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Public Disclosure Authorized Public Disclosure Authorized Sector Current status and future paths Public Disclosure Authorized

The World Bank Global ICT Department1 Public Disclosure Authorized

1. Authors: Llewllyn Toulmin, Ph.D., Consultant; Peter Smith, Lead Telecommunications Policy Specialist. Contributors: Naomi Halewood, Hong Anh Tu. ’s infrastructure challenge

As Vietnam becomes richer it faces challenges in adapting its infrastructure policies and institutions. While the old challenges of providing basic services to all remain, new challenges are emerging, such as accessing new sources of finance, refining planning processes, preparing for rapid urban- ization, improving the efficiency of infrastructure service providers, developing stronger institutions to encourage private finance of infrastruc- ture or direct private provision of infrastructure, and developing more tar- geted approaches to poverty alleviation. This report on Telecommunications Strategy - Current Status and Future Paths is one of six volumes dealing with Vietnam's Infrastructure Challenge. Other volumes deal with Infrastructure Cross Sectoral Issues, Urban Development, Transport, Water Supply and Sanitation, and Electricity. The work for these reports was carried out between 2004 and 2006 by World Bank staff and consultants. The reports have been revised to take account of comments made by the Government in workshops during May 15-17, 2006. The comments of numerous colleagues from the World Bank, the 's Department for International Development Bank, the Asian Development Bank, and the Bank for International Cooperation are gratefully acknowledged. Table of Contents

I. Overview ...... 1 II. Policy and Institutional Framework ...... 5 Main Laws and Regulations...... 5 Allocation of Responsibilities for Policy-Making and Regulation ...... 8 III. Market Structure and Ownership ...... 11 Steps Toward Liberalization ...... 11 Current Structure and State of Competition ...... 12 Private Sector Participation ...... 18 IV. Investment and Financing ...... 21 Revenue and Financing ...... 21 Potential New Areas of Investment ...... 23 V. Sector Performance ...... 25 Access to Services ...... 25 Efficiency ...... 27 Pricing ...... 27 Affordability ...... 29 VI. Main Issues ...... 31 Promoting Competition and Private Participation ...... 31 Developing Modern Regulatory Institutions and Processes...... 33 Reforming and Restructuring VNPT ...... 35 Increasing Rural Telecommunications Infrastructure and Access ...... 36 Devising a Roadmap ...... 37 Revising the Current Telecommunications Law ...... 37 VII. The Way Forward ...... 39 1. Promote Competition and Private Participation ...... 39 2. Develop Modern Regulatory Institutions and Processes ...... 41 3. Reform of VNPT ...... 42 4. Promote Extension of Rural Telecommunications Infrastructure and Access ...... 42 5. Develop and Publish a Telecommunications Development Policy Roadmap ...... 42 6. Begin Dialog on Drafting a New Telecommunications Law ...... 43

iii The Way Forward: Summary ...... 43 Annexes Annex 1. Excerpts from March 2005 Economist Intelligence Unit (EIU) Country report on Vietnam ...... 48 Annex 2. Charts on the Growth of Telecommunications in Vietnam ...... 49 Annex 3. SOE Status of Various Telecommunications Organizations as of December 2005 . . . . .50 Annex 4. ISPs Licensed in Vietnam ...... 51 Annex 5. BCCs in Vietnam ...... 52 Annex 6. Reform of Laws for Investment and for Increasing FDI ...... 53 Annex 7. SMEs in Vietnam ...... 56 Annex 8. Decree on Telecommunications ...... 57 Annex 9. Decree on Spectrum Management ...... 85

End Notes Concessioning of Services Quality of Service Focus on Telecommunications

iv List of Acronyms

ASEAN Association of South East Asian Nations BCC Business cooperation contracts BOT Build, operate and transfer BTA Bi-lateral trade agreement DGPT Department General of Post and Telecommunications DPM Deputy Prime Minister ETC Electricity Company2 FPT Corporation for Financing and Promoting Technology GNI Gross national income HCMC ICT Information and communications technologies IDRC International Development Research Centre (Canada) ISP Internet service provider IT Information technology ITU International Telecommunications Union IXC Internet exchange carrier MOST Ministry of Science and Technology MOT Minstry of Trade MPI Ministry of Planning and Investment MPT Ministry of Posts and Telematics NIPTS National Institute of Post and Telecommunications Strategy OOG Office of Government OSP On-line service provider PTF Post and Telecommunications Finance SME Small and medium sized enterprises SOE State owned enterprise SPT Saigon Post and Telecommunications VAS Value added services VDC Vietnam Data Corporation VEC Vietnam Electricity Corporation The Military Electronic and Telecommunication Company VIETSHIPTEL Vietnam Maritime Telecommunication Company VNPT Vietnam Post and Telecommunications Corporation VPS Vietnam Postal Service VTI Vietnam Telecommunications International VP Telecom Viet Power Telecom, formerly ETC USD dollar VOIP Voice over Internet Protocol WB World Bank WTO World Trade Organization

2. Source for this acronym: US Telecommunications Industry Association and interviews with ETC; this firm is now called Viet Power Telecoms or VP Telecoms. vi I. Overview

ietnam’s telecommunications sector has munications, which has grown an average of continued to expand rapidly, primarily 53% each year over the last four years. Some V due to mobile growth, and appears forecasters estimate that Vietnam could reach a poised to continue expanding in the future. total teledensity in excess of 50% as soon as the With a population of just over 80 million (com- end of 2009.4 Total teledensity as of 2004 was parable to Germany), Vietnam is one of the slightly ahead of India, somewhat behind major emerging markets of the ASEAN region. , but still less than half that of the Over the past three years, Vietnam has sus- or . Figure 1 below shows tained an average annual growth of about 42% the total teledensity of Vietnam and other in total teledensity.3 This figure is higher than selected Asian countries. and is one of the highest in the world. It is estimated that the 2005 figure for total The primary growth driver is mobile telecom- teledensity is about 19.9,5 almost even with Indonesia. In terms of industry revenue growth, Vietnam is currently one of the three fastest growing communications markets in , with estimated total industry revenues of $1. 88 billion in 2005 and a forecast $5 billion by 2010.6 The Vietnamese market is still one of the smallest in Asia, however. (See the table below.) Since the launch of the Doi Moi (lit- erally “change and newness”) policy in the early 1990s, Vietnam has been implementing a program to increase competition in many telecommunica- tions market segments, has ended the Source: Derived from ITU data monopoly of the Vietnam Post and Note: Fixed line data for Thailand are from 2003 Telecommunications (VNPT), has intro- duced the Internet, has separated poli-

3 “Teledensity” refers to telephone lines per 100 population; here “total teledensity” is used to ensure that it is clear that both mobile and fixed telephone lines are being included in the analysis. 4. See Business Monitor International (BMI), Vietnam Telecommunications Report, Q3 2005 5. BMI, ibid. 6 Pyramid Research, Vietnam Country Outlook, September 2005

1 Table 1: ness, with actual or licensed Telecom Market Size and Growth by Asian Country competitors in place in Internet, 2004 Total Telecom 2005 Total Telecom Percent paging, cellular, and even local Country Revenue (US$m) Revenue (US$m) Growth service provision. However,

Australia 13,331 14,916 10.6% VNPT continues to dominate China 70,881 78,936 10.2% the sector through high market share (estimated at 90 to 94% of Hong Kong 5,836 6,236 6.4% the entire sector) and though India 15,246 18,554 17.8% multiple ownerships in each Indonesia 8,519 10,213 16.6% market segment. And much of Japan 144,167 141,035 -2.2% the new entry is through other 4,634 4,948 6.4% state owned enterprises (SOEs), New Zealand 2,787 2,903 4.0% the military, and through non- Philippines 4,079 4,581 10.9% ownership business coopera- 3,978 4,015 0.9% tion contracts (BCCs7), not 25,963 26,749 2.9% through the ownership partici- Taiwan 10,563 10,306 -2.5% pation of private entities. Thailand 5,621 6,255 10.1% Figure 2 below provides a sum- Vietnam 1,567 1,877 16.5% mary view of the sector. As shown in the chart, VNPT Source: Pyramid Research is active in each industry seg- ment, owns the two active carri- cy/regulation from operations, has begun to ers ( and Mobiphone) separate post from telecoms, and has substan- in the most rapidly growing segment, mobile tially reduced international and other prices. A telephony, and has a partial ownership in SPT Bilateral Trade Agreement (BTA) with the (Saigon Post and Telecommunications), a poten- United States is in force, which contains time- tial major competitor active in most segments. delimited targets for market opening and for- Viettel, Viet Power Telecom (sometimes known eign (US) investment. The government has as VP Telecom, formerly ETC) and announced its intention to accede to the World Telecom have been licensed in most industry Trade Organization, and has begun studies on segments, and are emerging as potential national the telecommunications portion of the needed competitors to VNPT. Other notable aspects of Vietnam telecom- WTO offers. Internet cafes and shops are flour- munications include: ishing in all cities and many towns, develop- ment plans in telecommunications and related ● Prices for international calling and leased areas have been drafted and adopted, and in lines have dropped markedly, by about 70% 2002 a new Ministry of Posts and Telematics in the last two years. These prices are now (MPT) was created. about 7% or more below regional averages, With respect to competition, the monopoly according to MPT and one independent of VNPT has been ended in every line of busi- analysis. This is a major achievement.

7. BCCs are schemes in which foreign companies finance capital investment and share in revenues, but have no ownership share and no or limited management control. These are discussed at length in section III.

2 ● The Internet got underway in Vietnam quite ability of some telecommunications services recently, in November 1997, but has grown is also poor. very rapidly. There were an estimated 7.5 ● Voice over Internet Protocol (VOIP) is now million users as of the end of 2004 and 11.6 available on a limited basis in parts of million as of the end of 2005, a remarkable Vietnam by dialing an additional number. In achievement. This is still a moderately low other countries the cheap price of VOIP has penetration rate of 14.3 percent, however, helped to lower prices substantially, and this and penetration is largely limited to urban effect is anticipated in Vietnam. areas.8 ● Regulation is undertaken by MPT; there is ● Efficiency of the telecommunications sector, little discussion at this point of creating an as measured in lines per employee, is quite independent or quasi-independent regula- low by regional standards, and the afford- tor. However, MPT is obligated to modern-

8 . BMI, ibid.

3 ize its regulatory procedures under the BTA, Progress is notably lagging in priority areas and has begun consultations with some such as: stakeholders, primarily SOEs and other min- ● Increasing competition and private partici- istries. There has been little regulatory movement to analyze and restrict potentially pation in all segments by encouraging new anti-competitive practices alleged against the private entrants, improving the interconnec- dominant VNPT, such as delaying financial tion regime, and regulating prices in a pro- and technical interconnection with other gressive way providers, and maintaining high prices for ● Developing modern, transparent regulatory calls to nearby Thailand. institutions and processes, including in the area of spectrum management Despite Vietnam’s impressive progress in ● Reforming and restructuring VNPT, includ- areas such as teledensity, price reductions and ing by “equitization” (privatization) increasing competition, the sector is still behind ● Increasing rural telecommunications infra- other countries in the region in many areas. A structure and access. recent rating of Asia-Pacific telecommunica- tions markets in terms of risk, maturity, poten- To make significant progress in these areas, it tial and regulation, ranked Vietnam 14th out of will be necessary to create a roadmap for devel- 14 countries reviewed, behind Pakistan, opment through an open dialog with stakehold- Thailand and Indonesia.9 ers, and to move toward drafting a new, modern Vietnam was ranked 158 out of 167 in telecommunications law that will attract Reporters Sans Frontieres 2005 Annual World investors and protect consumers. Government Wide Press Freedom Index, which partially action to modernize the policy and regulatory reflects “the main obstacles to the of environment in these areas would accelerate and 10 information on the Internet.” improve the performance of the sector.

9. BMI, ibid.

4 II. Policy and Institutional Framework

Main Laws and Regulations and general approach through 2020 ● National Institute of Post and The main goals for developing the telecommu- Telecommunications Strategy (NIPTS) ICT nications sector in Vietnam are defined in the: strategy, adopted by MPT in October 2005, which sets goals for telecommunications and ● Post and Telecommunications Ordinance of ICT for the year 2010 and 2020. 2002 ● Decision 158/2001/QDTTG of October 18, These and other key decisions affecting the 2001, approving Vietnam Post and Telecommu- telecommunications sector are shown in the nications development strategy through 2010 table below.

Table 2: Major Decrees and Decisions in Telecommunications

Prime Ministerial Decision No. 26 May 1998 Regulation of posts and telecommunications prices 99/1998/ND-CP Decision No. 81/2001/QD-TTg 24 May 2001 Action to implement Directive 58-CT/TW and step up the application and development of ICT in 2001-5 Decree No. 55/2001/ND-CP 23 August 2001 Management, provision, and use of Internet Services Decision 158/2001/QDTTG 18 October 2001 Approval of VNPT strategies through 2010 and 2020 PM Decision No. 33/2002/QD-TTg 8 February 2002 Approval of the plan for Internet development for 2001-5 Ordinance (Law) No. 43/2002 1 October 2002 Regulates telecom networks and services, licensing procedures and prices; defines types of telecom services Decree No. 90/2002/ND-CP 11 November 2002 The functions, tasks, powers and organizational structure of MPT Ministry of Posts and Telematics 26 August 2003 Provisional interconnection fees set and lowered from (MPT) Decision No. 148 previous levels /2003/QD-BBCVT MPT Decision 217/2003QD-TTg 27 October 2003 Telecom providers with less than 30% market share can set their own prices Document No. 16/BBCVT-KHTC 6 January 2004 Price setting rules for enterprises Cost based tariffs Decree No. 24/2004/ND-CP 14 January 2004 Issuance of spectrum management regulations Decree No. 160/2004/ND-CP 3 September 2004 Issuance of telecom regulations MPT Reg. 191/2004/QD-TTg 8 November 2004 Created Vietnam Public Telecommunications Service Fund MPT Reg. 04/2004/TT-BBCVT 29 November Provides sanctions for violations of post, telecom and 2004 radio frequencies Decision No. 58/2005/QD-TTg 23 March 2005 Approves VNPT experimental conglomerate Prime Minister’s Decision No. 6 October 2005 Approves ICT-IT development strategies through 2010 246/2005/QD-TTg and 2020

Sources: World Bank interviews; USAID, Competition Review of the Vietnamese Telecom Sector, 2005

5 Strategic objectives under these plans and ● Enterprises from any economic sector are decisions include to: allowed to provide most telecommunica- tions and postal services, except "essential" ● Develop a national information infrastruc- ones such as construction, development and ture with advanced technology, high capac- management of the infrastructure such as ity, high quality of service and nation-wide the "national axis [backbone] network, and service international, mobile and local phone net- ● Build a telecommunications sector that is a works," which will be undertaken by state- leading sector in the economy, with an owned enterprises. annual growth rate of 20-25% ● Licenses for network establishment and ● Reach penetration in “e-Vietnam” (e-com- service provision have a maximum duration merce, e-government, e-citizen access) com- of 15 years, telecommunications service pro- parable to the regional ASEAN average by vision licenses have a life of 10 years; and 2010 licenses for telecommunications cables on Specific objectives detailed in the NIPTS plan the continental shelf and in exclusive eco- include: nomic zones have a life of 25 years. ● Enterprises with a market share of more ● Reach a penetration of 32-42 total telephone than 30 percent are prohibited from using lines per 100 population by 2010 their market power to hinder new entrants. ● Reach 25-35 Internet users per 100 popula- tion by 2010, with 30% broadband access Decrees implementing the law have been ● Achieve 10 PCs per 100 population by 2010. issued and cover:

● The laws and decrees reflect a slow but on- Postal administration going liberalization of the telecommunications ● Telecommunications administration sector. This progress toward liberalization is ● Spectrum management. now being enhanced by three major factors: (1) Copies of the latter two decrees are attached comparisons by decision-makers with tradi- in the Annexes. tional rival China, which is seen as being 5-10 Specific other noteworthy reform measures years ahead in terms of telecommunications taken by the government in the last several and ICT development and inward investment; years include: (2) comparisons with other ASEAN nations, and (3) the drive to accede to the World Trade ● Creating the new MPT in place of DGPT, to Organization (WTO) in the near future. set policy in and regulate “telematics” The most important and comprehensive of (telecommunications plus IT) the above-listed laws and decrees was the ● Decreeing that post is separate from telecom Telecommunications Ordinance (law), which in 2005, with a plan to actually separate took effect on October 1, 2002, after approval by financial and operational aspects of the two the Standing Committee of the National functions by or in 2007 Assembly. This 79-article ordinance continues ● Passing a regulation in 2005 creating the the telecommunications reform process in Vietnam Public Utility Telecommunications Vietnam, and is expected to encourage further Service Fund. This will serve as the private and foreign interest in the sector. This Universal Service Obligation (USO) mecha- new ordinance has many provisions, including: nism for the country, and will be capitalized

6 at $31.5 million, with 40% contributed by the ● Signing a Bilateral Trade Agreement (BTA) state. The balance will come from enterpris- with the United States in December 2001, es operating in the sector. In future, 5% of which covers telecommunications, and mobile revenues will go into the fund, along which provides time-delineated market with 4% of long distance revenues and 3% of opening and ownership measures for (US) domestic long distance revenues. investors over six years ● Passing a law in 2005 allowing for electron- ● Recognizing the principles of “significant ic transactions, and preparing a draft law on market power” and “asymmetric regula- ICT with Korean donor support, scheduled tion” in recent pricing regulations, which to be issued in 2006 allow all service providers with less than ● Reducing prices on international calling, 30% market power to set their own prices leased lines, Internet access and intercon- ● Issuing licenses to new operators in the nection fees, to the point that MPT and at areas of basic services, international, mobile, least one independent analysis states that a Internet exchange providers (IXPs), Internet market basket of prices is about 7% below service providers (ISPs), and other market regional averages11 segments.

Table 3: Allocation of Major Responsibilities in Telecommunications Policy

Deputy Prime Ministers (DPMs) Of the 4 Deputy PMs, one (the First Deputy Prime Minister) holds the portfolio for telecommunications, one holds the portfolio for ICT, and one holds the portfolio for e-government Office of Government (OOG) This office serves as the PM’s and DPM’s secretariat and clearinghouse, and also coordinates inter-departmental policy and institutional initiatives. OOG runs the in-house e-government program, which focuses on building intra-departmental and provincial networks Ministry of Post and Telematics (MPT) Sets policy for and regulates the telecommunications sector; representative of the State’s capital interests in facility-based operators, including the dominant VNPT Ministry of Trade (MoT) Sets policy and develops legislation and programs in the area of e- commerce and trade Ministry of Science and Technology Develops R&D programs in telecommunications and ICT; sets ICT (MOST) standards. Was formerly the chief policy actor in ICT, but this role was changed with the creation of MPT Ministry of Planning and Investment Ensures that sufficient and timely investment is available for approved (MPI) development in IT (defined broadly to include telecommunications) National Steering Committee on ICT Monitors implementation of the national IT plan (which covers telecommunications, ICT, and the ICT projects, functions and responsibilities of all ministries and agencies)

11. World Bank consultant Jose Monedero used ITU criteria and procedures in this analysis. Mondero, Revisions to Telecom Prices Summary Report, December 2003. Price levels have continued to fall substantially since this detailed analysis was undertaken. Price levels are discussed in more detail in section V, Sector Performance.

7 Allocation of Responsibilities for ● Announcing in December 2003 that it would Policy-making and regulation undertake stakeholder consultations in draft- ing the new IT draft law, which is scheduled to The laws, decrees and decisions shown in the be submitted to the National Assembly by section above allocate policy responsibilities in 2007 the sector as shown in the exhibit below. ● Holding a series of round table seminars The key policy and regulatory functions with stakeholders, sponsored by the UNDP, related to telecommunications are formally with the goal of developing a national IT assigned to the Ministry of Post and Telematics and broadcasting strategy. (MPT). Selected divisions of interest within this Furthermore, the Vietnam-US BTA includes important new ministry are shown in the figure by reference the WTO Telecommunications below. Reference Paper, and hence requires changes in The MPT departments of telecommunica- regulatory procedures. The BTA itself specifi- tions and radio frequency shown in the organi- cally requires some changes in regulatory and zation chart provide the regulatory function. market procedures, as follows: There is no discussion at present about creating ● Making licensing criteria transparent an independent or quasi-independent telecom- (although the choosing of local partners in munications regulator. However, MPT has the issuance of licenses may be excepted taken the initiative to modernize some of its from the transparency requirement) consultative procedures, including: ● Allowing public comment regarding the for-

8 mulation of laws, regulations and adminis- ments with respect to telecommunications trative procedures requirements. Also, the key areas of inter- ● Eliminating discriminatory prices and fees connection, universal access and radio fre- over a 4 year period quency management are not addressed in ● Prohibiting abuse of monopoly power. the BTA, except by incorporating the WTO Telecommunications Reference Paper, While encouraging, these BTA measures which gives very brief (albeit important) alone will not meet WTO accession require- guidance.

9 III. Market Structure and Ownership

Steps Toward Liberalization Resolution 49/CP on the Development of Information Technology. Evolution of the Sector. Until the late 1980s, In 1995 Vietnam joined ASEAN and wit- the telecommunications sector in Vietnam was nessed the normalization of trade relations with characterized by strict state regulations, monop- the United States. This normalization eventual- olistic market conditions, and tight control of all ly led in 2001 to signing a Bilateral Trade kinds of telecommunications services. The year Agreement (BTA) between the two countries; 1986 marked the beginning of the Doi Moi this BTA has an important telecommunications reform programs, the gradual privatization component. In 1996 a national program was (locally called “equitization”) of some state- instituted to establish a modern ICT (informa- owned enterprises (SOEs) in various sectors, the tion and communications technologies) infra- corporatization of other SOEs, and the begin- structure. DGPT Decree No. 109 of 1997 contin- ning of gradual liberalization in the telecommu- ued the liberalization trend, with more competi- nications sector. tors allowed to enter what was once a monop- Until 1993 the Department General of Posts oly market. and Telecommunications (DGPT), a unit of gov- From 1997 to the present, more licenses in all ernment, was the sole public telecommunica- lines of business have been issued, and tions provider in Vietnam. In that year, two increased attention has been focused on the separate organizations were created: DGPT was telecommunications and related sectors. This made the strategic, regulatory and development attention has been driven by several factors: agency, and the newly created Vietnam Post ● Liberalization of the laws governing small and Telecommunications (VNPT) was given the business formation have resulted in the cre- state monopoly for operating the national ation of over 25000 SMEs per year, one of the telecommunications network. VNPT offered few major areas of growth and job creation in and continues to offer all types of telecommuni- the economy. These new jobs are important, cations services, and is active in all 61 provinces since millions of school-leavers each year and in all cities. will be emerging from the educational sys- Also in 1993, the country’s first national tem and will require employment. Decision- information technology (IT) policy was devel- makers recognize that these new small firms oped, and reflected the plans for gradually need to use telecommunications effectively, transforming the entire economy into a market and that even more growth and jobs could be 12 economy, instead of a command one. This IT created by increasing the ICT adoption rate plan was codified in the landmark 1993 among SMEs. Upgrading of these firms in

12. Note that “IT” in Vietnam policy usually reflects all of what most observers would now call information tech- nology, telecommunications, software/hardware industry, and internal computerization projects.

