1. Having Low Profit Sharing Ratios, Vietnamese Mobile
Content Provider-CPs Have One Foot in the Grave
12, Nov 2012
The draft of a new legal document is believed to “create an equality between content service
providers (CPs) and mobile network operators,” which is really the good news for CPs. However, while
waiting for the new regulations to take effects, CPs have been trying to do everything they can to
survive the current difficulties.
Exhibition: a sms spam
How much for the involved parties?
CPs have been repeatedly complaining that mobile network operators have been bullying them when
they cooperate in providing content services.
Currently, mobile network operators can enjoy the “bigger piece of the cake,” 60-70 percent of the
turnover from content services, while CPs can pocket the remaining 30-40 percent.
The Ministry of Information and Communication (MIC) has admitted that CPs have been on a
disadvantage in doing business with mobile network operators. Since making modest profits, a lot of CPs
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2. have to take extra jobs to earn their living. Especially, many of them still have been found out as
delivering spam messages to get additional money.
The draft decree on information technology services compiled by MIC is believed to settle the current
problem – the unreasonable profit sharing ratio between CPs and network operators. The draft
document clearly stipulates that the profit allocation needs to go in a transparent way, and that CPs
would get the higher profit proportions than mobile network operators.
The draft decree also stipulates that MIC would grant or allocate prefix number bands through auctions
and competitions directly to CPs, which means that CPs would not have to ask for the number bands
from telecom groups as currently said.
The regulations, once taking effect, would create favorable conditions for content service enterprises to
develop, because they help CPs earn bigger money and stop the reliance of CPs on mobile network
operators in terms of prefix number bands for SMS.
In general, MIC has affirmed that the ministry now tries to set up a reasonable profit sharing profit to
remove the discriminatory treatment which has been existing between content service enterprises and
telecom groups.
CPs have to take extra jobs to survive
The information proves to be the good news for CPs. However, they still have doubts if this would come
true, since the regulations just remain on… paper. Meanwhile, telcos repeatedly say that the profit
sharing is the own business of enterprises and involved parties, while the State should not intervene
their business deals.
Nguyen Manh Ha, General Director of VMG, said that while waiting for the new regulations to take
effects, CPs have to do everything they can to live to wait for better things.
He said that CPs have to cut down the budget for the media campaigns to introduce new services, while
they have been living on old services (the services through SMS like lottery, music downloading, ring ton
downloading, games…) on the basis of the existing clients and distribution channels, even though the
markets have become nearly saturated.
“We get only 25 percent of the profit for the new services, which is even lower than the profit ratio for
old services,” Ha said.
As such, CPs have been falling into dilemma. The more they try to develop new services, the bigger
losses they would incur, because they have no budget for communication campaigns to develop
subscribers.
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3. CPs have been advised to focus on developing apps for smart phones instead of the basic services on
mobile networks. However, Ha said this is just an idea, not an effective solution to CPs, because most of
the apps for smart phones have short life circles, while the investment rates are very high.
(Source: Buu Dien)
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