LE NAM THANG
Vice Minister of Posts and Telematics
Since Vietnam took part in World Trade Organization (WTO) officially, the Posts and Telematics Sector has been facing up to many challenges and opportunities. After 20 years of innovation and development, now telecommunication industry has its own position and power. From a small scale industry with backward technologies (in 1986 there were nearly 100.000 subscribers in the country, 0.14 telephones per 100 persons on average; in 2006 there were 29.54 million telephone lines equivalent to over 35% of the population, 18% of the population using Internet), it has caught up the development of religion, played an important part in industrialization and modernization causes. In state management field, legal framework is getting more and more perfect by issue of Posts and Telecommunications Ordinance, Information Technology law, e-transaction law, Posts and Telecommunications development strategy to 2010 and oriented to 2020. The establishment of Ministry of Posts and telematics (MPT) at the central level and Posts and telematics Departments at the local level made management structure stronger and more efficient. However, besides great achievements, over past years, telecommunication and Internet fields have some limits in the establishment of mechanism and policy as well as implementation of law and regulations, that should be taken into account seriously to develop investment environment of telecommunication business and make it transparent and efficient especially after Vietnam became the an official member of WTO.
In the matter of network infrastructure, until now, 8 telecommunications enterprises (VNPT, Viettel, EVNT, SPT, Hanoi Telecoms, Vishipel, FPT, VTC) have been granted license of network establishment to supply telecommunication services at different levels. Among these enterprises, 3 enterprises established all kind of networks including domestic and international fixed networks, mobile networks; 6 enterprises established mobile networks and supplied mobile services. It is to say that until now, compared with other countries in the religion, our country has many facility based operators (FBO), so the competition becomes harder, especially in the mobile communications field. While state enterprises or state joint stock companies dominate the investment in network infrastructure deployment, there is lack of policy to encourage enterprises of all economic sectors to develop telecommunication, Internet in the way of reselling basic telecom services and providing value added services on FBOs' networks. In the other hand, in the matter of telecommunication business, enterprises with their own infrastructure want to develop the process from A to Z, so they try their best to own network for themselves. Unfortunately, there have not been detailed regulations for sharing infrastructures, which leads to duplicated investment and abundant network capacity in some areas and shortage of network capacity in some other areas. So, it is to say that this practice couldn’t use all of its investment efficiently and couldn’t maximize the usage of telecommunications resources.
While the telecommunication market opens and gets more and more competitive, the price management in the long time hasn’t changed; it follows the administrative mechanism and cross-subsidization system. Some prices haven’t been established on the cost base in accordance with the market. State still highly regulates and interferes with business process and tar riffing system of enterprises.
Telecommunication resources, especially radio frequency bands are limited. However, the regulation of license grant is “first come, first serve”. This licensing scheme leads to the fact that the qualified operators don’t have recourse to deploy while the some license holder uses recourse inefficiently. The matter of commercial right of telecommunication resource is being researched and not applied. Frequency and number using fee doesn’t reflect in time the change in the telecommunication policy in the competitive market and international economy integration.
Although state management structure is step by step made perfect, but it can’t meet the demand of present development. The names of state management bodies of Posts and telematics at the central level and local level don’t match with the functions and the tasks of them, which makes it difficult in the corporation and legal implementation. Although telecom market is open and competitive but there have not been the specialized telecom agency responsible for market management, especially in the field of network connection and competition control to ensure the quick and legal development of telecom market as well as in accordance with the master plan. There are limitations in the quality and quantity of the government officers in the field of telecommunications.
In the field of business, many telecom enterprises are operating in the old model. They haven’t been aware of the challenges after being a member of WTO. For example: cumbersome structure; business models don’t match with new environment, especially in the condition of technology and service convergence environment and international economy integration; the working manner is amateur; performance and labor productivity is low in general. Moreover, the business accounting is not separated, transparent, and cross- subsidization still exists; the prices of some services is lower than cost which leads to the fact that the high benefited services compensate for the low benefited services. This diminishes the competition ability of the enterprise.
When joining WTO, Vietnam telecom industry has new opportunities as well as big challenges; the causes of these are following:
Firstly, the globalization is changing the situation of world telecom market. The commitment’s WTO members and the newborn of new technologies (Internet, mobile satellites…) blur the geographical borders among countries and force countries to open telecom markets through cross- border mode (mode 1) and joint venture or business corporation contract with the domestic partners (mode 2) to directly provide services in the inner territory.
Secondly, the liberalization, market opening process and competition among telecom enterprises are getting more and harder, especially in the dense population areas, where people have high income and easily to invest. This leads to constant decrease of the price and ARPU (average revenue per unit). At the same time, in the remote areas, there are only one to two main state own investment enterprises supplying services for public tasks and contribute to security defense.
Thirdly, management government agencies face to new challenges and opportunities in telecommunications, information technology and broadcasting convergence as well as fixed and mobile convergence. With the convergence, on the base of common network infrastructure or on the identified frequency band, it is possible to supply all services such as fixed and mobile services, audio, data, pictures, from telecommunication to broadcasting services. However, telecommunications regulation and business organization of enterprises are being implemented on the base of distinction of particular services and technologies.