11 the ICT area is an excellent area for progress (with several BCCs including , in poverty reduction; this has been recog- Telecom, and NTT), design and construction nized by inclusion of telecommunications companies, research and training centers, a and ICT in the World Bank’s poverty reduc- finance company, a hotel, a hospital, and vari- tion strategy for the country. 13 ous others. ● Countries which Vietnam compares itself to, VNPT also owns the two dominant cellular including China, Thailand and the companies: Mobifone (which had a BCC Philippines, are forging ahead in telecommu- arrangement with Comvick) and Vinaphone nications and ICT. (holding contracts with Nokia). These two com- ● As part of its drive to participate in trade and panies are part of VNPT’s Vietnam Mobile the regional and global economy, Vietnam Telecom Services division (VMS). In addition, recognizes the need for good, effective VNPT has several paging companies (ABC, telecommunications. MCC, Phonelink, Polink, and SEPRO), and pay- phones (GPC, supplied by Sapura). As a result of these factors, decision-makers VNPT installed 1.148 million new fixed lines in the Parliament, the Communist Party and in in 2004, in line with expectations, is estimated to the Government have identified telecommuni- have installed about 1.3 million additional fixed cations as a leading economic sector. lines in 2005, and is forecast to install about 1.75 million in 2006. The result of this rapid growth Current Structure and State of is that fixed line penetration should pass 10% by 14 Competition the end of 2006. If achieved, this will repre- sent significant progress. Ownership and Market Structure. VNPT It is estimated that VNPT retains about 90 to remains the dominant public telecommunica- 94% market share of the entire telecommunica- tions provider, and participates in all activities tions market. As shown in Figure 2 in Section in the sector. As the largest telecommunications I, VNPT is active (and is dominant) in every line provider, VNPT is a conglomeration of divi- of business and market segment. sions, SOEs (state-owned enterprises), joint Other players which are moving to enter all stock companies, joint venture companies and segments include Viettel, an SOE owned by the other companies and units under one umbrella military, Viet Power Telecom, a firm owned by that offers a full complement of telecommunica- the electricity SOE, Hanoi Telecom, and SPT tions services. The figure on the next page (Saigon Post and Telecommunications). Of shows the organizational chart for VNPT. This these, SPT has the most complex ownership, organization structure includes the various being 87% owned by 11 government organiza- VNPT internal divisions, as well as numerous tions, including 18% by VNPT; with the remain- subsidiary member units, including the nation- ing 13% being owned by individuals, private al network company (VTN), the data network companies, and staff. SPT retains about 2.6% company (VDC), the international communica- market share of the entire telecommunications tions company (VTI--with a BCC with Telstra,), market, compared to 90-94% for VNPT. 61 provincial and city operating companies Figure 4 below shows the structure and busi-

13. For more information on the growth of SMEs in Vietnam, see the Annex. 14. BMI, ibid.

12 ness areas of VNPT. According to press reports, vatising 41 of its subsidiaries. To date, 26 of VNPT is preparing to modernize, corporatize and these units have been spun off and prepara- equitize its structure in 2006. Reportedly, the cur- tions are under way for the remaining 15. The rent plan is for regional operations to be incorpo- new group will retain a 50% stake in many of rated into separate companies, with an overall VNPT’s fringe divisions including equipment holding company which will own shares in its manufacturing, software development, hard- subordinate affiliates. This will allow for ware installation, tourism, insurance and pro- investors, including foreign investors, to purchase vision of value added services. shares, and for VNPT to raise needed capital. State of Competition by Market Segment. 15 TeleGeography reports the moves as follows: Competition has increased substantially in the The Vietnamese government has given the Vietnam telecommunications market over the green light to a plan to establish a new state- last decade, considering that in 1993 the market owned telecoms group, the Vietnam Post and was still a total monopoly in all market seg- Telecommunications Group (VNPTG) in early ments. However, it should be noted that much 2006. The new public entity will succeed of the current competition in the telecommuni- Vietnam Post and Telecommunications cations sector in Vietnam has come from other (VNPT), which has been working towards pri- SOEs (and the armed forces) entering the mar-

15. See http://www.telegeography.com/cu/article.php?article_id=10221

13 ket, as they see the potential for profits and SOEs. The report also states that the “the delay diversification, rather than from the private sec- in issuing SPT’s CDMA mobile service [license] tor. A report by GIPI (the Global Internet Policy is clearly an example of VNPT’s monopolistic Initiative) states that VNPT has actively tried to power.” GIPI concludes that VNPT has greater prevent the licensing of truly private competi- power than MPT to set prices, when the reverse tors, thus limiting the “competition” to other is supposed to be true, and states that there is

Table 4: Summary of Market Segments, Leaders and Challengers

Segment Leader Challengers

Fixed Local & VNPT* About 90% market Viettel National license Long Distance share SPT* National license Hanoi Telecom Hanoi license only Viet Power Telecom National license Int’l Services VTI* Owned by VNPT; Viettel Owned by military BCC with Telstra Viet Power Telecom Formerly ETC Int’l & Domestic VNPT* Viet Power Telecom Formerly ETC; Leased Lines Subsidiary of power company Viettel Owned by military Mobile Services Vinaphone* 43% mkt share 2005; SPT* BCC with Korea SLD; est. to drop to 37% (“S-Fone”) CDMA technology; by 2010 Forecast 10% share by 2010 Switch and related Partially owned by VNPT; supply contract with National license Nokia; Hanoi Telecom $656 million BCC with GSM technology; Hutchison for CDMA 3G; Owned by VNPT GSM technology now; Forecast 11+% share by 2010 MobiFone* 39% mkt share 2005; Viet Power Telecom Formerly ETC; est. to drop to 37% (VP Telecom) CDMA technology; forecast by 2010; 10% share by 2010 BCC with Comvik in Viettel New agreement with Ericsson process of being to provide GPRS-enabled liquidated; network; GSM technology; Owned by military; Owned by VNPT; GSM; Forecast 5% share by equitization planned 2010, although over 500K additional subs in just 1st 6 months of 2005 ISPs (only major VDC* VDC=Vietnam Data Netnam SOE, Canadian assistance players shown) Corporation; SPT* Partly owned by VNPT Owned by VNPT FPT Partly employee owned Viettel Military IXCs (Internet VDC* ditto Viet Power Telecom Very small share Inter-exchange SPT* Very small share carriers) Hanoi Telecom Very small share OSPs (On-line VDC* ditto Ten minor players service providers)

Sources: World Bank interviews, Pyramid Research, 2005 Competitors in red (also indicated by an asterisk) are owned or partially owned by VNPT

14 almost no true private enterprise activity in the and Intersputnik satellite systems; and two in- telecommunications marketplace.16 service submarine optical fiber cable systems VNPT retains a high degree of dominance in (T-V-H and SEA-ME-WE 3) connecting with almost every market segment, and has substan- other submarine cable systems. VTI is also tial multi-ownerships in many segments. The active in the VSAT arena. VTI operates an all- situation by segment is shown in Figure 2 in digital system, and has about 1500 employees. Section 1, is summarized in Table 4 below, and VTI has a BCC with Telstra of Australia to is described narratively below. develop international voice and data net- works.19 VTI had been planning to launch a Fixed Local and Long Distance Services. satellite, Vinasat-1, in the near future. But the VNPT dominates this market, with about 90%17 launch has been delayed, reportedly until 2008. of the total 6.85 million fixed local lines in serv- On July 29, 2002, MPT issued licenses to ice.18 VNPT is partnering with Siemens in a Viettel (an SOE under the military) and to Viet $107 million effort to provide wireless in the Power Telecom to undertake switched interna- local loop service in ten provinces in the central tional telephone services. region. VNPT’s monopoly power has been Voice over IP (VOIP) international services reduced, as licenses were issued over the last are in operation by VNPT, Viettel, SPT (as noted two years for local and long distance service to above, partly owned by VNPT), Vishipel, Viet Viettel (a military SOE), SPT and Hanoi Telecom Power Telecom and Hanoi Telecom. (in their respective cities only), and Viet Power Under the BTA, (US) foreign private Telecom (a nationwide SOE under the electric investors are supposed to be allowed to enter company, sometimes known as VP Telecom). the market for “satellite” services by the end of As stated above, VNPT owns an 18% interest 2005, with up to 49% ownership. (But see the in SPT, in addition to being the dominant carri- BTA discussion below.) er in this segment. As described earlier, the Vietnam Public International and Domestic Leased Lines. Utility Telecommunications Service Fund will Regarding international and domestic leased provide funding for rural expansion of local lines, the situation is as follows: service in un-served or under-served areas. ● VNPT dominates the market and until recently had a monopoly on leased lines International Services. VTI, an SOE subsidiary ● Currently Viet Power Telecom offers domes- of VNPT, was until recently the sole provider of tic leased lines, and has been recently given international services in Vietnam. VTI was a license for international leased lines. This founded in March 1990 and operates under service is not yet operational DGPT decision 324/QD-TCBD of September 9, ● Viettel also offers currently domestic leased 1996. VTI has gateway exchanges located in lines and now has a license for international Hanoi, Ho Chi Minh and Danang cities, linked leased lines. together by an SDH backbone; 6 satellite earth Due to increased competition, falling equip- stations with 6 antennas working with Intelsat ment costs, and in response to government pol-

16. GIPI, “Promoting Internet Policy and Regulatory Reform in Vietnam: Status of Telecommunications Development in Vietnam,” Assessment Report, March 2004. 17. World Bank interviews with NIPTS, December 2005. 18. SPT, the only currently active competitor, has 23,000 fixed lines in the Saigon area. 19. For a list and brief description of all the BCCs in Vietnam, see the Annex.

15 icy changes, the dominant carrier VNPT has more optimistic, estimating that mobile teleden- been dropping prices substantially. For exam- sity will reach about 39.9% by the end of 2009. ple, in May 2005 VNPT dropped its monthly Vinaphone has a reported growth rate of tariffs for leasing international capacity by 20 to 50,000 subscribers per month. Vinaphone spent 40%, and dropped its domestic rates by 10%. about $1.1 billion USD on expanding service coverage in 2003. Mobifone has received BCC Mobile Services. This market segment is the investments of $456 million USD from Comvik key driver of sector expansion in Vietnam, with of Sweden. Although Mobifone and Vinaphone growth rates averaging 53% per year for the have a common parent, they seem to compete past four years. Currently in Vietnam, competi- fairly vigorously. Total mobile revenues for all tion occurs primarily between two national firms are estimated at about $1 billion for 2005, mobile operators, both owned by VNPT as part with only about 7.0% of this revenue coming of its Vietnam Mobile Telecom Services (VMS) from mobile data services. These figures are division, and both using GSM technology. The projected to climb to about $2.9 billion and 8.7% estimated 2005 market share of the 9.3 million in 2010.24 mobile subscribers is Vinaphone at 43% and MPT and VNPT are eliminating the 20 Mobifone at 39%, thus totaling 82% for VNPT. Mobifone BCC arrangement with Comvik, and Pyramid Research forecasts that Vinaphone’s are reportedly changing to a new structure in market share will decline to about 37% by 2010, which the government would retain 51% own- that Mobiphone will also decline to about 37% ership, and shares for the remaining 49% would by 2010, and that other firms will rise from neg- be sold to the public. A statement in April 2005 ligible now to about 26% by 2010. by Deputy Prime Minister Tran Duc Lai Pyramid also estimates that mobile teleden- announced plans for the equitization of sity matched fixed teledensity at the end of 2004 Mobifone and Vinaphone. Observers expect , with both at about 7.5% penetration, and that that sale of shares in Mobifone will take less 21 the recent CAGR in mobile of “almost 50% time, since the main obstacle was the legal end 22 will moderate to around 21%.” Pyramid in of the Comvik BCC in May 2005, while the 2005 forecasts that mobile teledensity will reach Vinaphone equitization will take longer, since about 27% by 2010, more than twice the fixed the country’s local post offices have a share in 23 teledensity at that point. BMI forecasts are the ownership of this operator.25

20. NIPTS estimates that VNPT market share of mobile is 85% in December 2005, a figure close to the Pyramid Research estimate shown here. (World Bank interviews, December 2005.) 21. CAGR = compound annual growth rate. 22.Pyramid Research, “Vietnam Country Outlook,” September 2005, and Pyramid Research, “Communications Markets in Vietnam,” February 2004, www.pyramidresearch.com. PR anticipates that GSM technology will continue to dominate the market through 2010, with CDMA gaining less than 20% share, due to low demand for data usage and higher CAPEX requirements. Intensification of competition is also forecast, due to MPT allowing newcomers to undercut the prices of the two VNPT subsidiaries. 23. Thus the national goal set forth by NIPTS of “reaching total teledensity of 32-42 by the year 2010” is currently on track and would likely be achieved, barring unforeseen circumstances. One factor that might slow growth could be foreign investor reluctance to commit billions in an environment where ownership is not allowed; see the discus- sion later on the BTA, BCCs, and on investment and financing. 24. Pyramid Research, ibid. 25. World Markets Research Center, WMRC Country Report: Vietnam (Telecoms), October 2005.

16 Four other mobile operators have been Telecom. [But] it is unclear when the 3G tech- licensed and are operational: SPT26 (using nology will be made available, and beyond CDMA technology) , Hanoi Telecom, Viet this, no concrete plans have been confirmed by Power Telecom (formerly ETC), and Viettel (an other players, with Mobifone currently limit- SOE under the military). SPT and its CDMA ing its trials to 2.75 G technology. technology reportedly had difficulty in its first In November 2005, Deputy Prime Minister few months, due to high handset costs, lack of Nguyen Tan Dung reportedly turned down a handset selection, and lack of SIM cards. As a request from broadcaster Vietnam to 27 result, CDMA subscriber growth was “tepid” enter the lucrative mobile market. He reaf- at first, although it may expand to as much as firmed an earlier ruling that no more mobile 28 one third of subscribers by 2010. Military- licenses would be issued, in order to ensure a owned Vittel reportedly had net subscriber high quality of service quality from the existing additions totaling 540,000 in the first half of six operators. 2005, making it a potential threat to the top two competitors. Vinaphone, one of those top two, ISP and Other Internet Services. There are was reported by Pyramid Research to be set for three categories of Internet licenses in Vietnam: “imminent privatization, within two years,” Internet exchange carriers (IXCs), which are with Norway’s as the likely major wholesalers; Internet service providers (ISPs), investor. Viet Power Telecom has allocated which are retailers; and Internet online service $200 million to a plan to reach two million cus- providers (OSPs), which provide content and tomers with its CDMA 450 Mhz service. information services. Under the BTA, (US) foreign private investors were to be allowed to enter the market IXCs. The market for Internet inter-exchange for “mobile” services by the end of 2005, with up carriers (IXCs) opened up in early May 2002 to 49% ownership. However, Vietnam appears when FPT (also an ISP) and Vietel were licensed to be behind schedule in meeting those require- as IXCs, in addition to the previous monopoly ments (see the later discussion of the BTA). Vietnam Data Corporation, a subsidiary of Regarding technological evolution, BMI VNPT. Since then Viet Power Telecom, SPT, states that:29 and Hanoi Telecom have been licensed as IXCs. It does not appear that Vietnam has a clear pol- ISPs. The ISP market is dominated by VNPT, uti- icy towards the deployment of 3G [third gener- lizing its subsidiary VDC--Vietnam Data ation] networks, and – to the detriment of its 30 long term success – it is likely that permission Corporation. It holds 57% of the market. Six for service launch will be done on an ad hoc organizations hold 99% of the market, and two basis. Hence in February 2005 Hutchison of the six (VNPT and FPT) control 76% of the Telecom received a 15 year license to provide market. (See the exhibit below.) CDMA2000 services, which will include an FPT (the Corporation for Financing and upgrade to 3G as part of its BCC with Hanoi Promoting Technology), the second-largest ISP,

26. As noted above, VNPT owns an 18% interest in SPT, in addition to owning the two dominant cellular carriers. 27. Pyramid Research, ibid. 28. Pyramid Research, ibid. 29. BMI, ibid. 30. This figure and the chart are for the end of 2004. World Bank interviews in December 2005 with NIPTS indi- cate that VNPT still retained about “55 to 60% of the Internet market” at that point in time.

17 is a majority state-owned and minori- ty employee-owned share-based company, which is active in comput- er distribution, training and software. Netnam was created with assis- tance from Canada’s IDRC, is a state- owned enterprise owned by the gov- ernment Institute of Information Technology, and is used extensively by development agencies and profes- sional Vietnamese. It offers Internet dial-up, high speed connectivity, bul- letin boards, forums, file libraries, Source: World Bank interviews; USAID, ibid. Data from 2004. mirror sites, website creation, and business solutions. Liberalization in the ISP area has mobile, Internet and paging lines of business, currently led to 16 firms being licensed, through BCC arrangements. although not all are active.31 Four of these firms In December 2001 Vietnam and the United (Tham Tam, OCI, Viet Khang and Network States signed a bilateral trade agreement (BTA) Technologies) are stock (private) companies. which provides for a substantial measure of for- Note that VNPT has ownership of the domi- eign private investment in the Vietnamese nant ISP and partial ownership of the third telecommunications sector, on an ordered largest ISP, SPT. schedule over the next several years. The terms OSPs. There are 11 Internet on-line service and timetable of this agreement are presented in providers (OSPs) licensed in Vietnam, namely the table below. It is anticipated that this VDC (a subsidiary of VNPT), FPT, Netnam, SPT timetable will be widened in scope to cover (partially owned by VNPT), Vietel, OCI, Viet investors from all countries, as part of a Power Telecom, Vishipel, Netsoft, Elinco, and Vietnamese WTO telecommunications offer to Techcom. be forthcoming, perhaps in 2006. Foreign (US) investment with up to 50 per- In terms of the corporatization or privatiza- cent equity was to be allowed in Internet servic- tion (“equitization”) of VNPT, the obvious can- es by the end of 2004 under the terms of the BTA didate, there has been little public discussion or (but see the discussion below). Private invest- consultation regarding this option. However, ment in Internet services is permitted to reach there have been significant moves to begin carv- the 100 percent ownership level. ing up portions of the company, especially mobile, for possible private and foreign equity investment. Private Sector Participation Up to the present, the only avenue for pri- Private sector participation in the telecommuni- vate foreign involvement in basic telecom net- cations sector is on-going and increasing. There works (other than the BTA provisions) has been is now private sector participation in the through business cooperation contract (BCC)

31. USAID, 2005, ibid. See the Annex for a list of ISPs.

18 Table 5: Vietnam-US BTA for Foreign Investment in Telecommunications

Phase Segment foreign (US) investment Date Timetable

0 Upon BTA December 2001 All market segments 0% 2 years after I Value-added telecom services Up to 50% By end of 2003 agreement 3 years after II Value-added Internet services Up to 50% By end of 2004 agreement 4 years after III Mobile, leased lines and Up to 49% By end of 2005 satellite services agreement 6 years after IV Fixed line services (including Up to 49% By end of 2007 long-distance) agreement schemes, in which foreign companies finance SOE competitors), there could be decreasing capital investment and share in revenues, but interest among foreign investors in these have no ownership share, and limited or no schemes. management control. Despite the problems with BCCs, it should In most cases such BCC schemes suffer from be noted that recent BCCs have been negotiated various drawbacks which increase the cost of with provisions which will allow for conversion capital: to ownership arrangements in the future, if per- ● Lack of ownership by the private investor mitted. Furthermore, the BCCs have been a and limits on management control have neg- very effective method for bringing external cap- ative consequences, such as increased ital and investment into the country. For exam- investor risk, reduction in the availability of ple, the recent BCC between Hanoi Telecom and capital, and reduction in the transfer of man- Hutchinson is bringing in $656 million in exter- agement expertise to the firm. Also, since nal investment, a non-trivial sum. the BCCs de-link management from facing Citing the fact that BCCs remain the only investor risks, incentives for effective, profit- vehicle for investment, and an unsatisfactory oriented management are reduced. one, a recent USAID report stated that, “It is ● The negotiation process in time-consuming important to note that Vietnam is behind sched- ● The BCC arrangements were more attractive ule in implementing the BTA.”32Vietnam is when the investors had the security of a moving to allow for equity investment in monopoly situation. With the gradual open- mobile and other lines of business, although a ing up of the telecom market (mainly to local comparison of Vietnam with other Asian coun-

32 USAID, Competition Review of the Vietnamese Telecom Sector, 2005, p. 26. This report also cited various tech- nical legal and regulatory changes that were required to keep the BTA on schedule. World Bank interviews in late December 2005 with Vietnamese officials in charge of equitization confirmed that “foreign companies are not allowed more than 30% ownership, especially in the telecoms sector.” These officials stated that two options are being consid- ered: 1. changing current BCCs into equitized companies; this would require a change in the foreign investment law to increase the 30% ceiling;or 2. changing current BCCs into JVs, an option favored by the foreign investors. This option would require changing various government decrees.

19 tries in terms of limits on foreign ownership shows ual BCCs may do well. The US BTA signals the that Vietnam is lagging behind more progressive gradual end of the BCCs. This will likely not be telecom investment environments such as Singapore, an overnight phenomenon, but rather a gradual and is even behind countries such as Indonesia, transition. (For example, the first non-VNPT and . (See the table below.) BCC, with SPT, has a clause to convert the BCC to

Table 6: Allowed Foreign Ownership of Telecoms, by Country

Country % of Foreign Capital Allowed Legal Forms Required/Allowed

Brunei Not allowed Not allowed Cambodia 49%, with exceptions None Indonesia Non-ASEAN: 35% JV (joint venture); JO (joint ownership); ASEAN: 40% (with exceptions) Regional concessions Lao PDR Foreign JV partner provides at least 30% of the JV or Wholly owned foreign entity capital; no upper limit Malaysia 61% allowed for 1st 5 yrs, then 49% subsequently Through acquisition of shares in existing operators Not allowed Not allowed Philippines 40% No restriction Singapore 100% No restriction Thailand 49% Joint venture Vietnam Not allowed Only through BCCs

Sources: USAID, ibid.; World Bank research; source for Thai figure: ITI: Thailand Telecoms Market Report, 4/2005

Looking to the end of this decade, it appears a joint venture when Vietnamese law permits.) If likely that the dominance of VNPT in the mar- Vietnam accedes to the WTO, then the minimum ket will be reduced. Non-VNPT entities are standard will likely be imposition of the US BTA being encouraged to enter the market and make deadlines and requirements on the entire sector— it more competitive. and of course the BTA allows for direct invest- It also appears likely that the BCC approach ment. It appears likely that various BCCs will be will be gradually replaced in the future by more renegotiated over time to allow for increasing investor-oriented mechanisms, although individ- direct investment, ownership and control.

20 IV. Investment and Financing

Revenue and Financing lion USD, so this level of investment spread over five years (2005-2010) would total about Vietnam remains one of the smallest communi- $1.6 billion, a shortfall of $2.0 billion from what cations markets in Asia, with a total telecommu- is required. And with VNPT’s main sources of nications revenue of about $1.88 billion in profits -- highly priced leased lines and interna- 2005.33 This is largely due to having a relatively tional calling -- being cut dramatically, there is low GDP per capita combined with a high rural a question of whether it would be able to even population with little access to telecommunica- make these investment targets. VNPT as a tions services. source of financing is further weakened by its However, in terms of 2004 to 2005 revenue inability to raise funds via bond or share offer- growth, Vietnam, with a 16.5% increase, trails ings in private markets. Of course, the BCCs are generating hundreds of millions of dollars only Indonesia (at 16.6%) and India (17.8%) in in fixed and mobile investment within VNPT growth in the Asia region. and its competitors. But it seems questionable Vietnam faces similar challenges to other that billions of dollars of investment capital developing countries in terms of financing sub- can be attracted, without allowing for equity stantial network rollout. To achieve a target of participation. 35 lines per 100 population by 2010 from the Forecasts by Pyramid Research also bring current level of about 19.9 per 100 (fixed plus revenues and investments into question. PR mobile), will require about $240 million per forecasts that overall fixed communications rev- point (800,000 lines per point (one percent tele- enues will be fairly flat from 2006 to 2010.35 density) times about $300 per line34), or about The components of this forecast are: $3.6 billion in total. The total investment budg- et for VNPT for 2003 was only about $313 mil- ● Declines in revenues from international

33 Pyramid Research, ibid. 34 Total costs per line can be expected to be about $200 or even much less in urban areas, and mobile deployment costs per line are very low, but in rural areas the cost per line (even for mobile) will be higher. Costs per line will like- ly decline during the period, although the rapidly falling costs for electronics are not as important a part of the total cost as they once were. Also, it should be noted that the easy, pent-up demand is now being satisfied, and marketing, churn, and construction costs per line could rise as outreach to less motivated customers (with more choice) and to smaller towns is required. The costs of the “core network,” including towers, rights of way, additional regional nodes to allow for administration, failure-tolerance, and to minimize backhaul requirements, will form a much larger part of the total expense, and hence will drive up the unit cost for the extensive rural deployments required in Vietnam to reach the bulk of the population. See www.srtelecom.com/imports/pdf/en/CDMA-Networks-ruralPB3.pdf. Note that two of the recent BCCs in Vietnam, Cable & Wireless and France Telecom, had total average costs of roughly $900- 1000 per line. 35. Pyramid Research, ibid.

21 long distance (ILD; outgoing), domestic ings, supply credits, debt financing, equity long distance (DLD) and data private cir- issuance, and donor assistance. Under its cur- cuits rent structure, VNPT is unlikely to raise funds ● Very slight increases in local service through debt or equity issuance, and it appears revenues likely that retained earnings may come under ● Declines in revenue per line for residential pressure. Outside donor assistance from some and business voice communications sources is on-going but will likely be small com- ● Increases in Internet revenues; but these are pared to the need. not enough to overcome the ILD and DLD Continuing with the analysis of societal declines. investment, the table below shows that Vietnam is spending a comparatively low percentage of In line with these predictions, VNPT report- GDP on ICT. With a figure of 2.4%, Vietnam edly posted somewhat disappointing revenues ranks below all analyzed countries in the for the first half of 2005, running about 8% region, and is even one percent behind below plan, on an annualized basis. Indonesia.36 Thus the questions are raised, what growth To avoid future financing problems, it will and technology strategy will VNPT pursue, and be important to attract private capital into the will the strategy be cost efficient and cost com- sector. This capital should be both domestic petitive? If the strategy is not highly competi- and foreign in order to meet the demand. Such tive, financing may become a major issue. private capital will likely only be attracted by Financing sources are limited to retained earn- major improvements in the regulation and operation of the sector, including:

Table 7 ● Restructuring and reforming VNPT ICT Expenditures as a Share of GDP in ● Encouraging and licensing truly private Selected Countries operators ● Moving away from BCCs (or renegotiating Country Name Percent of GDP them) to simple private ownership of facili- Singapore 10.5 ties Malaysia 6.9 ● Making the official separation between the Malaysia 5.8 government and the dominant carrier more India 3.7 real in practice Thailand 3.5 ● Eliminating the multiple player ownerships Indonesia 3.4 of the dominant carrier Vietnam 2.4 ● Creating an effective regulatory regime for

Source: World Development interconnection, numbering and spectrum Indicatiors 2004, 2005 management Note: Data in italics are from 2002. ● Acceding to the WTO and meeting all its telecommunications requirements.

36. Note that defining and measuring the concepts used in this table are difficult, definitions used across coun- tries may not be identical, and exact results should be used with caution. Also, “expenditures” are not the same as “investment,” and could reflect high expenditures on low-cost-per-unit goods. Gross comparisons between countries may be useful, however.

