the enterprises have big advantages in doing business. It might happen that network operators join forces to set up profit sharing ratios. Therefore, MIC may think that it needs to protect the more vulnerable subjects.

C. V

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