To ensure successful integration, on the base of estimation of state, analyzing characteristics and orientation, we need to establish and apply creatively policies in the fields of telecom so that we can take advantages of opportunities, overcome challenges for the purpose of accomplishing the “Take off Strategy” successfully to promote Vietnam industry’s level as high as that of the developed countries by the year of 2020. In this context, it should be put special attention on the following policies:
Firstly, since now till the issue of new Telecommunication law, licensing policy shouldn’t grant new FBO licenses to avoid the hard competition among enterprises, in particular state enterprises and avoid wasting resources and ensure efficient investment. In this period, licensed FBOs should compete with time to promote competition ability on the base of innovating business organization towards group model, strong telecom corporation with modern technology and management, high specialization, the network infrastructure matching with demand of technology and service convergence; ensuring independent business, independent accounting, moving towards to remove cross-subsidization among services; promoting equitization of enterprises that focusing on value added, Internet, mobile services at the beginning. It should have reasonable policy, mechanism encouraging enterprises of all economic sectors to resell basic telecom services, providing internet and value added services on the base of FBOs’ network infrastructure. It should utilize invested available infrastructure base, such as cable television broadcasting, transmitting the data on the electricity's cable to provide convergence services.
Secondly, about the matter of price management policy, prices should be rebalanced on the base of cost and supply and demand relation in the market. Step by step adjust the price of services to ensure efficient business of enterprises in the context of competition and international integration. First of all, it should focus on price mechanism project for local and inner-provincial telephone services with the aim to removing cross-subsidization; ensure equality between cities and countryside; ensure the efficiency of frequency spectrum and number usage and allocation. It should adjust gradually interconnection price and leased line price on the base of cost; clarify the contribution of public service in interconnection price. It should avoid interfere with price adjustment through administrative methods. State should decide just price of public service, services of market dominating enterprises affecting on the entry of other enterprises.
Thirdly, in the matter of management policy of telecom resources (frequency, number), telecom resources should be planned on the base of insurance of investment, economical and efficient usage. We should give priority to planning and allocating resources for new technology, new services such as the next generation Internet, new generation of mobile technology (IMT-2000), and wireless wideband access (WIMAX), research and test new resource systems such as Ipv6, ENUM etc. We should consider policy of number portability, carrier pre-selection. At the moment, we should focus on building up licensing scheme in the way of beauty contest and apply it to the valuable frequency bands such as IMT-2000, WIMAX. Because of the historical characteristics of Vietnam, in the long time, there was only one telecom enterprise. After that, thanks to licensing policy of our Party and State, MPT gradually has granted licenses for new entrants. So, frequency band licensing follows the rule of grant consideration. This rule just took effect at the beginning of the period when one enterprise environment changed to many enterprise environments. Nowadays, in the world, all countries consider frequency as a precious resource so frequency licensing follows the rule of beauty contest. This is a method in which one enterprise in the excess of financial ability, technique specialization, technology, experience of deployment and business ability with the granted frequency bands will be selected. In this way, only the enterprises with the most efficient ability to establish network and do business will be licensed. This avoids the problem in which the enterprises with good ability to work are not licensed while the license holder is not able to implement the project.
Fourthly, about the matter of interconnection and infrastructure sharing policy, we should change from administrative mechanism “application - provision” to economic contract mechanism in providing interconnection capacity among enterprises; consider asymmetric management mechanism in interconnection in order to promote competition and favors new enterprises joining the market; encourage to share infrastructure including collocation of equipment, antenna, poles, cable –drain and other supporting facilities; facilitate telecom enterprises to hire infrastructure of other sectors such as TV broadcasting industry, electricity industry for establishment of network; gradually research, consider applying special mechanism at some areas and in certain conditions such as mobile roaming for serving public tasks; local loop unbundling for promoting to competition and creating better services for users.
Fifthly, about the matter of provision of public telecom service policy, we should implement activities of Public telecom service Fund to make a clear distinction between business and public task in the period of competition and international economic integration; plan and implement effectively program of provision of public telecom services in the period of 2006-2010 with a view to increasing universalization of services and bridging digital divide between cities and countryside. At first, we should focus to build the project of rural information and communication technology with the aim to establish effective and suitable infrastructure for Vietnam countryside’s practical condition so that we can provide cheap services such as IP-phone, e mail, domestic information retrieval through Internet connection.
Sixthly, in the matter of user protection policy, we should promote establishment of standard in telecom and internet field so that we can adapt to competitive and international integration conditions; promote management of quality of service and network through supervision, report, notification of quality of service, building up security and safe rules as well as anti-crime abilities; ensuring frequent and unscheduled check and at the same time we should strictly deal with violations of tariff and quality of service for protecting users’ rights.
In conclusion, in order to effectively integrate to WTO, we must innovate policies of licensing, telecommunications resource management, tariffing, interconnection, quality of service and law enforcement. Those policies must be in accordance with Vietnam’s conditions and international practice and legislation with a view to ensuring “take off” and successful integration of Vietnam Telecommunications Sector./.