22 Potential new Areas of Investment pass 200,000 by 2007, and states that supply is still lagging demand.38 There are a number of new technologies which Viet Power Telecom and Vietnam Cable TV promise lower cost and more customer-oriented are partnering to offer broadband Internet methods for telecommunications access and access to cable TV customers, at very high data service in Vietnam. These include broadband rates; this venture is in a nascent stage. Internet access via wireline, WiMax and soft- ware-based VOIP; these are discussed below. WiMAX. WiMAX is a new wireless standard being championed by Intel. It uses an antenna Broadband. Worldwide, the telecommunica- and two-way communications to replace back- tions market is basically organizing around two haul or consumer communications. This new major types of technologies: fixed broadband wireless standard is still in a formative phase of and mobile narrowband. Vietnam, having start- development, but the following characteristics ed very late on fixed broadband, is very far are clear: behind the growth curve in this area, but is starting to catch up. In mobile narrowband, ● 268mb/s in each direction, with realistic Vietnam also began late but not as late as broad- throughput of 70mb/s band, and has had tremendous growth. Hence ● 30 mile range (48 km) this area is better developed. Both arenas offer ● Support for Voice over IP, multimedia, and significant possibilities for investment. data. Broadband Internet access via wireline in ● Strong security features, including encryp- Vietnam has a low penetration, but is expected tion. to grow rapidly due to high demand and recent WiMax will connect individual mobile users price wars. It is estimated that there are cur- and home broadband subscribers directly to the rently (late 2005/early 2006) about 100,000 Internet, providing an alternative to the cable ADSL (asymmetric digital subscriber line) and asymmetric digital subscriber line (ADSL) broadband subscribers in Vietnam, with VNPT offerings available now. WiMax is appropriate holding about 45% market share. Major com- for countries with large rural areas, where lay- petitors include FPT (with about 30,000 sub- ing fiber optic cables is very costly. Vietnam is scribers in mid-2005) and Viettel (10,000 sub- reportedly looking into WiMax, and Singapore scribers), which are both undercutting VNPT’s is already conducting trials. price substantially. This price war has led to extremely low prices, including just $37/month Software-based VOIP. Turning to internation- for residential customers of VNPT (down from al service, software-based VOIP service has sub- the previous price of $68 per month), and only stantial potential in Vietnam. An example of about $2/month (sic) for a rock bottom ADSL this type of service is Skype,39 which has package offered by FTP. This is one of the low- 37 received considerable publicity recently. Skype est prices in the world. TeleGeography fore- (and other similar software packages) is free, casts that the number of ADSL subscribers will downloadable software that enables users to

37. Thai News Service, “Tough ADSL Competition Keeps Prices Low in Vietnam,” 10 Oct 2005 38. See http://www.telegeography.com/cu/article.php?article_id=7544. 39. See www.skype.com/ for more information.

23 make free calls anywhere in the world via the services are expected to create further down- microphones in their computers. Skype uses ward pressure on international calling rates in P2P (peer-to-peer) technology to connect to Vietnam and elsewhere. other Skype users. Quality of service reported- These and other new technologies would ly exceeds that of traditional land line phones. appear to be fruitful areas for attracting private This service was launched in early 2004. investment, with subsequent benefits for indi- Current penetration in Vietnam is apparently vidual and corporate consumers, major very small, but over time this and other similar investors and individual shareholders.

24 V. Sector Performance

Access to Services point, point to multi-point, and satellite solu- tions are used. Most of this rural network is Since the launch of the national economic under the control and ownership of VNPT, reform process in the early 1990s, Vietnam has although some other enterprises are preparing vastly improved and expanded its telecommu- to enter the rural market. Cellular service is nication infrastructure, especially in the avail- available in at least some locations in 61 of the ability of modern basic service and cellular serv- 61 provinces. Internet service has been provid- ices. From 1991 to 2005, the total number of lines ed to some rural locations, based in commune in service in Vietnam grew from 100,000 to 16.2 and post offices. There are a few websites that million (of which 6.9 million were fixed and 9.3 provide information on rural agricultural pro- million were mobile—note that mobile has duction. Postal and newspaper distribution is already exceeded fixed). Total teledensity relatively high, with 85.4 percent of rural com- increased from 0.1 to 19.9 per 100 residents dur- munes reached by daily newspaper delivery. ing the period. Because of this rapid expansion, The rural market is thus better off than it was most of the telecommunications infrastructure several years ago, but with only about 3% tele- was built in the last decade. It is modern and density, this market is very much under-served. digital. The North-South cable backbone was Various donor assisted projects have been built in 1995. Today all major and regional put in place to ameliorate the rural situation. urban centers have efficient telephone networks For example, in September 2005 VNPT and with extensive penetration. Ericsson completed a JICA-funded project to Penetration in rural areas is below about 3% install 140,000 phone lines in rural areas of the according to the ITU, compared to the overall 10 central provinces. The effort was supported penetration of 15 to 30% in the cities.40 by a JICA low interest loan. Various other sim- According to BMI research, one third of ilar efforts are underway in rural areas, sup- Vietnam’s villages are in mountainous or other ported by loans or grants from Sweden, France areas difficult to reach with cheap telecommuni- and other donors. cations solutions.41 Currently 8298 out of 8921 The government has recognized the rural communes in the country (about 93%) have at problem and has passed a regulation creating least one fixed line telephone. More than 40 the Vietnam Public Utility Telecommunications provinces have 100% of their rural communes Service Fund as a Universal Service Obligation penetrated with one or more fixed line tele- (USO) mechanism to address the issue. phones. Copper cable is generally used, but in Although the funding sources have been identi- difficult locations such as remote areas, moun- fied, operational details of this mechanism are tainous regions and islands, microwave point to still being worked out.

40. Penetration figures by province are not available. 41. BMI, ibid.

25 The number of pay phones was reported at total of 19.9, another remarkable increase 11,155 as of 26 December 2005, up from 10,703 at over the previous year’s total of 12.3. the end of 2004.42 This is a low penetration rate, Vietnam only permanently connected to the but the situation is mitigated in that many small Internet in November 1997, although it had businesses in towns and rural areas allow cus- been involved in various networking activities tomers and passersby to use their business for five years before that. By year end 2003, phones for a set fee. according to the ITU, Vietnam had about 3.5 As elsewhere in the region, the mobile mar- million Internet users and a very small number ket in Vietnam has enjoyed explosive growth. of hosts (see chart below). This user penetration The number of subscribers increased from 22,500 in 1995 to an estimated 9.3 mil- Table 8. lion by 2005, an average Total Teledensities (Lines per 100 Pop.) in Selected Countries annual increase in excess of 80%. (Recent years have 1995 2004 averaged about 53% annual Fixed Mobile Total Fixed Mobile Total growth.) China 3.3 0.29 3.59 24.1 25.8 49.9 In the fixed line market, India 1.29 0.01 1.3 4.3 4.8 9.1 1.1 million lines were Indonesia 1.69 0.11 1.8 4.6 14.1 18.7 installed in 2004, and an Malaysia 16.57 5 21.57 17.6 57.3 74.9 estimated 1.3 million in Philipines 2.05 0.72 2.77 4.1 38.7 42.8 2005, a 20% increase over Singapore 40.52 8.68 49.2 43 89.1 132.1 2004. Year on year growth Thailand 6.06 2.26 8.32 10.6 42 52.6 rates in fixed lines have Vietnam 1.05 0.03 1.08 6.98 5.3 12.3 averaged over 20% for the past three years, a remark- Source: ITU; note that the fixed line figure for Thailand is from 2003 able achievement. Vietnam’s 2004 total Table 9. teledensity of 12.3 placed Internet Use in Selected Countries it ahead of India (9.1), but Country Hosts Hosts/10 5 Users Users/100 left it trailing behind Inhabitants 103 Inhabitants regional neighbors and competitors Indonesia, China 89,357 1 33,700 2.57 India 86,871 1 18,481 1.75 China, Thailand and Indonesia 62,036 3 8,080 3.76 Malaysia, and Thailand. Malaysia 107,971 43 8,692 34.53 (See the chart below.) Philippines 27,996 3 3,500 4.40 Note that the estimates Singapore 484,825 1,155 2,135 50.88 for 2005 show Vietnam Thailand 103,700 17 6,031 9.65 with a fixed line teleden- Vietnam 340 0 3,500 4.30 sity of 8.4 and mobile Source: ITU 2004 teledensity of 11.5, for a

42. World Bank interviews with Vinaphone, December 2005.

26 was ahead of China, India and Indonesia, and service with data rates of up to 156 kbps, for use slightly behind the Philippines. In terms of pene- in rural areas. This CDMA2000 technology will tration, the Vietnam figure represents a low user also support VOIP telephony. Lack of broad- penetration of about 4%. However, growth esti- band access in urban and especially in rural mates since 2003 show Vietnam reaching a figure areas is a major limiting factor for Internet of about 11.6 million users by the end of 2005, for access and usefulness; changing this will a penetration of about 14.3 per 100 population. require major investment. The growth of the Internet market segment Internet access is hampered by the low pen- was hampered until 2002, due to a firewall that etration of personal computers, reported at 1.6 stopped inbound traffic carrying any objection- PCs per 100 population in 2004, and forecast at able sexual or political material. Enforcement of 1.9 in 2005 and 5.3 by the end of 2009.43 the firewall policy was moved in that year from the government to the ISPs. The ISPs are still Efficiency reportedly required to block in-bound traffic from about 200 objectionable sites. On the basis of the most commonly used indicator As mentioned earlier, broadband Internet of efficiency (the number of telephone main lines access is still in the nascent stages, and is limit- per employee), Vietnam was lagging its regional ed to about 100,000 customers, despite high comparators substantially. In each of the meas- demand. Viet Power Telecom was reported in ured years, Vietnam had the fewest lines per December 2005 to be testing a mobile Internet employee, usually by a factor of two or more. Comparing Vietnam to China (Vietnam’s traditional comparator in the region), Table 10: showed that China was about three times Telephone Main Lines per Employee as efficient on this measure. The figures for Vietnam are climbing, however, which is encouraging. China 84.8 196.6 158.7 India 28.4 50.7 90.7 Indonesia 82.1 146.2 181.3 Pricing Malaysia 115.5 161.8 219.4 Vietnam’s “market basket”44 for fixed Philippines 72.5 176.7 256.7 line service prices is higher than China’s Singapore 223.9 202.0 221.2 Thailand 99.6 144.4 197.9 and India’s, but lower than other coun- Vietnam 13.4 16.7 48. 9 tries in the region, while its market bas- ket of fees for mobile and Internet are Source: ITU 2004, World Bank, 2005 still high by regional standards. See the 2001 figures shown in italics. The Vietnam figure is for year end 2003, table below. the latest figure available.

43. BMI, ibid. 44. A “market basket” is a group of prices for different goods, added together for comparative purposes. Here the market basket for fixed line residential includes one fifth of the installation charge, the monthly subscription charge, and the cost of 15 peak and 15 non-peak local calls. The market basket for mobile is based on the pre-paid cost of 25 mobile calls on the same network and other networks, with calls including some mobile to fixed calls made during peak, off-peak and weekends. Thirty text messages per month are also included. The market basket for Internet includes 20 hours per month, with 10 at peak and 10 at off-peak times. Phone charges but not phone line rental charges are included if applicable. All market baskets were developed by the World Bank, using comparable ITU or World Bank figures.

27 VNPT, in an effort to increase take-up of international outbound calling and internation- landlines, launched a special promotion in al leased lines fell dramatically during the peri- December 2005 and January 2006, of a 30% od of 2001 to the present, such that outbound reduction in the connection fee, and three calling rates were at least 7% below the region- months of free phone service, for customers al average, according to VNPT and independ- who signed up for at least six months. Business ent analysis.45 Tariffs were lowered twice in customers who requested five or more lines 2005 for mobile phones by VNPT, the market received a 50% discount. leader. Tariff levels for two areas of key interest, The chart below shows that effective

Table 11: Market Price Baskets for Fixed, Mobile, and Internet Services in Various Asian Countries

Price basket for fixed line Price basket for mobile Price basket for Internet (US$ per month, residential) (US$ per month) (US$ per month)

China 3.56 3.70 10.14 India 3.21 3.25 8.74 Indonesia 6.15 4.58 22.26 Malaysia 8.69 5.59 8.42 Philippines 12.20 4.03 17.05 Singapore 6.67 5.72 11.04 Thailand 8.34 6.84 6.98 Vietnam 4.27 6.89 19.85

Source: World Bank and ITU data, World Bank methodology. Data from 2004.

Table 12: Evolution of International Telephone Service Charges (PSTN)

December July April (all prices in USD) 2001 2002 2003 2003 2005 Zone 1: ASEAN, China, Taiwan, Hong Kong, 1.70 - 2.30 1.50 - 1.70 1.30 - 1.40 0.90 0.43-0.55 Macao, Republic of Korea and Japan Zone 2: USA, Canada, Australia, New 2.30 - 2.00 1.80 - 2.00 1.50 - 1.70 1.00 0.43-0.55 Zealand, , North Korea, and India Zone 3: The remainder 2.30 2.0 1.70 1.10 0.64

Decision Effective as of Decision 897/2001/QD-BBCVT, October 30, 2001, DGPT December 2001 Decision 476/2002/QD-BBCVT, June 13, 2002, DGPT July 2002 Decision 25/2002/QD-BBCVT, Dec. 18, 2002, MPT January 2003 Decision 47/2003/QD-BBCVT, March 20, 2003, MPT April 2003 Decision 4088/2005/QD-GCTT August 03, 2005, VNPT September 2005

45. The independent analysis was done in December 2003, and prices have continued to fall since then.

28 September 2005 (the date of the most recent “significant market power,” can set their own change), outbound international calling rates prices without approval from MPT. This deci- had dropped by more than 70% compared to sion covers all forms of telecommunications rates three years previously. This is a remark- services, including mobile and Internet. This able amount of change in a relatively short approach is a significant change from the previ- time. ous practice of MPT approving (and often VOIP services offered by VNPT and other rejecting) all price proposals. This new regula- licensed (and unlicensed) providers, offered at tory approach has already led to substantial substantial discounts off of normal switched price drops. But some critics have contended traffic, have helped to drive down the cost of that the new “significant market power” international and national long distance voice approach is not transparent in its application, and data communications, and to increase traf- and will not aid startup telecommunications fic volumes. providers. During the period between 2003 and 2005, charges for international private circuit leasing Affordability via submarine cable decreased by about 70% (see the table below). Again, this is a remark- The monthly market price basket for fixed line able amount of change in a short period. Due service (described earlier) is about 9% of per to recent increased competition, dominant capita GNI in Vietnam (see the table below). VNPT has been dropping prices substantially. This is rather high by regional standards. For example, in May 2005 VNPT dropped its The market baskets for mobile and for monthly tariffs for leasing international capaci- Internet services are still very high by ty by 20 to 40%, and dropped its domestic rates regional standards, with both shown as the by 10%. highest in the region. Hence although prices Under an MPT decision in 2003 (No. have fallen substantially in recent years, they 217/2003QD-TTg), all telecommunications may still require work. A modern, inde- service providers with market shares of less pendent and comprehensive study of prices than 30%, and thus deemed to have less than is indicated.

Table 13: Evolution of Private International Circuit Leasing Charge

USD/month, Zone 1 USD/month, Zone 2

Decision 477/2002/QD-TCBD, July 2002 $2824 $2824 June 13, 2002, DGPT Decision 26/2002/QD-BBCVT, January 2003 $2400 $2400 Dec. 18, 2002, MPT Decision 54/2003/QD-BBCVT, April 2003 $1008--1440 $1080-1440 March 20, 2003, MPT Decision 11/2005/QD-BBCVT May 2005 $404 -714 $404 -714 April 28, 2005

Source: World Bank interviews in 2004 and late 2005

29 Table 14: Month Market Price Baskets as a Percentage of GNI Per Capita Monthly price basket for Monthly price basket for Monthly price basket for GNI per capita, fixed line (percent of GNI mobile (percent of GNI Internet (percent of GNI Atlas Method per capita) per capita) per capita) (current US$)

China 3.32 3.44 9.43 1290.00 India 6.21 6.29 16.92 620.00 Indonesia 6.48 4.82 23.43 1140.00 Malaysia 2.24 1.44 2.17 4650.00 Philippines 12.51 4.14 17.49 1170.00 Singapore 0.33 0.28 0.55 24220.00 Thailand 3.94 3.23 3.30 2540.00 Vietnam 9.32 15.04 43.31 550.00

Sources: World Bank and ITU data, 2004

30 VI. Main Issues

he priority substantive public policy ing new providers in almost every segment, issues for development of the telecommu- and has thus been increasing competition. This T nications sector in Vietnam are: is laudable. However, there is no adopted roadmap which reveals government plans for 1. Increasing competition and private partici- increasing competition, private and foreign pation investment, other than the Vietnam-US BTA, 2. Improving regulatory institutions and which is limited to one country, is fairly narrow processes in scope, and is not on schedule. Such a 3. Restructuring and reforming the dominant roadmap could address the areas of using new carrier technologies (such as broadband, fixed wireless 4. Improving rural access to telecommunica- access, VOIP, advanced mobile technologies, tions and information services. etc.) to encourage external direct investment and satisfy consumer demand. Discussion and Each of these priorities is related to the oth- adoption of such a roadmap would be useful in ers: thus, competition is a powerful incentive developing WTO telecommunications offers, for excellent performance. Credible, transparent part of the WTO accession process which is a and effective regulatory institutions and stated government goal for the near future. processes support competition and investment. Other issues related to new entry, competi- Restructuring and reforming the dominant car- tion and private involvement include the issues rier will improve its competitiveness and the of the BCCs and the role of private involvement competitive nature of the market, and encour- in the sector. The BCCs have fueled network age better customer service by all providers. growth, and have brought in large external And improved rural access depends on encour- investments, but are not really satisfactory, aging regulations, investment, competition, tar- long-term mechanisms for bringing in private iffs, network interconnection, and the most capital and expertise. Real private investment, effective use of scarce subsidy funds or other ownership, risk-taking, and management of mechanisms. These priorities are discussed fur- enterprises are necessary to reap the benefits of ther below. The first four issues focus on sub- a market economy. stantive areas; the last two focus on processes for achieving progress. MPT’s adopted ICT Development Strategy document of 6 October 2005 does not give pri- vate sector enterprise estimates or goals for Promoting Competition and Private future market shares, nor does it provide a Participation method for attracting private investment to achieve the strategy’s many laudable goals. This complex area involves three main sub- Licensing new entrants is very helpful and is issues: new entry, interconnection, and pricing. on-going, although experience in other coun- New Entry. The government has been licens- tries shows that many obstacles besides just

31 licensing usually lie in the way of true competi- engaging in anti-competitive cross-subsidies. tion and private participation. Nor is it clear VNPT currently occupies a substantially domi- from the MPT plan or from current trends how nant position in all market segments. Based on much truly private investment will be attracted, experience in many other countries, as real com- versus investment from other SOEs and the mil- petition develops, VNPT and other large play- itary (which have dominated investment to ers may be tempted to use market and political date.) An on-going dialog between government power to manipulate interconnection rates and and new and potential entrants is needed to terms to their advantage, rather than being sub- encourage their participation. ject to a “level playing field,” or even to a field Regarding licensing of new entrants, proce- “tilted” against them (which might encourage dures for the award of licenses for major new private entrants). . telecommunications network and service opera- There is currently no transparent process to tors remain ill-defined and non-transparent, set or appeal interconnection disputes or rates, and there are at least some allegations that the and the MPT is not well equipped to deal with dominant player has held up licenses for other the emerging problems in this area. There are a players. Licenses are issued to connected par- number of complaints surfacing regarding inter- ties, including SOEs, without transparent stud- connection slowdowns practiced by the domi- ies of the effects on the market, the qualifica- nant carrier. There is no cost analysis of intercon- tions of the potential awardees, discussion of nection rates and no modeling of costs based on possible competitive bidding, the need to attract existing carriers or preferably on a model, effi- private investors, or other factors. Other coun- cient firm There is some progress in developing tries have moved to a class license approach for a “reference interconnection offer” (RIO), which public telecommunications operators, and have is one standard approach to dealing with this commissioned public studies of the effects of, problem; this progress should be encouraged. say, issuing new mobile licenses. In non-contro- Experience in many liberalizing markets has versial, highly competitive segments (such as shown that interconnection rapidly emerges as paging, ISP provision, etc.) many countries have the most important regulatory issue. Hence moved to simple registration of any new improving the quality and availability of infor- provider, or even to just allowing anyone to mation and regulation in this area is vital. perform the service without registration. Pricing. MPT (and its predecessor DGPT) low- Interconnection. A key prerequisite for effec- ered tariffs considerably over the last six years, tive competition in any telecommunications and very considerably in the last three years. sector is a transparently managed and non-dis- However, there is no transparency to the criminatory interconnection regime, under process, no published study or modeling of which major providers are obliged to provide underlying costs, and no true rebalancing (in cost-reflective rates and are prohibited from that no below-cost prices have been raised).46

46. There has also been no discussion of “price capping.” Price capping in telecommunications usually allows for one or more factors in a formula, which is applied to current prices and future allowed changes. Factors typically include an inflation factor which allows prices to rise, and an “x” factor (a negative factor) for increased productivity and reduced equipment prices. This latter factor is typically much larger than the inflation factor, so that over time the price levels in the sector are driven down towards (presumed) costs. Prices have been falling quickly enough in Vietnam that this topic has not been raised. But if and when prices begin to level out, it will be important for MPT to be familiar with this important regulatory tool.

32 Analysis of outgoing international calls sion will in practice require commitment to the shows that these rates, recently very high Reference Paper on Regulatory Principles for indeed, are now about 7% below regional aver- Basic Telecommunications Services,47 and ages. This is a remarkable achievement. since Vietnam has already committed to the There remains a need to analyze and move paper by including it by reference in the BTA. away from cross-subsidies which are hard to ana- An issue here is that although VNPT is nomi- lyze, inefficient, encourage inefficiency by market nally separate from MPT, in fact MPT has the players, and may subsidize the wrong parties or role of owning VNPT, 90 to 94% of which is programs. Subsidies likely currently run from dominated by VNPT. Other countries have international and domestic long distance to local helped ameliorate this issue during a transition service. Creation of competitively neutral, trans- phase by having the ownership function vest- parent subsidies should be a high priority. A ed in the ministry of finance or equivalent transition plan can help plot the course from the body. This issue is under discussion and current situation to a more modern system. undertaking this separation of functions MPT has agreed to focus on tariff approval would be a major step forward. only for firms with more than 30% market MPT was created by a decree in late 2002, share, which is a step in the right direction and it seems unlikely that a new, separate regu- towards asymmetric regulation. However, latory body will be created under or outside of there is no roadmap or agreed plan for moving MPT in the near future. However, it would toward a modern tariff review process for the appear possible to create a two-step approach in firms with significant market power. which a “Regulatory Committee” could be Finally, due to the drastic drops in prices formed in the near future within MPT, and then reported by MPT, it is not clear what the source this could become the basis for a move to a of financing for the on-going rapid expansion of Regulatory Authority at a later date. the sector will be. Will current tariff rates suf- In the meantime, following the WTO empha- fice? Will borrowing be feasible? Will BCC sis on strengthening regulators,48 there are arrangements suffice, or will private investment issues which should be addressed regarding the be attracted through reform, to fill in the gaps? A forward-looking professional analysis of capacity of MPT, and of improving its regulato- these questions could help MPT and stakehold- ry processes. Areas of concern include increased ers understand the implications of recent and transparency and public and stakeholder input, possible future regulatory actions. possible predatory practices in the market, and improved regulatory processes in tariff review, Developing modern Regulatiory interconnection, licensing, and spectrum man- Institutions and processes agement. In the long term, a separate regulator would Vietnam is implicitly endorsing the principle be useful in Vietnam, as it has proved useful in of regulatory independence from operators over 100 other countries around the world. with its statement that it wishes to accede to There is widespread agreement that an ideal reg- the WTO in the very near future, since acces- ulator should have the following characteristics:

47. Technically, under WTO accession, what is required is that Vietnam would negotiate a schedule of commit- ments with its major trading partners, then submit these. In practice, the Reference Paper has been key. 48. Specifically, the Telecommunications Regulatory Reference Paper and GATS Articles III and VI.

33 ● Neutral, fair, reasonable, impartial and where the ministry still retains ultimate author- objective in its dealings with all parties ity, it can use TRAI to elicit public comments ● Transparent in its procedures, following the and develop recommendations—but the min- principles of providing notice, listening to istry is not bound by those recommendations. all parties, making decisions based on the In this way, the ministry has the benefit of a full facts, issuing decisions that explain the prin- consultative process which takes in the consid- ciples used, and providing for appeals erations of all stakeholders, while still allowing ● Highly competent in key areas, but willing the ministry a broad scope of power. and able to contract out for specific expertise Other possible regulatory organizational ● Composed of a modest-sized staff that is not approaches include that of Malaysia, in which bureaucratic the regulatory body uses the “layer regulatory ● Staffed with personnel who are well trained, approach.” In this approach, each layer in the and often cross-trained in key disciplines communications stack (content layer, applica- such as economics, policy analysis, account- tions layer, service layer, facilities layer) is ing, regulation, engineering and law. either regulated, unregulated or partially regu- ● Possessed of a sound source of revenue that lated. Some analysts feel that this approach provides adequate funding for staff com- tends to break down “technology silos” and pensation and institutional facilities make regulation (and service) more responsive ● Undertakes regulation in conformance with to end users. the WTO Telecommunications Regulatory The regulatory approach and structure Reference Paper49 should not be simply limited to telecommunica- ● Undertakes licensing and regulating mar- tions, but should cover the broad range of tech- kets in a manner consistent with GATS nologies that are converging in the ICT arena. Articles VI, VIII and IX. There are various specialized areas of regu- latory process improvement which were It should be noted that creating a separate already discussed earlier, namely licensing, regulatory body does not necessarily mean that pricing and interconnection. One important the supervising ministry gives up its role in set- remaining area is spectrum management. ting broad sector policy or even making deci- sions on particular important issues. The exam- Particular attention needs to be given to ple of the Telecommunications Regulatory managing the use of the radio spectrum. Authority of India (TRAI) is useful here. TRAI Implementation of improved management and and its relevant ministry each have legislative licensing arrangements has the potential to opti- authority, with the ministry’s major responsibil- mize the economic benefit of this scarce ity being in the important area of licensing resource, while also possibly generating sub- major new entrants. In areas such as licensing, stantial revenues. In most developing coun-

49 Under the Reference Paper, key minimum concepts include: a) prevention of anti-competitive practices by major suppliers; (b) transparent, non-discriminatory, and cost-oriented provision of interconnection by major suppli- ers, including either publication of interconnection agreements or resort to a 'reference interconnection offer' binding the service provider, and dispute resolution mechanisms; (c) transparent, non-discriminatory and competitively neu- tral universal service obligations; (d) public availability of licensing conditions and criteria; (e) independence of regu- latory bodies from service suppliers; and (f) objective, timely, transparent and non-discriminatory procedures for the allocation and use of scarce resources (such as radio frequencies, numbering ranges and rights of way).

34 tries, the government “hoards” radio spectrum length,”50 corporatized subsidiaries, would be a -- retaining an excessive amount for its own use, major step forward. However, it is not clear but actually not using it much. This is not effi- that comprehensive plans are in place on how cient, and with the growth of mobile and wire- to move forward in this area, although there are less, considerable reallocations are often needed press reports and government announcements from government to private use. Automated that the area is being addressed, and there have spectrum monitoring, and computerization of been announcements that VNPT’s Mobifone spectrum management processes, are important will be partially equitized. areas for improvement in the management of The multiple ownerships of VNPT and dom- this important public resource. Key sub-issues inance in the sector are quite striking, especially within spectrum management include: in the cellular arena. Although observers and customers report that VNPT subsidiaries do ● Adequate allocations for mobile GSM, compete against each other in the same lines of CDMA and other wireless growth business, the current structure raises questions ● Bands for new services, and possible com- about whether competition is in fact inhibited. pensation for parties who are forced to leave The challenge of attracting telecom invest- bands ments to support economic growth in a context ● Unlicensed bands where international tariffs are rapidly decreas- ● Appropriate pricing for scarce spectrum allocated to commercial use ing, thereby eliminating a major source of rev- ● Transition path to mobile 3G enues for the dominant player and potential ● Potential for rural service licensees, is a challenge Vietnam has in common ● Timeliness of regulation with many developing countries. The challenge ● Computerized monitoring of licensed bands is compounded by the (partial) natural monop- to prevent “piracy,” interference, and unau- oly nature of telecom infrastructure (particular- thorized use ly in access infrastructure), and this challenge ● Adequate funding and authority to regulate requires designing detailed market transition the spectrum using a modern approach. mechanisms. Thus, the main challenge will clearly be to Reforming and Restructuring VNPT manage a transition in market structure that allows for increased public and private invest- VNPT is currently an SOE and a conglomerate ment in the sector. Given the current market of divisions, dependent SOEs, subsidiary stock structure, this will initially be an exercise in cor- companies, non-profit divisions, and other com- porate restructuring of VNPT (perhaps via panies. The MPT plan for this area states that, carve-outs or spin offs). This restructuring “MPT will focus on enterprise reform, introduc- would need to be accompanied by policies and ing the corporation model to VNPT....” Truly regulations that reinforce the underlying goals corporatizing VNPT, and creating “arms- of the corporate restructuring (e.g., tariff setting,

50. An “arms-length” subsidiary refers to an entity which has a separate accounting system and which pays mar- ket-based prices to its parent for goods and services. Such a subsidiary can still be under the full control of the par- ent, and subject to its policy and operational direction. But the “arms-length” nature of the financial relationship means that the subsidiary cannot give or receive hidden subsidies, and is thus much more amenable to privatization, because its accounting statements are clear and transparent.

35 including retail, wholesale and interconnection and rural areas of Vietnam, where the problem tariffs). This will put a heavy premium on insti- of thousands of un-served or under-served vil- tutional capacity to manage transition and gov- lages needs to be addressed. New methods ernance, implying that capacity building at the need to be devised to encourage existing ministry level will be a key feasibility factor providers to enter rural areas, and to create new moving forward. approaches where private capital clearly will VNPT is currently heavily involved in the not work. Vietnam is moving to create a univer- manufacturing of equipment such as consumer sal service institution which will help amelio- telephone sets and other retail and wholesale rate this problem; this effort should be encour- communications items, for its own internal use aged and international best practices incorpo- and for external sale. In other countries it has rated into its operation. been found that such involvement by the oper- Similarly, Internet access is still low nation- ator in equipment supply is inefficient and pro- wide and is virtually non-existent in rural vides out of date and costly technologies. areas. New approaches are needed to bring Getting VNPT out of this business will almost Internet information to the rural areas where certainly be necessary to improve its efficiency the large majority of the population lives. These and attractiveness to investors. approaches could either be direct or through VNPT has not separated its postal opera- intermediaries. Broadband access to the tions from its telecommunications operations, Internet is currently completely absent in rural although it has been announced that the two Vietnam. entities have been decreed as separate and Experience in other countries has shown that operational separation is under way. that private industry can be encouraged at no VNPT is heavily involved in the postal bank- or low cost to enter rural markets, and that the ing (giro) business. Virtually all telecommu- “frontier” for private investment can be nications monopolies (or former monopolies) pushed back. Usually this requires the reduc- seeking outside investment have fully sepa- tion of restrictive government rules and regu- rated telecommunications from postal busi- lations. Beyond some point, private investment nesses, since the latter are usually money-los- will not normally go to commercially unattrac- ing, low technology, and highly labor-inten- tive locations, and then creative approaches sive -- the opposite of the telecommunications can be used, such as negative bidding auctions, business. output based aid, the deployment of NGOs, VNPT, like most telecommunications the bundling of attractive and unattractive monopolies or former monopolies, likely takes areas in licenses (with enforced rollout targets its customers somewhat for granted. In a com- petitive marketplace this approach must in the unattractive areas), reduction of risk for change, and the monopoly must become cus- investors, encouragement of private coopera- tomer-oriented and demand-driven. tives, low interest lending, using the govern- ment as a model user via procurement to drive the rollout of infrastructure, etc. Increasing Rural Telecommunications Having discussed the four major substantive Infrastructure and access issues, we now turn briefly to the two process- The number of telephone lines per 100 people related issues: devising a roadmap and revising shows a large variation between the large cities the current telecommunications law.

36 Devising a roadmap Revising the current Telecommuni- cations Law Currently there is no roadmap for change in all of the above areas which has been discussed The current telecommunications ordinance (law) openly and agreed upon. Plans and decrees tend is relatively recent and has many progressive fea- tures. But it is not a modern telecommunications to be engineering documents or penetration law that recognizes the interests of consumers, goals, not well-thought-out mechanisms using mandates modern regulatory procedures, policy changes that reflect international best encourages private entry and competition, and practice. There is a need for more policy plan- encourages investors. Nor is the law (or its ning and linking processes and policy changes to implementing decrees) consistent with the BTA anticipated results. The NIPTS ICT policy is a or the WTO. step in the right direction, but it too needs more The next section shows the way forward in focus on how to achieve laudable goals. moving to address these issues.

37 VII. The Way Forward

he challenge now facing government is to ing its teledensity very rapidly indeed, from a establish an effective policy and regulato- very low base. Yet many countries have stum- T ry environment conducive to the contin- bled in managing the transition, when it comes ued growth of telecommunications, in order to to the difficult decision to let market forces take optimize the performance of the sector in urban over under state regulation, instead of state and rural areas and to the mobilization of private command. It is not yet clear if, when and how capital and expertise to properly manage the Vietnam will deal with this challenge. A more telecommunications firms in the sector. detailed approach to address this area is dis- Four main substantive priorities emerge. The cussed below. first priority is to intensify and entrench pro- competitive policies for the sector, to reap the 1. Promote Competition and Private proven benefits of market competition. These Participation priorities include encouraging new entry, improving the interconnection regime, and There are two separate but related goals for this increasing the transparency and cost-orientation area. One is to create competition because com- of pricing. The second priority is to support petition provides positive incentives for these pro-competitive policies by establishing increased productivity and responsiveness to highly credible, transparent and effective regu- customer needs. The second is to facilitate mul- latory processes within MPT in the short run, so tiple channels for investment in order to meet that these processes can be migrated to a non- investment needs and meet performance targets. ministerial regulatory institution in the long run. To fulfill these goals, it is important to The third priority is to reform and restructure develop and publish a plan for eliminating the VNPT, using internal management change and multiple-ownerships that the dominant carrier external forces such as equitization. The fourth currently possesses in every market segment, priority, for geographic areas that are not well- especially mobile telephony. This plan or served by the market, is to adopt and implement roadmap should also specify: the policy and a set of policies and programs that will system- regulatory steps that will be undertaken to sub- atically address inadequate access to telecom- stantially increase broadband penetration in munications services, and more broadly to infor- urban and rural areas, attract truly private mation services, in the thousands of villages and investment; how to implement simple and rural areas in Vietnam. transparent processes for competitive new In addition to the four substantive reform entry; how to reduce anti-competitive conduct; priorities, there are two process-oriented areas, and how new and innovative telecommunica- dealing with a roadmap for reform, and with tions technologies will be encouraged and not revising the current telecommunications law. obstructed by the government. A clear vision of Vietnam has done an excellent job of increas- a future industry structure needs to be devised and disseminated. This structure would have a tive is to ensure economically optimal use of number of viable operators, each totally inde- scarce resources. Properly implemented, pendent of each other, and all subject to impar- improved policies and practices could generate tial regulation. substantial non-tax and tax revenues for the State Another way to help achieve the goals is to budget. It is recommended that such a review be identify what is required to accede to the WTO completed before any new licenses are issued for in the telecommunications area. In the compet- radio-based services. The review should analyze itive arena, this will at least entail developing a how to attract truly private investment to obtain credible telecommunications offer(s). Without licenses, in addition to the SOE investment specifying particular trade negotiation posi- which has been very prevalent to date. tions, it would appear that a credible offer Interconnection is a very important and would need to address issues such as: opening challenging area of improving competition and of various market segments to foreign participa- private entry. Enforcement of a credible and tion; possibly increasing private ownership equitable network interconnection regime is above 50% in at least some market segments; critical to facilitate new entry as well as to pro- setting realistic time deadlines for proposed vide incentives for existing operators to make changes, and meeting the Telecommunications investments. Currently the situation vis-a-vis Reference Paper requirements which were interconnection difficulties is not clear, but the already agreed to under the BTA, and which are signs are that monopolistic abuse is likely. A likely to be key in WTO accession. study of this area should be undertaken, identi- A third related way to promote competition fying carrier complaints, the effects of domi- is to continue to implement the pro-competitive nance, abuses if any, and ways to meet the market opening and investment provisions of WTO’s very specific requirements in this area. the Vietnam-US BTA. Apparent lack of compli- (These latter include interconnection “at any ance with this agreement is not a good signal. feasible point...cost-oriented, ... transparent,... Implementation of these BTA agreement obliga- reasonable... timely... sufficiently unbun- tions will positively affect the market, and will dled...non-discriminatory....”) Vietnam is very reduce investment risks and costs for the expan- far from meeting these requirements at this sion of telecom networks in Vietnam. point. Another key element of achieving competi- Features of a modern interconnection regulato- tion and private entry is licensing. Licensing is ry regime including publication of Reference an important threshold issue in this area. The Interconnection Offers (RIOs)51 by dominant oper- government should initiate a comprehensive ators, and publication of time-bound interconnec- review of its current policies and practices for tion dispute settlement procedures. Vietnam does awarding licenses. The objective should be to not have these important features now. move to a class licensing system that will stream- Turning to the pricing aspects of promoting line and clarify licensing procedures. A second, competition—until recently the Government pol- related, objective should be to increase trans- icy has been to announce cuts in tariffs, driving parency in the licensing process. Another objec- international, long distance and leased line rates

51. An RIO is a detailed document that is publicly available, which presents the dominant carriers’ technical and financial requirements for interconnection. The RIO is reviewed by the regulator and smaller operators for reason- ableness before it is published, and dominant carriers are then obliged to accept any interconnection that meets the RIO requirements.

40 down toward and even below regional norms. and should allow input from all parties interest- Very recently the government took the positive ed in a particular case or dispute. step of freeing firms to set their own prices, unless A specific study should be undertaken on they possessed significant market power. what role a non-ministerial telecommunications However, regulation in pricing is now enter- regulatory body should play, what it should ing a much more technically difficult phase. look like, how it could meet WTO requirements, Very soon the government regulators will need what legal changes would be needed to create to wrestle with the difficult concepts of possible it, what its charter should be, the role of the reg- collusion on prices, possible application of infla- ulator versus that of the ministry, and how the tion-linked “price cap” type formulas for maxi- new modern procedures could be migrated into mum tariffs, dominant carrier abuses of pricing, this body. Such a study would allow a dialog to and analysis of the costs underlying prices. Steps begin on the future of regulatory institutions in to address these issues should include: undertak- the sector. ing a comprehensive study to ascertain if indeed The government should consider the useful prices in all market segments have reached or are Indian TRAI model discussed earlier, which below regional norms or other appropriate lev- allows for broad public consultation by the reg- els; developing and publishing a plan for moving ulator but allows the ministry to retain the ulti- to a modern tariff-setting regime (including pro- mate decision-making authority in selected cedures, training, development of in-house or areas. The Malaysian, Singaporean, and other contracted out capacity, appeals of regulatory progressive regulatory models should be stud- decisions, etc.); and undertaking a study of the ied and carefully considered. needed sources of financing for continued MPT should investigate and act on a plan to growth in the sector. A special focus on rate create a Regulatory Committee within the rebalancing, to bring tariffs in line with underly- Ministry; with the goal of having this Committee ing costs, is key here. become the basis of a later Regulatory Note that a powerful argument can be made Authority. This Committee and the subsequent that Vietnam should be able to achieve prices Authority, following best international practice, which are noticeably lower than regional norms should not be limited just to telecommunications or international benchmarks. This is because regulation, but should address all converging new operators (as in Vietnam) can use the latest, technologies in the ICT arena. lowest-cost technologies to achieve high service In the area of specialized regulatory process- quality and high penetration, at substantially es, the government should undertake a compre- lower prices than neighboring countries in hensive review of radio spectrum policies and which capital investment took place as recently procedures. The radio spectrum review should as a few years ago. take into account the WTO Reference Paper requirements, which include: “The current state 2. Develop modern Regulatory of allocated frequency bands will be made pub- Institutions and processes licly available...” [except government use need not]; and “any procedures for the allocation and The government should act quickly to establish use of scarce resources, including frequencies, effective regulatory processes that will meet the numbers and rights of way, will be carried out tests of the current BTA, GATS, WTO accession in an objective, timely, transparent and non-dis- and international best practices. These practices criminatory manner....” As part of the review should be transparent, impartial and modern, process, a forum for dialog between govern-

41 ment and commercial users of spectrum should ness market forces, NGOs, cooperatives, lend- be created, and annual meetings held. ing to private entities, small businesses, and other creative methods, using proven interna- 3. Reform of VNPT tional models. This review should also identify internationally proven methods for increasing This area partly overlaps with the first area, in penetration in remote areas where the private that promoting competition naturally implies market may not work, using transparently bid the reform and restructuring of VNPT. Specific subsidies as part of an output based aid initia- areas for reform include: tive, where they are absolutely necessary, and apply these methods to rural Vietnam. ● Elimination of multiple ownerships in spe- The review should also take into account cific market segments WTO Reference Paper requirements in this area, ● Corporatization as a share-based entity of which state that although WTO members may VNPT itself, and of VNPT’s SOE subsidiaries undertake any universal service obligation (USO) which are amenable to corporatization regime that they like, the USO scheme must be ● Transitioning from BCCs to JVs, to acceler- “administered in a transparent, non-discrimina- ate delivery in selected VNPT service areas tory and competitively neutral manner...that is ● Creation of “arms-length” relationships (as not more burdensome than necessary....” The described earlier) between the parent VNPT new planned universal service mechanism for and its various subsidiaries, with the possi- Vietnam should be designed with this require- ble end result in the near-medium term of ment, and international best practices, in mind. VNPT being a holding company of various The government should undertake a study corporatized enties readily amenable to of a limited government-based approach in equitization (privatization) which government uses its power as a major ● Analysis and assessment of the complex purchaser of telecommunications services and VNPT organization to see if some simplifica- infrastructure. In this approach, the govern- tion and streamlining could increase VNPT’s ment would invite tenders to build out rural ability to be more customer-oriented, better services and/or infrastructure, but would not manage its operations, and create investor limit itself to using just one provider or suppli- interest. er. Thus market forces would be utilized to ● Separation of VNPT’s telecommunications decrease costs and increase speed of rollout. equipment manufacturing business from its This study should also address the topic of pol- operator business icy measures that will increase broadband pen- ● Follow through on the separation of VNPT’s etration in rural areas. postal and postal giro businesses from its There are two important but more process- telecommunications businesses. oriented reforms required to move the sector forward, as follows. 4. Promote Extension of Rural Telecommunications infrastructure 5. Develop and Publish a and access Telecommunications Development The government should undertake a review of polycy Roadmap the situation with regard to rural telecommuni- Plans and roadmaps to date have focused on cations and Internet, focusing on ways to har- penetration levels and technologies, and have

42 always been internally developed. Here the key role that telecommunications and telemat- concept is to develop a policy roadmap that will ics play in the economy. But it is far from take the points above, elaborate them, and pub- being a modern telecommunications law that lish them for written and other feedback, before the WTO, international best practice, or the roadmap is finalized. This will allow the investors would recognize as a model. A dia- first transparent stakeholder and public input log needs to begin, starting with a study, with- into the sector, at a critical juncture in its devel- in the government, and between the govern- opment. It could also prove to be a useful input ment, stakeholders, the public, donors and to a WTO accession package. experts on the nature of a future, new telecom- munications law. 6. Begin dialog on Drafting a new Telecommunications Law The way forward: Summary The table below provides a summary of the rec- The new telecommunications ordinance of ommended short and long term steps for mov- 2002 was a major step forward in terms of ing the sector forward. increasing competition and recognizing the

Table 15: The Way Forward

(0-2 years) (up to 5 years)

1. Promote Develop and publish plan for: eliminating Implement plan specifics, monitor targets, publish competition and multiple ownerships by the dominant results private participation carrier, encouraging new enterprises, and attracting private investment, implementing simple and transparent processes for authorization of competitive new entry, reducing anti-competitive conduct, increasing broadband penetration in urban and rural areas, and increasing new, innovative technologies

Develop WTO accession package in the Accede to WTO, implement offers made area of market access commitments Continue to implement the pro-competitive Finish implementing BTA elements of the Vietnam-US BTA

Initiate comprehensive review of licensing Implement findings of the licensing review procedures, with focus on class licensing for public telecommunications operators, Create class licensing system increasing revenue, increasing transparency, and increasing private investment

43 Table 15 : The Way Forward (Continue) interconnection problems and practices Establish and implement a modern Move toward cost-based interconnection interconnection regulatory regime including publication of RIOs by dominant operators, and publication of time-bound Accede to WTO, implement requirements in this interconnection dispute settlement area procedures. Analyze WTO requirements in this area, Adjust prices where study indicates apply to Vietnam

Undertake a comprehensive study of price Continue rate rebalancing in line with study levels, with a focus on rebalancing. findings. Re-examine the question via regular Examine reasonableness of price levels additional study given that very low cost, recent Implement plan, moving towards cost-based technologies are available tariffs

Undertake rate rebalancing in line with Take results and act on them study; examine actual or probable cross- subsidies

Develop and publish a plan for moving to Implement plan a modern tariff-setting and review regime

Develop a plan to transition from BCCs to Take results and act on them. Monitor results JVs, to accelerate delivery and efficiency and publish them in selected service areas

Undertake study of future financing needs of the sector

2. Develop modern Establish regulatory processes that will Implement and improve regulatory processes and regulatory meet GATS and WTO requirements, capacity institutions and focusing on transparency and impartiality processes Launch study and begin dialog on long Continue dialog, move toward creating new term plan for a non-ministerial regulatory Regulatory Authority based on the Regulatory body, study India (TRAI), Malaysia, Committee and on international best practices Singapore and other relevant examples

Establish a “Regulatory Committee” which Undertake transfer of VNPT from MPT to other will avowedly be the basis for the future state agency. Ensure MPT impartiality regulatory body

Study transfer of VNPT ownership Implement WTO and world best practice in responsibility from MPT to other these areas appropriate state agency.

Initiate review of policies and practices in Continue forum meetings, take forum advice into spectrum management, taking in to account in formulating spectrum policy account WTO requirements .

Create forum for discussion of commercial concerns in the area of spectrum management

44 Table 15 : The Way Forward (Continue)

cellular segments Finish corporatizing all VNPT SOE subsidiaries Corporatize VNPT, create “arms length” relationship with subsidiaries Equitize (privatize) almost all remaining VNPT subsidiaries. Assess VNPT organization and “equitize” Ensure all subsidiaries are customer-oriented. some of its subsidiaries, allowing foreign investment and ensuring they are Attract private investment into equitized entities customer-oriented.

Make VNPT into an SOE holding Execute separation of equipment manufacturing company of equitized and non-equitized organizations

Plan separation of equipment manufacturing units from the operator portion of VNPT

Complete the separation of post and postal banking from the telecommunications portion of VNPT

4. Promote Undertake a review of methods to Implement market force findings, as well as extension of rural harness market forces to better serve selected USO schemes, while meeting WTO telecoms rural areas, and of Universal Service requirements. Implement, monitor and publish infrastructure and Obligation mechanisms where required. results of broadband recommendations access Take WTO requirements into account. Include a focus on broadband Internet access for rural areas in the review

Undertake study of government approach Undertake government procurement of rural in which govt invites tenders to build rural services and infrastructure (under a universal services and/or infrastructure, but does service program) in which competing multiple not limit itself to using just one provider providers are utilized

5. Develop and Develop a policy roadmap that elaborates Implement roadmap on agreed time delimited publish telecom and reflects the above areas; solicit and schedule development policy incorporate stakeholder and public Input roadmap into WTO accession package roadmap comments 6. Begin dialog on Commission study on international best Draft and submit new telecommunications law in a new telecom law practices in this area line with revised sector roadmap Begin internal and public dialog on shape and nature of a new law

45 List of Annexes

Annex 1. Excerpts from March 2005 Economist Intelligence Unit (EIU) country report on Vietnam Annex 2. Charts on the Growth of Telecommunications in Vietnam Annex 3. SOE Status of Various Telecommunications Organizations Annex 4. ISPs Licensed in Vietnam Annex 5. BCCs in Vietnam Annex 6. Reform of Laws for Investment and for Increasing FDI Annex 7. SMEs in Vietnam Annex 8. Decree on Telecommunications Annex 9. Decree on Spectrum Management

47 Annex 1. Excerpts from March 2005 Economist Intelligence Unit (EIU) Country Report on Vietnam

Country Briefing for Vietnam from VNPT’s mobile-phone provider, Vinaphone, to the Economist Intelligence unit seek out subscribers more actively and to reduce tariffs. Despite falling prices, interna- CURRENT RATINGS tional telephone calls continue to be among the Overall Country Assessment: C most expensive in the world. The government is Overall Score: 57 hoping to launch a US$300m telecoms satellite, Infrastructure Assessment: D which could be in orbit as early as 2007. Infrastructure Score: 78 Full Internet services became available in (A-E scale, E = very risky; 0-100 scale, 100 = mid-1998 in both Hanoi and Ho Chi Minh City. most risky) Internet usage remains expensive, and in 2004 there were just 3.7m Internet users, equivalent Resources and infrastructure: Transport, to 4.5 users per 100 people. Usage rates are well communications and the Internet below those found in Thailand and Malaysia. The dominant Internet service providers are Vietnam’s telecommunications industry has state-owned. Vietnam Datacommunications been growing rapidly, second only to that in Company (VDC) controls 54% of the market, China in recent years, according to the followed by Corporation for Financing and International Telecommunication Union, a Promoting Technology (FPT), which controls Geneva-based industry co-ordinating body. In about one-quarter of the market. A government 2004 there were 9.7m telephones, with 5.2m firewall blocks access to some pornographic main lines and 4.5m mobile phones. This repre- and politically sensitive sites abroad, but also sented 11.7 phones per 100 people, up from only limits bandwidth and makes confidential busi- 2.2 in 1997. Although the monopoly previously ness transactions difficult. In an effort to boost enjoyed by the state-owned Vietnam Post and investment in the information technology sec- Telecommunications Corporation (VNPT) has tor, the government is allowing a few firms to ended, with five new telecoms service providers avoid the firewall. in, or about to enter, the market, VNPT remains dominant. Rising competition has forced Source: EIU, Country Profile - Main report: September 7th 2005

48 Annex 2. Charts on the Growth of Telecommunications in Vietnam (source for all charts: ITU)

49 Annex 3. SOE Status of Various Telecommunications Organizations as of December 2005

Organization State owned enterprise? (NOT Joint Stock Company? aa jointjoint stoctstock company)company)

VNPT VTI (Int’l, under VNPT) Yes VDC (data, under VNPT) Yes GPC (mobile cellular etc., under VNPT) Yes Reported plan in 2006 to become a JV VMS (VN Mobile Services, under VNPT) Yes Vinaphone Yes Mobiphone Yes VTN (VN Basic Telecom Network) Yes VP Telecom (was Electricity Telecom Co.:ETC) Yes SPT (Saigon Post and Telecom) Yes Viettel Yes FPT Yes Vishipel (VN Ship Telephone) Yes Netnam Yes Hanoi Telecom Yes

Source: World Bank interviews with NIPTS in December 2005

50 Annex 4. ISPs Licensed in Vietnam

There were reportedly 16 ISPs licensed in known organizations. Under current law, ISP Vietnam as of December 2005; these are shown licensing is open to and unlimited for Vietnamese below. Addresses are provided for the lesser private individuals and private firms.

No. Name of ISPs Address

1 Tham Tam Stock company 154 Truong Cong dinh, Vung Tau, Ba Ria Vung Tau Province 2 OCI Joint stock Company No. 123 Truong Dinh, District 3, HCMC 3 Viet Khang Joint stock Company No. 47 Apt. B12B Ngoc Khanh street, Ba Dinh district, Hanoi 4 District No. 10 Electronic Company No. 376 Dien Bien Phu street, HCMC 5 Technology Investment and Development No. 117- D1 Trung Tu living quarter, Dong Da District, Company, Ltd Hanoi, Vietnam 6 Network Technology Joint stock Company No. 16 Pham Dinh Toai street, District 3, HCMC 7 Electronic, chemical and information Co. Defense Ministry, 18 Lang Ha street, Ba Dinh district, Hanoi 8 Electric Telecom Company (ETC--recently No. 5D Nghi Tam Street, Tay Ho District, Hanoi changed to Viet Power Telecom or VP Telecom) 9 Hanoi Telecom Company No. 02 Chua Boc Street, Trung Tu living quarter, Dong Da district, Hanoi 10 Army Electronic and Telecommunication (Vietel) No. 01 Giang Van Minh, Hanoi 11 VDC 12 SPT 13 Netnam 14 FPT 15 Vishipel 16 Netshoft (Ho Chi Minh City Post and Telecommunications Information Company)

51 Annex 5. BCCs in Vietnam

There have been 11 BCCs in Vietnam, as shown completed. The list below is derived from World in the table below. Bank interviews in Vietnam in December 2005, Note that the VNPT website provides a some- and the USAID 2005 Competition Review of the what different list. Five of the 11 BCCs have been Vietnamese Telecom Sector.

# VN Partner(s) Foreign Partner(s) Services Offered/Purpose Notes

1. VNPT/VTI Telstra, Australia Development of international Signing date: 1998 telecommunications network Contractual term: 6 years. Finished. and services 2. VNPT-GSM Comvik/Kinnevik, Development of the Contractual term: 10 years Sweden nationwide (02/06/1994-19/05/05). Investment: network and services US$ 127.8 M. Finished. 3. VNPT Voice International Development and Contractual term: 9 years. Australia exploitation of paging Investment: US$ 725,000. Finished. services in HCMC 4. VNPT Sapura SDN-BHD Development and Effective date: 06 Oct. 1993. Malaysia exploitation of the public Contractual term: 8 years card phone services in HCM Sapura’s share is $3,751,000; VNPTs’ area. $1,615,000. Finished. 5. VNPT Worldcorp Holding Development and Contractual date: 5 years. Signing Singapore exploitation of yellow page date: 12/12/94. Effective date services 17/06/95. Foreign investment: US$ 842,000. Finished. 6. VNPT Korea Telecom Development of internal Contractual term: 10 years. Signing network in Haiphong city date 20/08/94. Effective date: and the provinces of Hai 27/04/96. Foreign investment: US$ Duong, Hung Yen and 40M. To be completed soon. Quang Ninh 7. VNPT Nippon Telegraph Development of internal Contractual term: 15 years. Signing and Telephone network in the of date: 23/07/1997. Foreign (NTT), Japan Hanoi area. Construction of investment: US$ 194.4 million. 240,000 new telephone lines Underway. 8. VNPT France Telecom Development of internal Contractual term: 15 years. Signing (France) network of the east of date: 25/07/97. License issuance on HCMC. Contruction of 11/97/ Foreign investment US$ 540,000 new telephone lines 467M. Underway. 9. VNPT Cable & Wireless Development of telephone Contractual term: 15 years. Signing (UK) network in the east of Hanoi date: 28/07/97. Foreign investment: city. Construction of US$ 207 million. This BCC does not 250,000 new telephone lines exist any more. 10. SPT S-Telecom (Korea) Development and First non-VNPT BCC; began in 2000. exploitation of mobile phone Contractual term: 15 years. Has network and service clause to convert to a joint venture when Vietnam law permits. Foreign investment: US$230M Underway. 11. Hanoi Hutchison Telecom Build a CDMA network in Foreign injection of $656 million. Telecom Hanoi Announced in 2005.

52 Annex 6. Reform of Laws for Investment and for Increasing FDI

This annex provides a discussion of the Law on more favorable for domestic than foreign Foreign Investment, which governs investment enterprises. The government states that com- in the telecommunications and other arenas. mon levels of corporate income tax, fees, The discussion proceeds with various questions services will soon applied to both kinds of and answers, as provided by researchers and enterprises. respondents in Vietnam. The responses were ● There are some specific differences between reviewed with Vietnamese officials in the VN - US BTA and the Law on Foreign December 2005 by the World Bank Hanoi office Investment of Vietnam in areas such as capi- for currency and accuracy. tal contribution, national treatment, most 1. What is the date of the current Law on favored nation, forms of enterprise, and prin- Foreign Investment? ciples of management and labor. The Law on Foreign Investment was passed 4. What is the status of change in these areas? on November 12, 1996. There have been vari- Many pieces of legislation are being pre- ous subsequent amendments and re-issuances culminating in the most recent on June 9, 2000. pared for submission to the National Assembly 2. What topics does the law cover? over the next two years, to provide a common The law governs a wide range of issues, legal framework for both domestic and foreign including the forms of direct capital investment, investment. A common framework for both the procedures for licensing foreign investment, Law on Foreign Investment and Law on management of foreign - invested enterprises, Promotion Domestic Investment shall create a capital contributions, personnel matters, taxation, common legal base for the business activities of accounting, foreign exchange and liquidation. all economics sectors, according to a spokesman 3. Is there any discussion now on changing for MPI’s legislation department. However, it is the law? unlikely there could be a single Code or Law Certain shortcomings have been identified governing the business of all economic sectors. regarding the law on foreign investment and Foreign investors are currently subject to the legal framework governing enterprises in all higher prices for certain services, though these economics sectors. These include the following: forms of discrimination are gradually being ● The forms of investment, establishment proce- abolished as Vietnam moves closer to national dures and incentives vary significantly among treatment of foreign investors, as required the the three major laws: the Law on Foreign Vietnam - US BTA and ultimately the WTO. In Investment, the Enterprise Law and the Law March 2003, the Government further liberalized on Promotion of Domestic Investment. the foreign investment law (Decree 27 amend- ● Regarding incentives, foreign-invested enter- ing Decree 24), moving forward a registration prises claim that preferential tax rates are (vs. licensing) regime and making the process of

53 registration and licensing more transparent. caused confusion. On June 17, 2003, The Furthermore, in April 2003, the Prime Minister Corporate Income Tax rates under these two lifted the compulsory sale of foreign currency Laws were harmonized at 28 percent, taking for both foreign and domestic enterprises. effect January 1, 2004 (instead of 32 percent 5. Currently, what are the vehicles for invest- and 25 percent respectively.) ment for foreigners operating in Vietnam? 7. How is more investment being encour- At present, two main possibilities are open aged in telecommunications and IT? to foreign investors in Vietnam. They may Vietnam promulgated its first Foreign invest under the Law on Foreign Investment or Investment Law in 1987 following doi moi policy the Law on Promotion of Domestic Investment. made by Sixth Party Congress in December Forms of investment under the Law on Foreign 1986. Recognizing that Vietnam would have to Investment are well known, while those under compete with other nations in absorbing foreign the Law on Promotion of Domestic Investment investment, the 1987 Law established a remark- have remained vague to some extent. ably liberal regime for foreign investment in 6. What reforms have been made in these Vietnam. Since 1987, this Law has been revised areas? for several times, and most recently in 2000, to Two major reforms have been undertaken in move closer into conformity with the principle these two areas: of national treatment. ● Circular 73/2003/TT-BTC dated July 31, Before the Bilateral Trade Agreement (BTA) 2003 was issued by the Prime Minister pro- between Vietnam and the US, under the law of viding guidance for the implementation of foreign investment, in the field of international the regulation on capital contribution and the and domestic telecommunications, it was not purchase of shares by foreign investors in allowed to have direct or joint-venture invest- Vietnamese enterprises set forth under ment. However, a decree clarifying the law was Decision 36/2003/QD-TTg dated March 11, issued which allows foreign investment in 2003. The main changes introduced by telecommunications and IT through Business Decision 36 are the enlargement of the defini- Cooperation Contracts (BCCs). tion of Vietnamese enterprises entitled to After the BTA was signed, a roadmap for receive capital contribution by, or to sell change was drawn up. However, the law of for- shares to, foreign investors and the clarifica- eign investment has not yet been amended to be tion of the term “foreign investors” that was in line with the US-Vietnam BTA. not properly defined under the Law on The amended Law on Foreign Investment, Promotion of Domestic Investment. effective July 1, 2000, aims to make Vietnam However, several new related issues have more attractive and friendly to FDI enterprises. arisen, such as the possibility of converting The most important amendment grants foreign local enterprises into foreign invested enter- enterprises the right to mortgage their land- prises and the reverse, when rates of capital use rights. This power gives foreign enterpris- contribution of foreign partners change. es the ability to borrow from foreign banks ● Though both the Law on Foreign Investment using the assets and property of their compa- and Law on Promotion of Domestic nies as collateral. Previously, only Vietnamese Investment govern foreign investment, each banks had the statutory authority to foreclose introduces difference tax structures. This has on land and property. This change is important

54 to foreign firms that wish to invest in the Moreover, some categories of FDI enterprises, Vietnamese economy because it creates a new especially those that export over half of their means of financing through which capital may production, no longer will be required to obtain be raised. investment licenses but will only be required to The government also sought to aid FDI (for- register the enterprise. Thus, private firms do eign direct investment) enterprises by passing not have to secure "onerous government amendments to the Law on Foreign Investment approvals" before they are able to invest legally that: (1) allow the government to provide loan as foreign companies in the Vietnamese mar- guarantees; (2) allow FDI enterprises to decide ket. An additional amendment allows enter- for themselves whether to set up reserve funds prises to purchase foreign currencies from com- and to determine their size; (3) reduce the prof- mercial banks to cover their current transac- it-remittance tax; (4) allow the remaining value tions. Finally, whereas in the past an enterprise of land-use rights contributed by the joint usually bore the burden and expense of site Vietnamese business party to be subject to liqui- work and obtaining land-use rights, it is now dation; and (5) allow FDI enterprises to deter- the responsibility of either the Vietnamese part- mine for themselves the forms of their invest- ner in the joint venture or the local people's ments and the reorganization of their capital committee to complete these tasks. structures. While FDI enterprises have welcomed these Other amendments to the Law on Foreign changes, many argue that the changes are dilut- Investment sought to minimize much of the red ed and insubstantial, especially considering that tape that burdens enterprises, such as govern- only twenty-three of the seventy-five proposed mental restrictions and procedures that are amendments were passed. Foreign investors more burdensome in Vietnam than in other for- generally view these changes as a positive step eign investment areas. For example, the statute toward alleviating the day-to-day headaches no longer requires unanimous approval by the faced by all foreign businesses in Vietnam. joint venture's management board for changes Furthermore, these changes help reduce the affecting the corporation, but rather, it merely burdensome taxes that foreign investors must requires consensus decision-making. pay in order to maintain a presence in Vietnam.

55 Annex 7. SMEs in Vietnam

Small and medium sized enterprises (SMEs) are Economic Times (of September 29, 2003). As of a major focus of economic, job and IT develop- December 2004, the number of registered SMEs ment in Vietnam. Various figures on SME cre- was about 172,800 and the number of opera- ation have been used, so a researcher in tional SMEs was about 92,416. Vietnam was asked to clarify this matter. The It is estimated that SMEs create 49% of non- result was as follows: agricultural jobs in rural areas and 25-26% of the Question: The figure of “14000 new SMEs national labor force. were created” has been cited. Was this a one Among the new enterprises established time figure? How many SMEs are being under the Law on Enterprises of 1999, more launched each year now? than 90 percent are SMEs. These SMEs are gen- Answer: The “14000 newly created SMEs fig- erally of poor experience, low competitiveness, ure” is the approximate number of enterprises and vulnerable, according to analysts of the established in year 2000, the first year after the problem. They are generally not knowledge- new Law on Enterprises of 1999 took effect. The able about IT, the Internet, marketing, foreign response to the new Law on Enterprises of 1999 markets or trade. However, they do offer the that abolished hundreds of needless licenses most hope for job creation, and in fact have been and permits for doing business has been quite a major engine for job growth in the last three impressive. During nine years prior to the years. implementation of this Law, only 30,000 enter- prises were established nationwide, while (Sources: World Bank Hanoi Office interviews in 2004 and under the new law, by August 2003, 71,500 in December 2005 with GSO, MPI and other government sources; VN Economic Times.) firms were established, according to the VN

56 Annex 8 Decree on Telecommunications (Unofficial Translation)

THE GOVERNMENT DECREE No. 160/2004/ND-CP OF SEPTEMBER 3, 2004 DETAILING THE IMPLEMENTATION OF A NUMBER OF ARTICLES ON TELECOMMUNICATIONS OF THE POST AND TELECOMMUNICATIONS ORDINANCE

THE GOVERNMENT activities in Vietnam in the establishment of telecommunication networks; provision and use Pursuant to the December 25, 2001 Law on of telecommunication services; manufacture, Organization of the Government; export and import of telecommunication equip- Pursuant to the May 25, 2002 Post and ment; construction and installation of telecom- Telecommunications Ordinance; munication works. At the proposal of the Post and Telematics 2. Where the international agreements which Minister, Vietnam has signed or acceded to contain telecommunication provisions different from those of this Decree, such international agree- DECREES: ments shall apply. Article 3.- Assurance of safety for telecommu- CHAPTER I nication networks and information security GENERAL PROVISIONS 1. Telecommunication networks constitute a national information infrastructure, must be Article 1.- Scope of regulation protected and must not be infringed upon. Local 1. This Decree details the implementation of a administrations, people's armed force units and number of articles on telecommunications of the telecommunication enterprises shall have to Post and Telecommunications Ordinance, which coordinate with one another in safely protecting was passed on May 25, 2002 by the Standing public telecommunication networks. Owners of Committee of the National Assembly. private-use telecommunication networks, own- 2. The management, provision and use of ers of special-use telecommunication networks, Internet services shall comply with the provi- telecommunications service agents and service sions of the Government's Decree No. users shall have to protect their telecommunica- 55/2001/NDCP of August 23, 2001 and the rele- tion networks and terminal equipment, actively vant provisions of this Decree. participate in protecting public telecommunica- Article 2.- Subjects of application tion networks, and at the same time notify 1. This Decree applies to Vietnamese organi- telecommunication enterprises or competent zations and individuals; foreign organizations State bodies of acts that destroy or infringe upon and individuals engaged in telecommunications public telecommunication networks.

57 2. In the process of participating in telecom- cation networks. The use of encoding tech- munications activities, agencies, organizations niques to assure confidentiality in commercial and individuals shall have to assure safety for and civil transactions must comply with law telecommunication networks and information provisions. security, submit to the management, inspection, 3. Confidentiality for all organizations and examination by competent State bodies and individuals' private information transmitted via comply with their telecommunication network telecommunication networks shall be assured safety and information security assurance according to law provisions. It is strictly prohibit- requests. ed to eavesdrop or secretly record information on 3. In emergency cases prescribed by the telecommunication networks; steal or illegally emergency state legislation, part or whole of use passwords and cipher keys as well as private telecommunication networks may be mobilized information of organizations and individuals. for service under decisions of competent State 4. Telecommunication enterprises shall have bodies. to assure confidentiality for private information 4. At the requests of competent State bodies, related to telecommunications service users, telecommunication enterprises shall have to including their names, addresses, callers' num- arrange locations, telecommunication network bers and called numbers, call time and other access points as well as other technical and pro- private information which users have provided fessional conditions for such bodies to control when entering into contracts with the enterpris- and assure information security. es, except for the following cases: 5. Telecommunication enterprises shall coor- a/ Telecommunication service users agree dinate with professional units of the Public on the supply of the above-said information; Security Ministry in urgently preventing and b/ Telecommunication enterprises have stopping the provision of services in cases of reached written mutual agreements on the shar- using telecommunication and Internet services ing of information on telecommunication serv- to instigate violence and riots, infringing upon ice users that violate telecommunication legisla- national security and opposing the State of the tion in order to prevent acts of shirking contrac- Socialist Republic of Vietnam. tual obligations; 6. The Post and Telematics Ministry shall c/ Telecommunication enterprises have coordinate with the Public Security Ministry reached written mutual agreements on the shar- and concerned agencies in guiding the assur- ing and supply of information on telecommuni- ance of telecommunication network safety and cation service users in service of the calculation information security in telecommunication of charges, printing of bills and collection of activities. charges from customers; Article 4.- Assurance of confidentiality d/ Upon requests of competent State bodies 1. Agencies, organizations and individuals according to law provisions. engaged in telecommunication activities must 5. The control of information on comply with the legislation on State secret pro- telecommunication networks and Internet must tection and take responsibility before law for be conducted by competent State bodies accord- the information contents they put into, store ing to law provisions. Telecommunication and transmit in telecommunication networks. enterprises, owners of private-use telecommu- 2. Information classified as State secret must nication networks, telecommunication service be encoded according to law provisions on agents and users shall have to closely collabo- cipher if it is to be transmitted on telecommuni- rate with, and fully supply relevant information

58 to, competent State bodies so that the latter can and on radio frequency and transmitter man- detect, stop and handle acts of abusing telecom- agement and use if they are to be used on pub- munication networks to carry out terrorist activ- lic telecommunication networks. ities, infringe upon national security or social 4. Intranet means a telecommunication order and safety. equipment system established by an organiza- tion or individual (hereinafter called intranet CHAPTER II owner) at a premises with a specified address TELECOMMUNICATION NETWORKS and scope which the intranet owner has the full AND SERVICES right to lawfully use for ensuring internal com- munication among the intranet members. SECTION 1 Where the intranet owner is an individual, the TERMINAL EQUIPMENT AND INTRANETS intranet members shall be members of the household of which the intranet owner is the Article 5.- Subscriber terminal equipment head or is a person authorized by the household and intranets head according to law provisions. Where the 1. Subscriber terminal equipment mean intranet owner is an organization, the network users' fixed or mobile terminal equipment con- membership shall be determined according to nected to public telecommunication networks the operation charter and legal document(s) through the end points of public telecommuni- prescribing the organizational structure and cation networks. apparatus of such organization or to other rele- 2. Subscriber terminal equipment are catego- vant regulations. rized as follows: 5. Intranets are categorized into wire a/ Single-line subscriber terminal equip- intranets (telecommunication equipment are ment are terminal equipment which do not linked together by telecommunication cables) have the circuit-switching or call-connecting and wireless intranets (radio equipment are function, including: fixed telephone equipment, linked together by radio waves or radio waves mobile telephone equipment, fax equipment, combined with telecommunication cables). paging equipment, modems, wireless Internet Article 6.- Positions of end points of public access terminal equipment, computers, equip- telecommunication networks ment having the combined functions of the 1. End points of public telecommunication above-said equipment; networks are physical connection points b/ Multi-line subscriber terminal equipment belonging to the telecommunication networks, are terminal equipment which have the circuit- which satisfy technical standards to ensure the switching, call-connecting function, including connection of service users' terminal equipment PABX switchboards, wireless Internet access to the telecommunication networks. portal equipment and equipment with the call 2. End points of public telecommunication connecting function; networks serve as a dividing line between the c/ Other subscriber terminal equipment as economic and technical responsibilities of prescribed by the Post and Telematics Ministry. telecommunication enterprises and those of 3. Subscriber terminal equipment on the list service users. The scope from the end points to of those subject to standard conformity certifica- the users' side falls under the users' responsi- tion, subscriber terminal equipment which bility. The scope from the end points to the transmit radio waves must comply with the reg- enterprises' side falls under the enterprises' ulations on standard conformity certification responsibility.

59 3. Where telecommunication networks are themselves subscriber terminal equipment or used to provide telecommunication services for intranets within their premises up to the end users via local loops (subscriber lines or trunk points of public telecommunication networks or lines), unless it is otherwise agreed upon in the hire other organizations or individuals to do contracts between telecommunication enter- this work. The design and installation of sub- prises and service users, the positions of end scriber terminal equipment and intranets must points of public telecommunication networks follow the State's procedures and rules and the shall be determined to be on the subscriber Post and Telematics Ministry's regulations on side, which are: construction and installation of telecommunica- a/ The last cable boxes installed in the sub- tion network facilities and telecommunication scribers' homes; or equipment. b/ The subscriber line boxes or wire- 3. The connection of subscriber terminal connection slates of transmission equipment equipment and intranets to public telecommu- installed in the subscribers' homes if the condi- nication networks shall be effected by telecom- tion stated at Point a above is not satisfied; or munication enterprises under contracts signed c/The sockets for plugging the first sub- with service users. scriber terminal equipment (closest to the users) 4. When connecting subscriber terminal in the subscriber's homes, if the conditions stat- equipment and intranets to public ed at Points a and b above are not satisfied. telecommunication networks, telecommunica- 4. Where telecommunication networks are tion enterprises may refuse to connect and used to provide telecommunication services for request service users to remedy problems if users via satellite equipment (including trans- they detect and have sufficient grounds to make mitters or transreceivers) or base radio stations, conclusions that the installation of subscriber or wireless Internet access portal equipment of terminal equipment or intranets: telecommunication enterprises, if it is not other- a/ Fails to satisfy technical standards pre- wise agreed upon in the contracts between scribed by the Post and Telematics Ministry; or telecommunication enterprises and service b/ Causes unsafety to public telecommuni- users, the positions of the end points of public cation networks, telecommunication enterprises telecommunication networks shall be deter- and service users; or mined to be on the, subscriber side, being the c/ Fails to ensure the service use purposes antennas of the satellite equipment or antennas according to telecommunication regulations or of the base radio stations or antennas of the the terms of the telecommunication service pro- wireless Internet access portal equipment. vision and use contracts. Article 7.- Equipment, design, installation, 5. For subscriber terminal equipment and maintenance, repair and connection of sub- intranets connected to exclusively leased chan- scriber terminal equipment, intranets nels, VSAT earth satellite station or Internet, 1. Service users may purchase by themselves telecommunication service users must use sub- subscriber terminal equipment or hire them scriber terminal equipment or intranets strictly from telecommunication enterprises; may for the right purposes stated in the telecommu- maintain, repair by themselves subscriber ter- nication service provision and use contracts. minal equipment or intranets belonging to their They must not use or allow others to use sub- properties or hire other organizations or indi- scriber terminal equipment or intranets for for- viduals to do this work. warding by any mode (automatic or manual) 2. Service users may design and install by calls from terminal equipment they do not own

60 or terminal equipment outside their intranets urban centers, residential areas, industrial via exclusively leased channels, VSAT earth parks, export-processing zones, high-tech satellite station, Internet and vice versa (in both parks, new economic zones and other public incoming and outgoing directions). facilities include the planning on such telecom- munication works as telecommunication cen- SECTION 2 ters, public service points, antenna masts, cable TELECOMMUNICATION NETWORKS culverts and tanks, in-house cable lines, etc. - Viba transmission lines, optical-fiber cables Article 8.- Public telecommunication net- and copper cables are constructed along roads, works bridges, culverts, pavements, streets or power 1. Public telecommunication networks lines; include: - Other public and welfare construction a/ Fixed telecommunication networks: works do not affect or obstruct the operation of - Fixed earth telecommunication networks; telecommunication network works which have - Fixed satellite telecommunication net- been constructed as planned. works. c/ Organizations or telecommunication b/ Mobile telecommunication networks: enterprises, when establishing and operating - Mobile earth telecommunication networks; telecommunication networks, must: - Mobile satellite telecommunication net- - Observe development plans and plannings works. already approved by competent State bodies; c/ Other public telecommunication net- - Have telecommunication licenses granted works prescribed by the Post and Telematics by the Post and Telematics Ministry under the Ministry. provisions of this Decree; 2. Management and operation of public - Have information resource allocation deci- telecommunication networks. sions (if any) of the Post and Telematics a/ The Post and Telematics Ministry: Ministry; - To formulate and promulgate or submit to - Observe branch standards, Vietnamese the Prime Minister for approval telecommuni- standards and international standards on con- cation development strategies and plannings, struction and installation of telecommunication including plannings on telecommunication net- networks and works, promulgated or publi- works and information resources; cized by competent State bodies for compulsory - To submit to the Prime Minister for decision application; the establishment or cancellation of telecom- - Not cause harms to the environment and munication relations with foreign countries; other socio-economic activities. - To decide to close or open domestic long- Article 9.- Local loops distance telecommunication directions in serv- 1. Local loops constitute part of public ice of public-utility, security and defense tasks telecommunication networks, including sub- after consulting the Public Security Ministry scriber lines and trunk lines that connect local and the Defense Ministry. switchboards of telecommunication enterprises b/ Ministries, branches, local administra- to service users' subscriber terminal equipment. tions at all levels and the Post and Telematics 2. Subscriber lines are wire or wireless trans- Ministry shall have to coordinate with one mission lines connecting local switchboards of another to ensure that: telecommunication enterprises to users' single- - The planning, design and construction of line subscriber terminal equipment.

61 3. Trunk lines are wire or wireless transmis- 5. Other telecommunication enterprises sion lines connecting local switchboards of must not establish national telecommunication telecommunication enterprises to users' multi- backbone systems but may lease domestic and line subscriber terminal equipment. According to international long-distance channels for estab- technical standards, trunk lines are categorized lishing telecommunication networks and pro- into subscriber, analog and digital trunk lines. viding telecommunication services strictly Article 10.- National telecommunication according to their licenses. backbone systems Article 11.- Broadcasting 1. National telecommunication backbone 1. Broadcasting means the transmission of systems constitute part of public telecommuni- codes, signals, data, scripts, sounds, images and cation networks, including domestic and inter- other forms of information by cable lines, radio national long-distance transmission lines and waves, optic means and other electromagnetic international communication portals, which are means. of special importance to the operation of the 2. The Post and Telematics Ministry per- whole national telecommunication network and forms the function of State management over directly affect the national socio-economic broadcasting nationwide: development and assurance of national security a/ To submit to the Prime Minister for prom- and defense. ulgation national broadcasting development 2. The Post and Telematics Ministry per- strategies and plannings; organize and direct forms the function of State management over the implementation of such strategies and plan- the national telecommunication backbone sys- nings after they are approved by the Prime tems through mechanisms, policies and regula- Minister; tions on licensing, interconnection of b/ To promulgate legal documents on telecommunication networks; interconnection licensing, frequencies, standards, quality and standards, quality and charges, channel lease; tariffs for performing the State management in common use of national communication infra- the broadcasting domain; structures. c/ To organize the inspection, supervision and 3. Only network infrastructure-operating handling of law violations in broadcasting; assume enterprises which have licenses for establish- the prime responsibility for, and coordinate with ment of domestic or international long-distance the Defense Ministry and the Public Security public fixed telecommunication networks can Ministry in, inspecting and controlling the broad- establish national telecommunication backbone casting in service of defense and security. systems and deal in the domestic or internation- 3. Before being submitted to the Prime al long-distance channel lease service. Minister for approval, socio-economic develop- 4. Network infrastructure-operating enter- ment plannings related to broadcasting must be prises which only have licenses for establish- evaluated by the Post and Telematics Ministry ment of public mobile telecommunication net- to ensure that they are in line with the strate- works may establish local and domestic long- gies, plannings and law provisions on broad- distance transmission lines for connecting casting. together the equipment systems belonging to Article 12. - Private-use telecommunication their networks but must neither use these trans- networks mission lines for providing the channel lease 1. Private-use telecommunication networks service nor establish international communica- are the ones established by private-use telecom- tion portals. munication network owners to ensure commu-

62 nication among network members, including b/ Wire private-use telecommunication net- two or more telecommunication equipment works which have transmission lines built by installed in different places with specified their owners themselves; addresses and scopes on the Vietnamese territo- c/ Wireless fixed satellite and mobile satel- ry, which the network members have the full lite private-use 'telecommunication networks, right to lawfully use and are connected together excluding satellite private-use networks in via public telecommunication networks or mobile maritime, mobile aeronautical, broad- transmission lines leased or constructed by the casting (radio and television) and amateur radio network owners themselves. services; 2. Private-use telecommunication network d/ Wireless private-use telecommunication owners are Vietnamese agencies, organizations or networks of Vietnam-based foreign diplomatic enterprises or foreign agencies or organizations representations, consular offices, representative that operate on the Vietnamese territory and are offices of international organizations, which licensed to establish privateuse telecommunica- enjoy diplomatic privileges and immunities. tion networks according to regulations. Network e/ Other private-use telecommunication net- members are members of the agencies, organiza- works as prescribed by the Post and Telematics tions or enterprises licensed to establish the net- Ministry. works. Membership is determined according to 5. Except for the private-use telecommuni- the operation charters and legal documents defin- cation networks stated in Clause 4 of this ing the organizational structures and apparatuses Article, other private-use telecommunication of such agencies, organizations or enterprises or networks shall not require network establish- to other relevant regulations. ment licenses but must comply with regulations 3. Based on the transmission modes used for on interconnection, numbering, radio frequency network establishment, private-use telecommu- and transmitter use licensing. nication networks are categorized into wire pri- vate-use networks (telecommunication equip- SECTION 3 ment are linked together by telecommunication TELECOMMUNICATION SERVICES cables), wireless private-use networks (telecom- munication equipment are linked together by Article 13.- Classification of telecommuni- radio waves or radio waves combined with cation services telecommunications cables). 1. Basic telecommunication services are serv- 4. Private-use telecommunication networks ices that instantaneously transmit users' infor- that require network establishment licenses mation in the forms of signs, signals, data, include: scripts, sounds and images via telecommuni- a/ Private-use telecommunication networks cation networks or Internet without modifying the members of which are Vietnamese agencies, the forms or contents of information sent and organizations or enterprises or foreign agencies received via networks. or organizations that lawfully operate in 2. Basic services include: Vietnam, carry activities of similar nature or for a/ Fixed telecommunication services (local, similar purposes and are associated under their domestic and international long-distance): operation charters or legal documents defining - Telephony service (voice, far., data trans- the common organizational structure or com- mission in audio tapes); mon association forms and activities for their Data transmission service; members. - Television signal transmission service;

63 - Channel lease service; c/ Internet application service in - Telex service; telecommunications. - Telegraph service. 6. Basing itself on the post and telecom- b/ Mobile telecommunication services munication development strategy and telecom- (local, nationwide): munication service market planning for each - Mobile earth communication service; period, the Post and Telematics Ministry shall - Wireless trunk telephone service; promulgate the list of basic and value added - Paging service; telecommunication services. c/ Fixed satellite telecommunication service; Article 14.- Resale of telecommunication d/ Mobile satellite telecommunication service; services e/ Maritime radio service; 1. Resale of telecommunication services is f/Other basic services prescribed by the Post the form of direct purchase of telecommunica- and Telematics Ministry. tion services from telecommunication enterpris- 3. Supplementary services are services addi- es on the basis of capacity leasing or traffic pur- tionally provided together with basic services, chase through contracts signed with such further diversifying and perfecting basic servic- telecommunication enterprises for providing es on the basis of technical properties of equip- telecommunication services for users. Resale of ment or servicing capability of telecom- telecommunication services includes resale of terminal services and resale of services on the munication enterprises. Telecommunication basis of leasing domestic or international long- enterprises shall prescribe and publicize sup- distance channels. plementary services they provide. 2. Resale of terminal services: 4. Value-added services are services that a/ When reselling terminal services, all increase users' information use value by per- organizations and individuals shall be obliged fecting the information forms or contents or to make business registration and pay taxes supplying the capability of storing and restor- according to law provisions and sign service ing such information on the basis of using resale agency contracts with telecommunication telecommunication networks or Internet. Value enterprises and observe regulations on manage- added services include: ment of telecommunication service resale tariffs; a/ E-mail service; b/ For fixed telecommunication services, b/ Voice mail service; organizations and individuals may establish c/ Network data and information access systems of fixed subscriber terminal equipment service; within the premises which they have the full d/ Electronic data exchange service; right to lawfully use and resell services to users e/ Value-added fax service, including stor- within such premises according to the right age and sending, storage and access; forms and quality agreed upon in the agency f/ Code and protocol conversion service; contracts on the basis of leasing local loops g/ Network data and information-process- (trunk lines, subscriber lines) of telecommunica- ing service; tion enterprises; h/ Other value-added services prescribed by c/ For mobile telecommunication services, the Post and Telematics Ministry. organizations and individuals may supply (sell 5. Internet services include: or lease) mobile subscriber terminal equipment a/ Internet connection service; and resell services to users according to the b/ Internet access service; right forms and quality agreed upon in the

64 agency contracts on the basis of purchasing traf- 3. Where service provision and use contracts fic of telecommunication enterprises. are expressed in writing: 3. Resale of services on the basis of leasing a/ Basing themselves on law provisions on domestic and international long-distance chan- contracts and regulations of the Post and nels: Telematics Ministry, telecommunication enter- a/ Network infrastructure-operating enter- prises shall have to formulate and promulgate prises may install telecommunication equip- model telecommunication service provision ment systems within the premises they have the and use contracts for uniform use within the full right to lawfully use for resale of whole enterprises. To guarantee the interests of telecommunication services nationwide on the telecommunication service users, the Post and basis of leasing domestic and international Telematics Ministry shall prescribe a number of long-distance channels of other telecommunica- essential universal telecommunication services; tion enterprises; telecommunication enterprises shall have to for- b/ Telecommunication service-providing mulate model contracts and submit them to the enterprises may install telecommunication equip- Post and Telematics Ministry for approval; ment systems within the premises they have the b/ In addition to the principal contents pre- full right to lawfully use for reselling telecommu- scribed for model contracts, the contractual par- nication services within industrial parks, export- ties may reach agreements on other contents of processing zones and/or high-tech parks on the their contracts provided that such contents are basis of leasing domestic and international long- not contrary to law provisions, do not infringe distance channels of other telecommunication upon the State's interests, public interests, legit- enterprises. Basing itself on the telecommunica- imate rights and interests of other organizations tion development strategies and plannings, the and individuals. Post and Telematics Ministry shall consider and Article 16.- Refusal to provide services decide on the cases of resale of telecommunica- In addition to general law provisions on con- tion services outside industrial parks, export-pro- tracts, telecommunication enterprises may cessing zones or high-tech parks. refuse to enter into contracts or unilaterally sus- 4. The Post and Telematics Ministry shall pend the performance of contracts signed with issue detailed regulations on technical and pro- service users in the following cases: fessional matters relating to the resale of 1. Service users commit violations of the telecommunication services such as the list of telecommunication legislation according to telecommunication services permitted for written conclusions of competent State bodies resale, subjects permitted to resell services, and fail to fulfil their responsibilities according resale scope, and tariffs for service resale, num- to such written handling conclusions. bering, interconnection and channel lease. 2. Service users breach the contract terms Article 15.- Telecommunication service pro- which the two parties have agreed to be condi- vision and use contracts tions for contract suspension. 1. The provision and use of telecommuni- 3. Service users shirk their obligation to pay cation services shall be effected on the basis of service charges as prescribed to another contracts signed between telecommunication telecommunication enterprise, if telecommuni- enterprises and service users. cation enterprises have reached mutual written 2. Service provision and use contracts shall agreement on this matter. be expressed in writing, orally, payment modes Article 17.- Professional communication and or by other specific acts as provided for by law. urgent communication

65 1. Professional communication: 2. Public telephone directories are collections a/ Telecommunication enterprises may use of information relating to the names, addresses, domestic and international professional com- subscriber numbers and other relevant informa- munication via telecommunication networks tion (if any) of service users, stored in the form they have established for managing and admin- of traditional or electronic publication, and istering their operation and dealing with techni- printed, distributed and managed by telecom- cal and professional matters. munication enterprises according to the regula- b/ Telecommunication enterprises shall tions of the Post and Telematics Ministry. have to prescribe the use subjects, scope and 3. Service users may register or refuse to reg- degree and issue regulations on management of ister their subscriber numbers in public tele- professional communication within their enter- phone directories. If service users refuse to reg- prises according to the regulations of the Post ister their subscriber numbers in public tele- and Telematics Ministry; phone directories, telecommunication enter- c/ Service charges shall be exempt for pro- prises shall be responsible for keeping confiden- fessional communication of telecommunication tial information relating to such service users, enterprises. except for the cases prescribed in Clause 4, 2. Urgent communication: Article 4 of this Decree. a/ Telecommunication enterprises shall Article 19.- Telephone directory assistance 1. have to promptly provide priority services for Telephone directory assistance service is a urgent communication cases prescribed in telephony service provided by telecommuni- Article 7 of the Post and Telecommunication cation enterprises to help service users to find Ordinance. out local subscriber numbers managed by the b/ Urgent services are local telephone serv- enterprises and registered in public telephone ices used to call emergency service numbers of directories. When service users call the tele- police, fire-fighting, first-aid and other agencies phone directory assistance service numbers of prescribed by the Post and Telematics Ministry; telecommunication enterprises and give infor- c/ The Post and Telematics Ministry shall mation relating to the names or addresses of prescribe emergency service numbers in the service users, they shall be informed of the local national telecommunication numbering plan. subscriber numbers they look for. Telecommunication enterprises shall have to 2. The Post and Telematics Ministry shall notify users of, publish in public telephone prescribe the telephone directory assistance directories, and publicize on the mass media, service numbers of telephone networks in the emergency service numbers prescribed by the national numbering plan. Post and Telematics Ministry; 3. Telecommunication enterprises shall have d/ Telecommunication enterprises shall to notify service users of, publish in public tele- have to provide service users with the possibili- phone directories, and publicize on the mass ty to access emergency services free of charge. media, telephone directory assistance service Article 18.- Subscriber numbers and public numbers prescribed by the Post and Telematics telephone directories Ministry. 1. Subscriber number is a combination of 4. Telecommunication enterprises shall have numerals dialed (pressed) by a service user on to provide service users with the possibility to the subscriber terminal equipment for connect- access the telephone directory assistance service ing to another service user in the same number- free of charge by the following modes: ing area or service network. a/ Self-organization of the provision; or

66 b/ Entrusting and signing contracts with d/ Value added tax (VAT). other organizations or telecommunication 3. For the monthly billing under contracts, enterprises to organize such provision. unless the users do not so request, telecommu- Article 20.- Notification of subscriber num- nication enterprises shall have to provide, or ber malfunctions entrust other telecommunication enterprises 1. The service of notification of malfunctions under contracts to provide, users with the bills of subscriber numbers of public telephony net- enclosed with the detailed lists free of charge for works is a telephony service provided by once, enumerating: telecommunication enterprises to help service a/ Domestic long-distance calls; users to notify the enterprises of the abnormal b/ International calls; operation or communication disruption of local c/ Calls to the mobile communication net- fixed subscriber numbers managed by such works. enterprises and requesting the remedy of such 4. Unless otherwise agreed upon between malfunctions. telecommunication enterprises and service 2. The Post and Telematics Ministry shall users, the detailed lists enclosed with the charge prescribe the subscriber number malfunction payment bills must contain at least the follow- notification service numbers of local fixed ing information on each charged call: telecommunication networks in the national a/ Date of the call; numbering plan. Telecommunication enterpris- b/ Starting time and ending time or starting es shall have to notify service users of, publish time and total call time; in public telephone directories, and publicize on c/ Called number (international call: country the mass media, the subscriber number mal- code, area code, subscriber number; domestic function notification service numbers pre- call: area code, subscriber number); scribed by the Post and Telematics Ministry. d/ Charge amount for each call. 3. Telecommunication enterprises shall have Article 22.- Cross-border provision and use to provide service users with the possibility to access the subscriber number breakdown notifi- of telecommunication services cation service free of charge. 1. The cross-border provision of telecom- Article 21.- Billing and payment of charges munication services by foreign telecommuni- 1. Telecommunication enterprises shall have cation enterprises for telecommunication serv- to make bills for payment of service charges in ice users on the Vietnamese territory must be an accurate, full and timely manner for service effected under business contracts or commercial users. Service users shall have to pay charges in agreements with Vietnamese enterprises which a full and timely manner for using the services manage and operate international communica- provided by the enterprises according to the tion portals. prescribed tariffs. 2. The use of telecommunication services by 2. Service charge payment bills must accu- users on the Vietnamese territory must be rately, fully and clearly contain at least the fol- effected under contracts signed with lowing details: Vietnamese telecommunication enterprises. a/ Charge for each type of telecommunica- 3. Basing itself on international practices, tion service; regulations on maritime, aeronautical safety b/ Total charge to be paid; assurance and Vietnamese telecommunication c/ The rate of exchange between the foreign enterprises' capability of providing telecom- currency for charge collection and Vietnam munication services, the Post and Telematics dong (if any); Ministry shall prescribe the cross-border provi-

67 sion and use of telecommunication services for 30% of the number of base radio stations of the vessels in the sea and aircraft in the space of mobile earth communication network. Vietnam and other special cases. 2. Annually, the Post and Telematics Ministry 4. Vietnamese telecommunication enterprises shall identify and publicize telecommunication licensed to provide telecommunication services enterprises holding essential equipment. abroad must observe Vietnamese law provisions 3. Telecommunication enterprises holding and law provisions of the countries where they essential means shall have the responsibility: provide telecommunication services. a/ To plan and invest in building telecom- munication networks to ensure the capacity of CHAPTER III servicing the network interconnection and the transmission of the traffic of telecommunication SERVICE PROVISION AND USE PARTIES services; b/ To create favorable conditions for the Article 23.- Telecommunication enterprises negotiation and interconnection of networks with telecommunication services holding domi- and services between telecommunication enter- nant market shares prises' telecommunication networks in a fair 1. Telecommunication enterprises with and rational manner on the basis of efficient use telecommunication services holding dominant of telecommunication resources and common market shares are enterprises having their use of interconnection positions and technical turnover or traffic market shares accounting for infrastructures under interconnection agree- over 30% of total turnover or traffic of the type ments between the involved parties; of telecommunication service in the geographi- c/ To formulate and submit to the Post and cal areas where they are licensed to provide, Telematics Ministry for approval model inter- which may directly affect the penetration into connection agreements for uniform application such service market by other telecommunica- to telecommunication enterprises that have tion enterprises. interconnection requests. 2. Annually, the Post and Telematics Article 25.- Telecommunication service Ministry shall identify and publicize telecom- agents munication enterprises with telecommunication 1. Organizations and individuals that wish services holding dominant market shares. to provide telecommunication services for users 3. Telecommunication enterprises with in the form of telecommunication service telecommunication services holding dominant agency must sign telecommunication service market shares shall have the rights and obliga- agency contracts with telecommunication enter- tions prescribed in Clause 2, Article 39 of the prises and make business registration according May 25, '2002 Post and Telecommunication to law provisions. Telecommunication service Ordinance. agents are classified into commission agents Article 24.- Telecommunication enterprises and resale agents. holding essential means 2. Commission agents may establish single- 1. Telecommunication enterprises holding line subscriber terminal equipment in the prem- essential means are those holding over 30% of ises which they have the full right to lawfully the capacity of the local loop in the geographical use; link subscriber terminal equipment to pub- area where they are licensed to provide or over lic telecommunication networks by subscriber 30% of the capacity of domestic or international lines for providing telecommunication services long-distance transmission channels; or over in such premises strictly according to the pre-

68 scribed service forms, quality and tariffs for CHAPTER IV commissions. INTERCONNECTION 3. Resale agents may establish subscriber ter- minal equipment systems (single-line and multi- SECTION 1 ple-line) within the premises they have the full INTERCONNECTION OF PUBLIC right to lawfully use; link their terminal equip- TELECOMMUNICATION NETWORKS ment systems to telecommunication networks by trunk lines or subscriber lines for reselling termi- Article 27.- Interconnection principles nal services in such premises strictly according to The Post and Telematics Ministry shall for- the telecommunication service resale regulations mulate and promulgate interconnection regula- of the Post and Telematics Ministry. tions on the following principles: 4. On the basis of law provisions on contracts 1. Telecommunication enterprises may and the Post and Telematics Ministry's regula- request to connect their telecommunication net- tions, telecommunication enterprises shall have works to telecommunication networks or serv- to formulate and promulgate model telecom- ices of other enterprises, and at the same time munication service agency contracts for uni- are obliged to allow other telecommunication form application within their enterprises. enterprises to connect to their telecommunica- 5. Telecommunication service agents shall tion networks or services under fair and ration- submit to the inspection and supervision by the al conditions. Post and Telematics Ministry and competent 2. The interconnection of telecommunication State bodies of their provision of telecommuni- networks must be effected on the basis of effi- cation services. cient use of telecommunication resources and Article 26.- Reporting regime of telecom- technical infrastructures which have been munication enterprises invested and constructed. 1. The Post and Telematics Ministry shall 3. Service users are guaranteed to: prescribe and promulgate report forms for uni- a/ Freely select telecommunication enter- form application to telecommunication enter- prises in an convenient and easy manner; prises. b/ Communicate with any users, regardless 2. Telecommunication enterprises shall have of which telecommunication enterprises such to regularly or irregularly report to the Post and users have signed contracts with; Telematics Ministry on their manufacture, busi- c/ Be provided with services and pay ness, technical and professional activities at the charges in a convenient and rational manner. latter's requests and shall be accountable for the 4. Technical requirements for interconnec- accuracy and timeliness of the reported contents tion are guaranteed to: and data. a/ Conform to the interconnection standards 3. Telecommunication enterprises shall have promulgated by the Post and Telematics the responsibility to evidence their reported Ministry; data if the Post and Telematics Ministry so b/ Ensure safety and integrity of each net- requests and create conditions for the Post and work and the entire public telecommunication Telematics Ministry to verify the reported data networks. when necessary. 5. Interconnection tariff shall be formulated 4.. Telecommunication enterprises that vio- on the basis of costs, rationally divided for the late the reporting regime shall be sanctioned network components or service phases without according to current law provisions. discrimination among various types of service.

69 Where the interconnection tariff is inclusive of nication are local tandem switchboards or long- amounts contributed for the provision of pub- distance switchboards; lic-utility telecommunication services; such c/ Geographical positions of interconnection amounts must be clearly stated. points for international communication are long Article 28.- Model interconnection agree- distance switchboards or international switch- ments boards; 1. Telecommunication enterprises holding d/ Geographical positions of interconnec- essential means shall have to formulate model tion points for mobile communication are local written interconnection agreements with trans- tandem switchboards or long-distance switch- parent and non-discriminatory conditions and boards or mobile switchboards. submit them to the Post and Telematics 1'zin- 3. The positions of interconnection points istry for approval. within a network structure are trunk portals of 2. After being approved, model written interconnected switchboards. interconnection agreements shall be made pub- 4. The number of interconnection points lic for uniform application to all telecom- shall be agreed upon by the interconnecting munication enterprises that have interconnec- telecommunication enterprises themselves, pro- tion requests. vided that it must abide by the interconnection 3. In addition to the major contents pre- principles prescribed in Article 27 of this scribed in model written interconnection agree- Decree. ments, interconnecting enterprises may reach Article 30.- Common use of positions and agreements with one another on other contents common use of infrastructures of such agreements provided that such contents 1. Common use of positions. are not contrary to law provisions and do not a/ Interconnecting telecommunication infringe upon the State's interests, public inter- enterprises shall apply the principle of common ests, legitimate rights and interests of other use of positions to interconnection points at all organizations and individuals. places where practical conditions permit in Article 29.- Interconnection points order to improve efficiency in the use of ground 1. Interconnection points are points lying on areas, reduce costs and create favorable condi- the routes that interconnect two telecommuni- tions for interconnecting enterprises. cation networks, used to define economic and b/ There are two methods of commonly technical responsibilities between two telecom- using positions, namely commonly using real munication enterprises. positions and commonly using virtual posi- 2. The geographical positions of interconnec- tions. The method of commonly using virtual tion points: unless otherwise agreed upon in the positions shall be applied only when it is impos- interconnection agreements of interconnecting sible to use the method of commonly using real enterprises or otherwise requested by the Post positions because interconnection-providing and Telematics Ministry, the geographical posi- enterprises cannot arrange ground areas and tions of interconnection points are prescribed as other necessary conditions. follows: 2. Common use of infrastructure. a/ Geographical positions of interconnection a/ Infrastructure consists of houses and points for local communication are local switch- buildings, cable culverts, cable tanks, cable boards or local tandem switchboards; posts, antenna towers, internal cable lines and b/ Geographical positions of interconnec- accessory equipment within the buildings tion points for domestic long-distance commu- where are installed interconnection equipment

70 and other means which need to be commonly minal equipment outside such networks. used in an economical and efficient manner, 4. Private-use and special-use telecommuni- avoiding waste in investment and construction cation networks must not be directly intercon- and creating favorable conditions for intercon- nected, unless it is permitted by the Post and nection, given that the submitted proposals are Telematics Ministry. rational, economically and technically viable Article 32.- Interconnection points and compliant with current law provisions; 1. Private-use telecommunication networks b/ The common use of infrastructure is may be interconnected by trunk lines to public effected under contracts agreed upon between telecommunication networks at local switch- enterprises. In a number of necessary cases of boards, local tandem switchboards and at other interconnection and establishment of telecom- interconnection points prescribed by telecom- munication networks, in order to guarantee the munication enterprises. interests of the State, enterprises as well as serv- 2. Special-use telecommunication networks ice users, the Post and Telematics Ministry shall may be interconnected by trunk lines to public decide on the common use of telecom- telecommunication networks at local switch- munication infrastructure when enterprises boards, local tandem switchboards, long dis- cannot reach any agreement. tance switchboards and at other interconnection points prescribed by telecommunication enter- SECTION 2 prises. INTERCONNECTION OF PRIVATEUSE Article 33.- Common use of infrastructure 1. TELECOMMUNICATION NETWORKS, Where owners of private-use or special-use SPECIAL-USE TELECOMMUNICATION telecommunication networks build by them- NETWORKS TO PUBLIC selves transmission lines according to their net- TELECOMMUNICATION NETWORKS work establishment licenses, they shall be responsible for the whole work of installing, Article 31.- Interconnection principles operating and maintaining trunk lines. The interconnection of private-use or Telecommunication enterprises shall have to special use telecommunication networks to arrange areas for installation of transmission public telecommunication networks must equipment (if any), cable conduits, cable tanks, ensure the following principles: antenna posts and masts and other accompany- 1. Private-use or special-use telecommuni- ing equipment such as power sources, air-con- cation networks must satisfy the technical stan- ditioners, etc., at the sites of their interconnec- dards applicable to public telecommunication tion switchboards for owners of private-use or networks. special-use telecommunication networks. 2. Interconnection shall be effected under 2. The use of telecommunication enterprises' written interconnection contracts between infrastructure shall be effected under contracts telecommunication enterprises and owners of signed between private-use or special-use private-use or special-use telecommunication telecommunication network owners and networks. telecommunication enterprises. 3. Private-use or special-use telecommuni- 3. Expenses for the use of telecommunication cation networks must not be used for forward- enterprises' infrastructure shall be agreed upon ing by any modes (automatic or manual) domes- by private-use or special-use telecommunica- tic and international long-distance calls (in both tion network owners and telecommunication outgoing and incoming directions) between ter- enterprises.

71 CHAPTER V b/ To formulate plans on the use of telecom- TELECOMMUNICATION NUMBERING munication codes and numbers already allocat- ed by the Post and Telematics Ministry; Article 34.- Telecommunication numbering c/ To grant numbers, lease numbers to, and plans withdraw numbers from, service users accord- 1. Telecommunication numbering plans are ing to the Regulation on management of the detailed regulations on the structure and use telecommunication number budget; purposes of codes and numbers for uniform d/ To report to the Post and Telematics application in the whole country in order to Ministry the plans on, and the situation of, the ensure the operation of telecommunication net- use of telecommunication codes and numbers works and services. The collection of telecom- regularly or irregularly when the Post and munication codes and numbers is called Telematics Ministry so requests; telecommunication number budget. e/ Within the scope of allocated 2. Telecommunication numbering plans telecommunication number blocks, on the basis include: of the telecommunication numbering plans and a/ Plan on numbering of public telecom- the network development plans already munication networks; approved by competent authorities, at least 60 b/ Plan on numbering of signaling point days before changing subscriber numbers, codes; telecommunication enterprises must notify the c/ Plan on numbering of Internet domain concerned service users of the time of, and nec- names and addresses; essary information about, the number change d/ Plan on numbering of other plans and instructions on the use of services telecommunication service networks. after their numbers are changed. 3. The Post and Telematics Ministry shall for- Telecommunication enterprises must bear all mulate, promulgate, amend and supplement number change costs but shall not be liable for telecommunication numbering plans. indirect damage caused by the number change Article 35.- Management of the telecommu- to users. nication number budget 4. Private-use and special-use telecommuni- 1. The Post and Telematics Ministry shall for- cation network owners, service agents and mulate and promulgate a Regulation on man- users that are granted or leased codes and/or agement of the telecommunication number numbers shall have to use such granted and/or budget. leased codes and numbers according to the 2. Basing itself on the numbering plans and Regulation on management of the telecommu- the number budget management plan, the Post nication number budget and the guidance of and Telematics Ministry shall decide on the telecommunication enterprises. allocation or withdrawal of telecommunication 5. The Post and Telematics Ministry shall codes and numbers to or from telecommunica- withdraw service codes and numbers or sub- tion enterprises as well as organizations and scriber number blocks already allocated for use individuals. for other purposes when telecommunication 3. Telecommunication enterprises shall have enterprises or network owners no longer need the following responsibilities: to use them. a/ To fill in procedures to apply for codes, 6. When they need to change number blocks numbers and number blocks according to the or the length of subscriber numbers, telecom- Post and Telematics Ministry's regulations; munication enterprises and special-use telecom-

72 munication network owners must draw up to the Post and Telematics Ministry for re-grant plans, propose solutions and may only imple- or withdrawal of licenses strictly according to ment them after obtaining the Post and regulations on the licensed subjects. Telematics Ministry's written permission. 6. Agencies, organizations and enterprises 7. All agencies, organizations and individu- shall bear full responsibility before law for the als must pay charges and fees for using telecom- accuracy of their dossiers of application for munication codes and numbers according to telecommunication licenses. On the basis of the law provisions. application dossiers, the Post and Telematics Ministry shall conduct evaluation and grant or refuse to grant licenses under the provisions of CHAPTER VI this Decree. After receiving telecommunication TELECOMMUNICATION LICENSES licenses, agencies, organizations and enterprises shall be responsible for, and take initiative in, SECTION 1 carrying out activities stated in their licenses GENERAL PROVISIONS ON LICENSING and bear full responsibility before law for their manufacture, business and service provision Article 36.- Licensing principles activities according to law provisions and the 1. Compliance with Vietnam's telecommuni- provisions of their granted licenses. cation development strategies, plannings and 7. All agencies, organizations and enterpris- plans. es shall be obliged to pay licensing charges and 2. Priority shall be given to schemes that can fees according to regulations. be quickly executed in practice, with commit- Article 37.- Telecommunication businesses ments to long-term provision for a majority of that do not require licenses service users; schemes that provide services in 1. Organizations, individuals and enterprises deep-lying, remote, border areas and islands; of all economic sectors that operate lawfully in Vietnam may register and conduct telecommuni- schemes that provide public-utility telecommu- cation business activities in the following nication services, serve Party and State agen- domains without having to apply for licenses: cies, security and defense. a/ Manufacture of telecommunication sup- 3. Where the licensing involves the use of plies and equipment (excluding radio transmit- frequencies or the number budget, licenses shall ters and trans receivers); be considered and granted only if the allocation b/ Export and import of telecommunication of frequencies or the number budget can be supplies and equipment; effected in line with the approved plannings. c/ Provision of telecommunication services 4. The licensing of telecommunication enter- in the form of telecommunication service prises that have foreign investors as their part- agency. ners must comply with law provisions on for- 2. In the course of conducting telecommuni- eign investment and international agreements cation business activities, organizations, indi- which Vietnam has signed or acceded to. viduals and enterprises must observe law pro- 5. It is strictly prohibited to purchase, sell or visions on goods and service quality, regula- transfer telecommunication licenses of all kinds. tions on information and advertisement, regula- In case of organizational change such as merger, tions on resolution of disputes and compensa- dissolution, equitization or change of the State- tion and other relevant law provisions. contributed capital portions, agencies, organiza- 3. In addition to the provisions of Clause 2 of tions and enterprises shall have to report such this Article:

73 a/ For the manufacture of telecommunica- c/ Having contingency plans for assuring tion supplies and equipment (excluding radio safety when technical incidents occur; transmitters and transreceivers), organizations, d/ Having equipment, facilities, technical individuals and enterprises must observe the and professional plans for assuring network telecommunication equipment quality manage- safety and information security. ment provisions of Article 52 of this Decree; Article 39.- Licensing procedures b/ For the export and import of telecom- 1. Application dossiers. munication supplies and equipment, organi- Each enterprise shall compile 3 sets of appli- zations, individuals and enterprises must cation dossier (1 original and 2 copies). Each observe the telecommunication equipment dossier set consists of: quality management provisions of Article 52 of a/ The enterprise's application for a license; this Decree, the radio frequency and equipment b/ The business registration certificate or use provisions of the Government's Decree No. investment license; 24/2004/ND-CP of January 14, 2004 on radio c/The enterprise's organization and opera- frequencies and the Prime Minister's regula- tion charter; tions on goods export and import management d/ The service provision scheme with the for each period; following principal contents: c/ For the provision of telecommunication - The business plan on types of services; services in the form of telecommunication serv- service provision scope; service standards and ice agency, organizations, individuals and quality; tariff; market and turnover forecast and enterprises must observe the telecommunica- analysis; total investment capital and allocation tion service agency provisions of Article 25 of of capital for each period; investment form, cap- this Decree. ital mobilization plans; manpower; - The technical plan on network configura- SECTION 2 tion and equipment, including main and stand- LICENSING OF THE ESTABLISHMENT OF by parts; network and equipment capability TELECOMMUNICATION NETWORKS AND analysis; capacity of transmission lines; corre- PROVISION OF TELECOMMUNICATION sponding information resources; equipment SERVICES and technical and professional measures for assuring information safety and security; Article 38.- Licensing conditions - Commitments to implement the scheme 1. Conditions on subjects: applied for a license for the long-term provision Being State enterprises or enterprises where of telecommunication services for users, and to the State holds dominant or special shares. observe telecommunication management regu- 2. Conditions on professional and financial lations. capabilities: 2. Dossier-processing time and procedures. a/ Having adequate financial and profes- The Post and Telematics Ministry shall sional manpower capabilities suitable to the receive application dossiers, conduct evaluation scales of the schemes for execution as licensed; within 75 days, counting as from the date of b/ Having feasible technical plans on net- receiving valid dossiers. In case of refusal, the work development and service provision plans Post and Telematics Ministry shall have to issue in compliance with current regulations on inter- written notices, clearly stating the refusal rea- connection, information resource use, service sons to the applying enterprises. Where applica- tariff, technical standards and quality; tion dossiers basically meet the technical and

74 professional requirements, the Post and b/ The Post and Telematics Ministry shall Telematics Ministry shall solicit written opin- conduct evaluation and consider the extension ions of the concerned ministries and branches of licenses within 60 days, counting from the on the enterprises' applications for telecommu- date of receiving valid dossiers. In case of nication network establishment or telecommu- refusal to extend licenses, the Post and nication service provision licenses, then synthe- Telematics Ministry shall have to issue written size and submit them to the Prime Minister for replies, clearly stating the reasons to the apply- approval. If receiving the Prime Minister's writ- ing enterprises; ten approvals, within 15 days after the date of c/ Each license shall be extended only once receiving such approvals, the Post and and the extended duration shall not exceed one Telematics Ministry shall have to grant licenses year. to the enterprises. 5. Withdrawal of licenses. 3. Amendment and supplementation of the Telecommunication network establishment licenses' contents. and service provision licenses shall be with- a/ While their licenses remain valid, if the drawn in the following cases: enterprises wish to amend and/or supplement a/ Past 02 years counting from the date they the licenses' contents, they must send dossiers are granted licenses but the enterprises have not of application therefor to the Post and yet carried out in reality activities stated in their Telematics Ministry; licenses without plausible reasons. If wishing to b/A dossier of application for amendment apply for new licenses, enterprises having their and supplementation consists of an application licenses withdrawn shall have to fill in all proce- for amendment and supplementation of the dures prescribed for application of new licenses; license's contents; a copy of the still valid b/ Enterprises are handled for violations in license; a report on the e=enterprise's operation; the telecommunication domain according to a detailed written description of the amended law provisions under which their licenses are and/or supplemented contents and other relat- withdrawn. ed documents; c/ The Post and Telematics Ministry shall SECTION 3 conduct evaluation and consider the grant of LICENSING OF THE PROVISION OF amended and/or supplemented licenses within TELECOMMUNICATION SERVICES 60 days, counting from the date of receiving valid dossiers. In case of refusal to grant amend- Article 40.- Licensing conditions ed and/or supplemented licenses, the Post and 1. Conditions on subjects: Telematics Ministry shall have to issue written Enterprises of all economic sectors, which replies, clearly stating the refusal reasons to the are established under law provisions. applying enterprises. 2. Technical and professional conditions: 4. Extension of licenses. a/ Having technical plans on telecom- a/ Enterprises which wish to extend their munication equipment system development licenses must send extension application within their premises and public service points dossiers to the Post and Telematics Ministry 60 and feasible telecommunication service busi- days before their licenses expire. An extension ness plans in compliance with current regula- application dossier shall consist of an applica- tions on network establishment, interconnec- tion for license extension and a copy of the still tion, information resource use, tariff, technolo- valid license; gy and service quality;

75 b/ Having contingency plans for assuring cation services for the public other than the safety when technical incidents occur; services prescribed in their granted licenses or c/ Having equipment and technical and pro- new telecommunication services involving the fessional plans for assuring network safety and use of telecommunication resources. information security. 2. Agencies, organizations and enterprises Article 41.- Licensing procedures that wish to experiment private-use telecom- 1. Application dossiers munication networks involving the use of Each enterprise shall compile three (03) sets telecommunication resources. of application dossier (1 original and 2 copies). Article 43.- Licensing procedures Each dossier set consists of: 1. Application dossiers a/ The enterprise's application for a license; Each application dossier shall be made in 3 b/ The business registration certificate or sets (1 original and 2 copies). Each set consists investment license; of: c/ The enterprise's organization and opera- a/ An application for a license for experi- tion charter; mental establishment or experimental provision d/ The service provision scheme with the of services: principal contents prescribed at Point d, Clause b/The scheme on the experimental establish- 1, Article 39 of this Decree. ment of a network or experimental provision of 2. Dossier-processing time services, clearly identifying the experimentation The Post and Telematics Ministry shall con- purposes, scope and period; network configura- duct evaluation and grant licenses within 60 tion, types of services and the experimentation days, counting from the date of receiving valid cooperation party (if any); projected tariffs (if dossiers. If there emerge matters in need of re- any); frequencies, number budget for the exper- evaluation, the above-said time limit may be imentation (if any); terms and conditions for prolonged but must not exceed 75 days, count- ensuring users' interests if the enterprise does ing from the date of receiving valid dossiers. In not put services into official provision after the case of refusal to grant licenses, the? Post and experimental service provision period expires; Telematics Ministry shall have to issue written c/ A copy of the telecommunication license replies, clearly stating the reasons to the apply- (if any). ing enterprises. 2. Dossier-processing time 3. Amendment and supplementation of the The Post and Telematics Ministry shall con- licenses' contents; extension and withdrawal of duct evaluation and grant or refuse to grant licenses. licenses within 30 days, counting from the date To comply with the provisions of Clauses 3, of receiving valid dossiers. In case of refusal, the 4 and 5, Article 39 of this Decree. Post and Telematics Ministry shall have to issue written replies, clearly stating the refusal rea- SECTION 4 sons to the applying agencies, organizations or LICENSING OF THE EXPERIMENTATION OF enterprises. TELECOMMUNICATION NETWORKS AND 3. Extension of the experimentation period SERVICES a/ Enterprises that wish to extend the experi- mentation period must send extension applica- Article 42.- Subjects to be licensed tion dossiers to the Post and Telematics 1. Telecommunication enterprises that wish Ministry 15 days before their licenses expire. to experimentally provide new telecommuni- Such an extension application dossier shall con-

76 sist of an application clearly stating the exten- SECTION 5 sion reasons and a copy of the still valid experi- LICENSING OF THE ESTABLISHMENT OF mentation license; PRIVATE-USE TELECOMMUNICATION b/ The Post and Telematics Ministry shall NETWORKS conduct evaluation and consider the extension within 15 days, counting from the date of Article 44.- Licensing conditions receiving valid dossiers. In case of refusal, the Agencies, organizations or enterprises wish- Post and Telematics Ministry shall have to issue ing to establish private-use telecommunication written replies, clearly stating the refusal rea- networks must ensure the following conditions: sons to the applying agencies, organizations or 1. The establishment of private-use telecom- enterprises. munication networks is only for ensuring com- c/ The extended period or the total time of munication among the network members, not extensions shall not exceed one year. for business purposes and profits. 4. Upon the expiry of the experimentation 2. Having technical and professional plans time limit, agencies, organizations or enterpris- for assuring safety and security for private-use es shall have to conduct a review, finalize the telecommunication networks. experimentation dossiers and report the experi- Article 45.- Licensing procedures mentation results to the Post and Telematics 1. Application dossiers. Ministry. Application dossiers: Each dossier of appli- 5. After the experimentation period, if agen- cation for a license for establishing an private- cies, organizations or enterprises that conduct use telecommunication network shall be made the experimentation wish to put their networks in 3 sets (1 original and 2 copies). Each dossier or services into official operation, they must set consists of: apply for licenses to the Post and Telematics a/ An application for a license for establish- Ministry. The application procedures shall com- ing an private-use telecommunication network. ply with the provisions of Sections 2 and 3, The written request of the Foreign Ministry if Chapter \/I of this Decree. the applicants are Vietnam-based foreign diplo- 6. Withdrawal of licenses matic representations, consulates or representa- Telecommunication network and service tive offices of international organizations which experimentation licenses shall be withdrawn in enjoy diplomatic or consular privileges and the following cases: immunities; a/ Past 06 months, counting from the date b/ The applying agency's or organization's they are granted licenses, but the agencies, establishment decision or operation license or organizations or enterprises have not yet car- the applying enterprise's business registration ried out in reality activities stated in their licens- certificate; es without plausible reasons. If wishing to c/ The operation charter or legal document(s) apply for new licenses, agencies, organizations defining the common organizational structure or enterprises having their licenses withdrawn or the common form of association or activity of shall have to fill in all procedures prescribed for members (if any); application of new licenses; d/ The network establishment scheme, b/ Enterprises are handled for violations in clearly stating the network establishment pur- the telecommunication domain according to pose; network configuration; categories of law provisions under which their licenses are equipment; to be-used services; network mem- withdrawn. bers (if any); operation scope; to be-used tech-

77 nology; to be used frequencies, codes and num- b/ An extension application dossier consists bers (if any). of a license extension application and a copy of 2. Dossier-processing time the still valid license; The Post and Telematics Ministry shall con- c/ The Post and Telematics Ministry shall duct evaluation and grant or refuse to grant conduct evaluation and consider the extension licenses within 30 days, counting from the date within 10 days, counting from the date of of receiving valid dossiers. In case of refusal, - receiving valid dossiers. In case of refusal to the Post and Telematics Ministry shall have to extend licenses, the Post and Telematics issue written replies, clearly stating the refusal Ministry shall have to issue written replies, reasons to the applying agencies, organizations clearly stating the refusal reasons to the apply- or enterprises. If there emerge matters in need ing agencies, organizations or enterprises; of re-evaluation, the licensing time limit may be d/ The extended period or the total time of prolonged but must not exceed 45 days, count- extensions shall not exceed one year. ing from the date of receiving valid dossiers. 5. Withdrawal of licenses 3. Amendment and supplementation of the Private-use telecommunication network licenses' contents establishment licenses shall be withdrawn in a/ The licensed agencies, organizations or the following cases: enterprises that wish to amend or supplement a/ Past one year as from the date they are the network configuration, types of services or granted licenses but the agencies, organizations network operation scope must send dossiers of or enterprises have not yet carried out in reality application therefor to the Post and Telematics activities stated in their licenses without plausi- Ministry; ble reasons. If wishing to apply for new licens- b/A dossier of application for amendment es, agencies, organizations or enterprises hav- and supplementation consists of an application ing their licenses withdrawn shall have to fill in for amendment and supplementation; a detailed all procedures prescribed for application of new written description of the proposed amend- licenses; ments and/or supplements; other documents b/ Enterprises are handled for violations in related to the amendment and/or supplementa- the telecommunication domain according to tion; and a copy of the still valid license; law provisions under which their licenses are c/ The Post and Telematics Ministry shall withdrawn. conduct evaluation and grant or refuse to grant amended and/or supplemented licenses within SECTION 6 15 days, counting from the date of receiving LICENSING OF THE INSTALLATION OF valid dossiers. In case of refusal to grant amend- TELECOMMUNICATION CABLES IN ed and/or supplemented licenses, the Post and VIETNAM'S EXCLUSIVE ECONOMIC ZONE Telematics Ministry shall have to issue written OR CONTINENTAL SHELF replies, clearly stating the refusal reasons to the applying agencies, organizations or enterprises. Article 46.- Licensing conditions 4. Extension of licenses 1. Commitments to observe Vietnamese laws a/ Agencies, organizations or enterprises and international agreements which the which wish to extend their licenses must send Socialist Republic of Vietnam has signed or extension application dossiers to the Post and acceded to. Telematics Ministry 15 days before their licens- 2. Commitments to submit to the supervi- es expire; sion by competent Vietnamese management

78 bodies and bear all expenses for this activity. 3. Amendment and supplementation of the Article 47.- Licensing procedures licenses' contents 1. Application dossiers: Each dossier of a/ While their licenses remain valid, if the application for a license for laying telecom- organizations wish to amend or supplement munication cables in the exclusive economic their contents, they must send dossiers of appli- zone or continental shelf of Vietnam must be cation therefor to the Post and Telematics made in 5 sets (01 original and 04 copies). Each Ministry; dossier set consists of: b/ A dossier of application for amendment a/ An application for a license for laying and supplementation consists of an application telecommunication cables in the exclusive eco- for amendment and supplementation of the nomic zone or continental shelf of Vietnam; license's contents; a copy of the still valid b/ The scheme on the laying of license; a detailed written description of the telecommunication cables in the exclusive eco- proposed amendments and/or supplements nomic zone or continental shelf of Vietnam, and other related documents; with the following contents: c/ The Post and Telematics Ministry shall - Nature, purpose and scope of the cable line, conduct evaluation and consider the grant of especially matters related to marine survey and amended and/or supplemented licenses within submarine operations; 60_days, counting from the date of receiving - Technical design and geographical posi- valid dossiers. In case of refusal to grant amend- tion, precise co-ordinates of the telecommunica- ed and/or supplemented licenses, the Post and tion cable line to be laid; Telematics Ministry shall have to issue written - Plans on the construction and assurance of replies, clearly stating the reasons to the apply- security and marine environment. ing organizations. 2. Dossier-processing time 4. Extension of licenses a/ The Post and Telematics Ministry shall a/ The licensed organizations that wish to receive application dossiers and send them to extend their licenses must send extension appli- the concerned ministries and branches for opin- cation dossiers to the Post and Telematics ions before granting licenses. Ministry 90 days before their licenses expire. An b/ The Post and Telematics Ministry shall extension application dossier consists of a grant licenses within 90 days, counting from the license extension application and a copy of the date of receiving valid dossiers. In case of still valid license; refusal to grant licenses, the Post and Telematics b/ The Post and Telematics Ministry shall Ministry shall have to issue written replies, conduct evaluation and consider the extension clearly stating the refusal reasons to the apply- of licenses within 90 days, counting from the ing organizations. date of receiving valid dossiers; c/ On the basis of the granted licenses, the c/ In case of refusal to extend licenses, the Post and Telematics Ministry shall collaborate Post and Telematics Ministry shall have to issue with the Public Security Ministry and the written replies, clearly stating the reasons to the Defense Ministry in permitting vessels to applying organizations; engage in surveys, construction, repair and d/ Each license may be extended only once maintenance of telecommunication cables in the and the extended time shall not exceed one exclusive economic zone or continental shelf of year. Vietnam according to the licenses and law pro- 5. Withdrawal of licenses visions. Licenses for laying telecommunication

79 cables in the exclusive economic zone or conti- vide public-utility telecommunication services nental shelf of Vietnam shall be withdrawn through: when the licensed organizations are handed for a/ Interconnection charges; violations in the telecommunication domain b/ The Vietnam fund for public-utility according to law provisions under which their telecommunication services. licenses must be withdrawn. 2. The Vietnam fund for public-utility telecommunication services is a State financial CHAPTER VII institution, attached to the Post and Telematics PROVISION OF PUBLIC-UTILITY Ministry and operating not for profits. TELECOMMUNICATION SERVICES 3. Sources for forming the Vietnam fund for public-utility telecommunication services Article 48.- Public-utility telecommunica- include: tion services a/ Capital contributed by telecommunica- 1. Public-utility telecommunication services tion enterprises: compulsory contributions of include universal telecommunication services telecommunication enterprises to the Vietnam and compulsory telecommunication services, fund for public-utility telecommunication serv- which are telecommunication services essential ices shall be accounted in the enterprises' pro- to the society and the State assures their provi- duction and business costs. The Prime Minister sion with the quality and tariff prescribed by shall specify the mechanism on contributions of competent State bodies. telecommunication enterprises; 2. On the basis of the telecommunication and b/ The State budget's supports for the char- Internet development plannings, the Post and ter capital and capital for implementing the pro- grams assigned by the Government; Telematics Ministry shall have the responsibility: c/ Official development assistance amounts a/ To formulate the program on the provi- and contributions of organizations and individ- sion of public-utility telecommunication servic- uals at home and abroad; es and submit it to the Prime Minister for d/ Other capital sources mobilized accord- approval; ing to law provisions. b/ To prescribe, and give specific guidance 4. The Prime Minister shall decide on the on, the list, subjects and scope of provision of organization and operation of the Vietnam fund public-utility telecommunication services; for public-utility telecommunication services. c/ To formulate and implement the annual Article 50.- Rights and obligations of plans on the provision of public-utility telecom- telecommunication enterprises providing pub- munication services. lic utility telecommunication services 3. The concerned State management bodies 1. To participate on an equal basis in imple- shall base themselves on their respective func- menting the State programs and projects on tions, tasks and powers to coordinate with the providing public-utility telecommunication Post and Telematics Ministry in implementing services according to law provisions. the programs and plans on the provision of 2. To fully and timely fulfil the obligation to public-utility telecommunication services. make financial contributions to the fund for Article 49.- Financial mechanisms to support public-utility telecommunication services the provision of public-utility telecommunica- according to regulations. tion services 3. To collaborate with, and create favorable 1. The State shall support enterprises to pro- conditions for, other telecommunication enter-

80 prises to implement programs and projects on equipment between Vietnam and foreign coun- providing public-utility telecommunication tries as well as international organizations shall services according to regulations of the State comply with the agreements which Vietnam has management agency in charge of telecommuni- signed or acceded to. The Post and Telematics cations. Ministry is an agency representing Vietnam in 4. To comply with the State regulations on participating in the mutual recognition agree- the provision of public-utility telecommunica- ments on standard conformity certification in tion services. the telecommunication domain. 3. The Post and Telematics Ministry shall CHAPTER VIII prescribe and publicize the lists of home-made TELECOMMUNICATION QUALITY and imported telecommunication equipment STANDARDS subject to standard conformity certification before they are permitted for circulation in the Article 51.- System of telecommunication Vietnamese market or connection to public quality standards telecommunication networks. 1. The system of telecommunication quality 4. Organizations and individuals are encour- standards consists of standards for compulsory aged to voluntarily obtain standard conformity application and standards for voluntary appli- certificates for telecommunication equipment cation to telecommunication equipment, net- not included in the lists stated in Clause .3 of works, network interconnection, services and this Article. works. 5. Telecommunication equipment which are 2. Compulsorily applied standards include domestically circulated and imported must comply with the goods labeling regulations and branch standards, Vietnamese standards and other law provisions. international standards publicized by the Post and 6. The Post and Telematics Ministry shall Telematics Ministry for compulsory application. specify the telecommunication equipment qual- 3. Voluntarily applied standards are those ity management contents, forms and proce- which organizations and individuals publicize dures. to voluntarily apply. Article 53.- Telecommunication service and 4. The Post and Telematics Ministry shall network quality management prescribe the formulation, promulgation and 1. The quality of telecommunication services application of telecommunication quality stan- and networks is managed through quality pub- dards. licization based on the standards publicized by Article 52.- Telecommunication equipment the Post and Telematics Ministry for compulso- quality management ry application or voluntarily applied by organi- 1. The quality of telecommunication equip- zations or individuals in accordance with law ment is managed through standard conformity provisions. certification based on the standards publicized 2. The Post and Telematics Ministry shall pre- by the Post and Telematics Ministry for compul- scribe the lists of telecommunication networks sory application or voluntarily applied by and services subject to quality management and organizations or individuals in accordance with standards for compulsory application. law provisions. 3. For telecommunication services and net- 2. The mutual recognition of standard con- works on the lists of those subject to quality formity certification of telecommunication management, telecommunication enterprises

81 must publicize their quality standards which Article 55.- Quality test are not contrary to standards prescribed by the 1. The Post and Telematics Ministry shall Post and Telematics Ministry for compulsory promulgate regulations on telecommunication application and report to the Post and test management in service of the quality man- Telematics Ministry on their actual quality agement aiming to build up and develop according to regulations. For telecommunica- telecommunication testing agencies, coordinate tion services and networks not on the lists stat- and combine the testing capabilities of the ed in Clause 3 of this Article, telecommunica- establishments. tion enterprises must formulate by themselves 2. The mutual recognition of telecommuni- and publicize the quality standards applied cation test results between Vietnam and foreign thereto. countries as well as international organizations 4. Organizations, individuals and enterpris- shall comply with the international agreements es are encouraged to voluntarily apply the qual- which Vietnam has signed or acceded to. The Post ity management system. Telecommunication and Telematics Ministry is an agency representing enterprises shall be responsible for the publi- Vietnam in participating in the agreements on cized quality standards, maintain the quality mutual recognition of telecommunication test according to the publicized standards; ascertain results and the designated agency within the that the owners of intranets which are operated framework of these agreements. for charges and interconnected to their net- works and their telecommunication agents CHAPTER IX ensure the publicized quality of their telecom- TELECOMMUNICATION TARIFFS munication networks and/ or services. 5. The Post and Telematics Ministry shall Article 56.- Principles for the State manage- promulgate regulations on the telecommuni- ment over tariffs cation service and network quality manage- 1. The State respects the telecommunication ment, inspect and handle violations related to enterprises' right to set tariffs by themselves telecommunication service and network quality. and to compete on tariffs according to law pro- Article 54.- Telecommunication work quali- visions, encourages them to raise efficiency, ty management reduce costs of, and tariffs on, services in order 1. The quality of telecommunication works is to increase the society's use of services and the managed through quality inspection based on economy's competitiveness. the standards publicized by State management 2. The State shall take necessary measures to bodies for compulsory application or voluntari- stabilize tariffs, ensure non-discrimination in ly applied by telecommunication enterprises in tariffs, protect the legitimate rights and interests accordance with law provisions. of service users, telecommunication service pro- 2. The Post and Telematics Ministry shall viding enterprises and the State. prescribe the list of telecommunication works Article 57.- Bases for setting tariffs subject to quality inspection before they are 1. Telecommunication service tariffs are commissioned. determined on the basis of the production costs 3. The Post and Telematics Ministry shall of services and the supply-demand relation on promulgate regulations on the telecommuni- the market. cation work quality management, inspect and 2. For services with their tariffs set by the handle violations related to the quality of State, their tariffs are determined also on the telecommunication works. basis of national socio-economic development

82 and telecommunication development policies in 1. The settlement of disputes between each period as well as the rational interrelation telecommunication service providers and users to telecommunication service tariffs in the shall be effected through negotiations between region sand the world. the involved parties. Unless otherwise provided Article 58.- Tariff management tasks and for in the telecommunication service provision competence and use contracts, the statute of limitations for 1. The Prime Minister: dispute settlement is prescribed as follows: a/ To promulgate telecommunication serv- a/ For tariffs, it shall be one month, counting ice tariff management policies and mechanisms; from the date of receiving the first charge pay- b/ To decide on tariffs on important telecom- ment notice or bill or from the date of payment munication services which have impacts on many of service charges; branches and socio-economic development. b/ For service quality standards and other 2. The Post and Telematics Ministry: violations, it shall be three months, counting a/ To decide on public-utility telecommuni- from the date of service use or commission of cation service tariffs (excluding services on which violations. the tariffs are decided by the Prime Minister); 2. Where the involved parties fail to reach b/ To decide on tariffs on telecommunica- any agreement through negotiations, they may tion services which have impacts on the request competent State bodies to settle their telecommunication market, for application to disputes according to law provisions. users of telecommunication enterprises holding Article 60.- Consultation, settlement of inter- dominant market shares; connection disputes between telecommuni- c/ To decide on tariffs on interconnection cation enterprises between telecommunication enterprises; 1. Telecommunication enterprises may d/ To prescribe the tariff management by request the Post and Telematics Ministry to set- telecommunication service-providing enterprises; tle disputes related to interconnection of public e/ To guide telecommunication enterprises telecommunication networks. to observe the State's regulations and decisions 2. The Post and Telematics Ministry shall on telecommunication service tariff manage- consider and decide on the settlement of dis- ment. 3. Telecommunication enterprises: putes within 30 days, counting from the date of a/ To account expenditures to determine receiving the enterprises' written requests for telecommunication service costs; dispute settlement. In case of refusal to settle b/ To set specific tariffs on telecommunica- disputes, the Post and Telematics Ministry shall tion services not on the State-prescribed list have to issue written replies, clearly stating the strictly according to the tariff management reg- reasons therefor to the enterprises. ulations issued by competent State bodies; 3. The dispute settlement shall follow the fol- c/ To observe competent State bodies' regu- lowing order: lations and decisions on telecommunication a/ The Post and Telematics Ministry organ- service tariff management. izes consultations between the involved parties. The time limit for such consultations shall not CHAPTER X exceed 60 days, counting from the date the Post SETTLEMENT OF DISPUTES and Telematics Ministry decides to organize the dispute settlement; Article 59.- Settlement of disputes between b/ If the involved parties cannot reach any telecommunication service providers and users agreement after consultations, the Post and

83 Telematics Ministry shall issue decisions to set- and by competent State bodies according to tle disputes within 30 days after the end of con- law provisions. sultations. After the Post and Telematics Article 62.- Handling of violations Ministry issues dispute settlement decisions: Vietnamese and foreign organizations and indi- - The two involved parties must execute the viduals that commit law violation acts in the decisions; telecommunication domain shall all be sanc- - Where the enterprises disagree with the tioned for administrative violations and han- Post and Telematics Ministry's decisions, they dled according to current law provisions. may file further requests for dispute settlement or initiate lawsuits for settlement according to CHAPTER XII law provisions. During the time of filing further IMPLEMENTATION PROVISIONS requests for dispute settlement or initiating law- suits, the two involved parties must still comply Article 63.- Implementation organization with the Post and Telematics Ministry's dispute The Post and Telematics Ministry shall have to settlement decisions. promulgate detailed regulations and guidance on the implementation of this Decree. CHAPTER XI Article 64.- Implementation effect INSPECTION, EXAMINATION, This Decree takes effect 15 days after its pub- HANDLING OF VIOLATIONS lication in the Official Gazette. All previous reg- ulations contrary to this Decree are hereby Article 61.- inspection, examination annulled. All Vietnamese and foreign organizations Article 65.- Implementation provision and individuals carrying out telecommunica- The ministers, the heads of the ministerial tions related activities in Vietnam shall be sub- level agencies, the heads of the Government ject to the inspection and examination by the attached agencies, and the presidents of the specialized post and telecommunication as provincial/municipal People's Committees well as information technology inspectorates shall have to implement this Decree.

On behalf of the Government Prime Minister

PHAN VAN KHAI

84 Annex 9 Decree on Spectrum Management (Unofficial Translation)

DECREE No. 24/2004/ND-CP OF JANUARY 14, 2004 DETAILING THE IMPLEMENTATION OF A NUMBER OF THE NUMBER OF ARTICLES OF THE ORDINANCE ON POST AND TELECOMMUNICATIONS REGARDING RADIO FREQUENCIES

THE GOVERNMENT Decree, the provisions of such international agreement shall apply. Pursuant to the December 25, 2001 Law on Article 3. State management over radio fre- Organization of the Government; quencies Pursuant to the May 25, 2002 Ordinance on Post 1. The Government performs uniform State and Telecommunications; management over radio frequencies nation- At the proposal of the Minister of Post and wide. Telematics, 2. The Ministry of Post and Telematics takes responsibility before the Government for per- DECREES: forming the State management over radio fre- quencies. CHAPTER I 3. The contents of specialized State manage- GENERAL PROVISIONS ment over radio frequencies include: a/ Formulating, and organizing the imple- mentation of, radio frequency plannings; prom- Article 1. Scope of regulation ulgating, or submitting to the Government or the This Decree details the implementation of a Prime Minister for promulgation, legal docu- number of articles of the Ordinance on Post and ments on management and use of radio frequen- Telecommunications regarding the activities of cies and equipment as well as satellite orbits; managing and using radio frequencies, radio b/ Effecting international coordination in, equipment and satellite orbits under Vietnam's and registration of, radio frequencies and satel- sovereignty. lite orbits; allocating and fixing frequencies; Article 2. Subjects of application granting frequency band licenses, licenses for This Decree applies to Vietnamese organiza- use of radio frequencies and radio transmitters tions and individuals as well as foreign organi- (hereinafter called radio frequency licenses); zations and individuals using radio frequencies collecting and managing fees and charges for and equipment in Vietnam. the use of radio frequencies according to law Where an international agreement which the provisions; Socialist Republic of Vietnam has signed or c/ Examining and controlling radio frequen- acceded to contains provisions on radio fre- cies, dealing with harmful interference and quencies different from the provisions of this managing electro-magnetic compatibility;

85 inspecting and sanctioning administrative vio- motion or during halts at unspecified points. lations in the radio frequency domain. 10. "Coast station" means a station in the Article 4. Interpretation of terms and phrases maritime mobile service, which is located on In this Decree, the following terms and land or islands for intercommunication with phrases are construed as follows: ships and boats. 1. "Fixed service" means a radiocommunica- 11. "Ship station" means a mobile station in tion service between specified fixed points. the maritime mobile service located on board a 2. "Mobile service" means a radiocommuni- ship or boat which is not permanently moored. cation service between mobile and land sta- 12. "Station located on fishing means" means tions, or between mobile stations. a station located on a ship, boat or means, 3. "Maritime mobile service" means a mobile mobile or immobile on the sea, intended to be service between coast stations and ship stations, used for exploiting, processing, culturing and or between ship stations, or between on-board collecting aquatic resources, providing logistical communication stations. services, investigating, exploring, examining, 4. "Aeronautical mobile service" means a controlling and protecting aquatic resources. mobile service between aeronautical stations 13. "Aircraft station" means a mobile station and aircraft stations, or between aircraft stations. in the aeronautical mobile service located on 5. "Broadcasting service" means a radiocom- board an aircraft. munication service in which the transmissions 14. "Amateur station" means a station in the are intended for direct reception by the general amateur service. public. This service may include radio transmis- 15. "Cordless telephone" (of an extended sions, television transmissions or other types of subscriber type) means a receiver-transmitter, transmission. consisting of two parts linked to each other by 6. "Amateur service" means a radiocommu- radio waves: nication service for the purpose of self-training, - "First part, base unit" is a fixed part, con- intercommunication and technical investiga- nected to a telephone network; tions carried out by amateur operators who are - "Second part, handset" is a part which may duly permitted and are interested in radio tech- be placed fixedly or carried in motion and shares niques solely with a personal aim and without the same telephone number with its base unit. profit interest. 16. "Out-of-band-emission" means emission 7. "Station" means one or more radio equip- on a frequency or many frequencies immediate- ment, including the accessory equipment, nec- ly outside the necessary bandwidth, which essary at one location for carrying out a radio- results from the modulation process, but communication service. Each station shall be excluding spurious emissions. classified by the service in which it operates per- 17. "Spurious emission" means emission on a manently or temporarily. frequency or many frequencies which are out- 8. "Satellite communication station" means a side the necessary bandwidth and the level of station located in the atmosphere or on the sur- which may be reduced without affecting the face of the earth for communication with one or corresponding transmission of information. more space stations or intercommunication 18. "Unwanted emission" means emission with one or more stations of the same type via consisting of spurious emission and out-of- the reflecting satellite. band emission. 9. "Mobile station" means a station in the 19. "Harmful interference" means interfer- mobile service intended to be used while in ence which endangers the functioning of lawful

86 radio services, obstructs or interrupts a radio- ditions and purposes for the use of a number of communication service currently permitted to band sections for a specific category of radio- operate. communication service or radiocommunication 20. "Allocation of a frequency band" means system. The band planning is elaborated on the the designation of a given frequency band for basis of the used technologies, the necessary use by one or many organizations or enterpris- band number limits, the service development es under specified conditions in a radio service demands and the bands reserved for new tech- or a radiocommunication system. nologies and demands. 21. "Assignment of a radio frequency" means b/ The channel planning divides each band the permission by a managing agency for a sta- into different groups of frequency channels for tion to use a radio frequency or a radio frequen- a specific category of radiocommunication serv- cy channel under specific conditions. ice according to a certain system of technical 22. "Primary service" means a service the standards. The channel planning is elaborated name of which is printed in capital letters on the basis of channel division recommenda- (example: FIXED) in the Table of Allocation of tions and technical standards of the the Radio Frequency Spectrum to Services. International Telecommunication Union for 23. "Secondary service" means a service the establishing the order in using radio frequency name of which is printed in normal letters channels and restricting harmful interference (example: Mobile) in the Table of Allocation of between radio equipment. the Radio Frequency Spectrum to Services. c/ Regional radio frequency plannings establish zones for reusing frequencies for a CHAPTER II specific category of radiocommunication serv- PLANNING ON, AND ALLOCATION OF, ice in a number of band sections in the frequen- RADIO FREQUENCIES cy band of between 30 MHz and 3,000 MHz. The regional radio frequency plannings are Article 5. The radio frequency spectrum elaborated on the basis of recommendations planning and technical standards of the International 1. The radio frequency spectrum planning is Telecommunication Union in order to raise the a plan on the division of the radio frequency efficiency in the use of the radio frequency spec- spectrum into frequency bands reserved for dif- trum and limit harmful interference between ferent services in each period and the prescrip- radio equipment. tion of conditions for establishing the order in Article 6. Implementation of the plannings exploiting and optimally using radio frequen- 1. It is strictly forbidden to manufacture, cies nationwide. import or use radio equipment and radio-wave The Ministry of Post and Telematics shall appliances in Vietnam in contravention of the formulate and submit to the Prime Minister for planning (excluding equipment temporarily approval the national radio frequency spectrum imported for re-export; equipment manufac- planning. tured for export; and equipment for technologi- 2. Basing itself on the national radio frequen- cal display at exhibitions or trade fairs). cy spectrum planning, the Ministry of Post and 2. The plannings on development of elec- Telematics shall promulgate the band planning, tronics, telecommunications, radio and televi- the channel planning and regional radio fre- sion broadcasting and other socio-economic quency plannings. development plannings related to the use of a/ The band planning shall specify the con- radio frequencies must be evaluated by the

87 Ministry of Post and Telematics in terms of Organizations and individuals permitted to use radio frequency before they are submitted to the these withdrawn bands shall have to pay the Prime Minister for approval. conversion expenses incurred by the organiza- 3. For radio equipment and telecommunica- tions and individuals with their band with- tion networks having used radio frequencies at drawn. variance with the planning before the planning Article 7. Adjustment of the planning takes effect, the Ministry of Post and Telematics 1. Basing itself on the national telecommuni- shall prescribe specific measures and time limits cation development policy, Vietnam's laws and for converting the equipment and frequencies to the international agreements which Vietnam has comply with the planning and suit the practical signed or acceded to in the telecommunication conditions for their use in Vietnam on the fol- and radio frequency domain, the Ministry of lowing principles: Post and Telematics shall adjust the planning on a/ For equipment which may be adjusted the radio frequency spectrum according to its with no conversion expense to operate in the competence or submit such adjustment to com- frequencies in compliance with the planning, petent authorities for approval in each period. organizations and individuals must carry out 2. Amendments and adjustments of the plan- the conversion procedures according to the ning on the radio frequency spectrum, once deadline specified in the planning. promulgated by competent authorities, shall b/ For equipment which can not be adjusted constitute part of the planning. to operate in the frequencies in compliance with Article 8. Allocation of bands in service of the planning or equipment which may be defense and security adjusted but require conversion expenses: 1. The allocation of bands for defense and - In the bands or zones of low use demand, security purposes shall adhere to the following organizations and individuals shall be permit- principles: ted to use their equipment till they are fully a/ Bands for long-term use shall be allocat- depreciated but for no more than seven years as ed in proportions suitable to the requirements from the effective date of the planning, or till and tasks, taking into consideration internation- they are requested by the Ministry of Post and al practices; Telematics to stop using such equipment b/ Bands to be used for a definite period because of interference. shall apply only to radio equipment currently in The replacement of broken-down equipment use but not be further furbished; or the extension of networks shall not alter the c/ Bands to be used irregularly for a short deadline for the entire networks to stop operating. period, once being used, must be notified to the - In the bands or zones of high use demand, Ministry of Post and Telematics, except those organizations and individuals must carry out classified State secrets; the conversion procedures according to the d/ Where there arises a need to use bands deadline specified in the planning and bear the reserved for socio-economic purposes for conversion expense. defense or security purposes, the written con- c/ Organizations and individuals having sent of the Ministry of Post and Telematics is their bands withdrawn ahead of the deadline required and it must be ensured that no harm- specified in the planning shall be refunded part ful interference be caused to the communication of their conversion expenses which, however, networks in service of socio-economic activities. shall not exceed the residual value of the equip- 2. In each period, the Ministry of Post and ment at the time of the band withdrawal. Telematics shall assume the prime responsibili-

88 ty for, and coordinate with the Ministry of among radiocommunication services of the Defense and the Ministry of Public Security in, same categories. making proposals on the allocation of bands for 6. Rational prioritization of the demands for defense or security purposes, and submit such the use of frequencies in service of new tech- proposals to the Prime Minister for approval nologies or the efficient use of the radio fre- after consulting the Radio Frequency quency spectrum. Committee. The Ministry of Defense and the Article 10. Radio frequency use charges Ministry of Public Security shall have to organ- 1. Radio frequency use charges are amounts ize the management as well as economical and collected under the State regulations to offset efficient use of frequency bands allocated to direct and indirect costs for the work of manag- them for the right purposes. ing, examining and controlling radio frequen- 3. In case of national security emergency, the cies and handling harmful interference; to Ministry of Defense and the Ministry of Public ensure the implementation of the State's poli- Security may use a number of bands not speci- cies in each period and suit the actual situation. fied at Point a, Clause 1 of this Article to ensure 2. The radio frequency use charge tariffs shall communication in service of defense and securi- be determined on the basis of the value of the ty on the basis of coordinating with the Ministry used frequency spectrum, the extent of frequen- of Post and Telematics under the plans already cy spectrum occupancy, the scope of coverage, agreed upon. the frequency use density of the bands and in the regions in which the licenses are granted. 3. Vietnamese organizations and individu- CHAPTER III als; foreign organizations and individuals in RADIO FREQUENCY LICENSING Vietnam shall only be granted the radio fre- quency licenses after paying the licensing fees SECTION I and radio frequency use charges. The manage- GENERAL PROVISIONS ON LICENSING ment and use of licensing fees and radio fre- quency use charges shall comply with the legis- Article 9. Licensing principles lation on charges and fees. The radio frequency licensing shall adhere to Article 11. Cases of withdrawal of licenses the following principles: 1. Radio frequency licenses shall be with- 1. Compliance with the telecommunication drawn in the following cases where: development strategies and plans; the national a/ Past one year after being granted the radio frequency spectrum planning and other band licenses or past six months after being frequency plannings specified in Article 5 of granted the licenses for use of radio frequencies this Decree. and radio transmitters, organizations or indi- 2. Assurance of efficient, rational and eco- viduals still fail to actually deploy the contents nomical use of the radio frequency spectrum. of their licenses. 3. Observance of the national and interna- b/ Organizations or individuals use fre- tional use norms and technical standards on quencies for wrong purposes, inefficiently, radio frequencies. wasting the radio frequency spectrum they 4. Satisfaction of reasonable demands of have been licensed to use. organizations and individuals for the use of c/ The radio frequency spectrum planning is radio frequencies. adjusted. 5. Guaranty of equality among users and 2. The Ministry of Post and Telematics shall

89 issue decisions to withdraw licenses, clearly zations, of the business registration certificate, stating the reasons therefor. for domestic enterprises, or the investment license, for foreigninvested enterprises or for- SECTION 2 eign parties to business cooperation contracts; BAND LICENSING c/ A lawfully notarized or authenticated copy of the telecommunication network estab- Article 12. Band licenses lishment and telecommunication service provi- Band licenses are those granted to organiza- sion license (or the telecommunication network tions and enterprises, entitling them to use a and telecommunication service experimenta- specified frequency band section under the con- tion license or the exclusive-use telecommunica- ditions on the upper and lower limits of the fre- tion network establishment license), for equip- quency band (including the protective frequen- ment requiring network establishment licenses; cy band section), the scope of coverage, the max- d/ A scheme on establishment of a radio- imum permitted level of out-of-band and out-of- communication network, clearly stating the coverage scope emissions and other conditions. purpose, scope of operation, network configu- Article 13. Conditions for band licensing ration and technology to be used; In cases where the allocation of bands is fea- e/ The written registration of the list of radio sible, the Ministry of Post and Telematics shall transmitters (according to the form set by the base itself on the following specific conditions Ministry of Post and Telematics). to consider and grant band licenses to organiza- 2. A dossier of application for amendment tions and enterprises: and supplementation of the contents of a 1. Having plans on development of license: radiocommunication networks and plans on In the effective duration of their licenses, if commercial provision of telecommunication organizations or enterprises need to amend services, ensuring socio-economic efficiency and/or supplement the contents of their licens- and band use efficiency. es (except for the provision on the bandwidth), 2. For public mobile telecommunication net- they must compile dossiers of application there- works, there must be the demand for band for. A dossier shall consist of: deployment on a national scale; for exclusive- a/ The application for amendment and/or use telecommunication networks and intranets, supplementation of the contents of the license; there must be the high demand for the use of b/ A detailed report on the amendment frequencies in a specified region. and/or supplementation contents, and relevant 3. Equipment must ensure the technical stan- documents. dards according to the regulations of the 3. Ninety days before the expiry date of their Ministry of Post and Telematics. licenses, if organizations or enterprises meet all Article 14. Procedures forgranting band conditions and wish to continue using their licenses allocated bands, they must compile dossiers as 1. A dossier of application for a band license required for application for new licenses. consists of: 4. The place for receiving dossiers, guiding a/ The application for a license, clearly stat- the declaration, handing and receiving licenses: ing the band applied for use and the scope of The Radio Frequency Department - the coverage; Ministry of Post and Telematics. b/ A lawfully notarized or authenticated 5. In the process of operation, organizations copy of the establishment decision, for organi- and enterprises shall have to strictly comply

90 with the conditions prescribed in their licenses; Telematics shall base itself on the following spe- report and add in a timely manner changes in cific conditions to consider and grant licenses to the technical parameters and the list of radio Vietnamese and foreign organizations and indi- transmitters in their radiocommunication net- viduals in Vietnam: works. a/ The use purposes and communication Article 15. Time limits for settlement of the objects are clear and compliant with law provi- band licensing sions; 1. The Ministry of Post and Telematics shall b/ Equipment must satisfy technical stan- evaluate and complete the consideration and dards prescribed by the Ministry of Post and granting of new licenses, amendment and/or Telematics for application (except for equip- supplementation of the contents of licenses ment for exhibitions or technical tests); within 45 days after receiving the complete and c/ Operators of sea-going ship stations, ama- valid dossiers. teur stations and other cases must have radio 2. If the dossiers are incomplete or invalid, operator's certificates granted or recognized by within five days after receiving them, the the Ministry of Post and Telematics; Ministry of Post and Telematics shall have to d/ The locations for antenna installation and notify the applying organizations or enterprises antenna heights must comply with the regula- thereof and guide them to supplement and tions of the Ministry of Post and Telematics and complete their dossiers. other law provisions on aviation safety assur- 3. In case of refusal to grant new licenses or ance; to amend and/or supplement the contents of e/ The designs of the equipment systems licenses, the Ministry of Post and Telematics must ensure the optimal use of the radio fre- shall inform in writing the applying organiza- quency spectrum and electro-magnetic compat- tions or enterprises thereof, clearly stating the ibility with the surrounding environment. reasons therefor. 2. Particularly for satellite communication stations operating via satellites of foreign coun- SECTION 3 tries or international satellite communication LICENSING OF RADIO FREQUENCY organizations, the Ministry of Post and AND TRANSMITTER USE Telematics shall base itself on the specific condi- tions prescribed in Clause 1 of this Article to Article 16. Radio frequency and transmitter consider and grant licenses only in the follow- use licenses ing cases: Radio frequency and transmitter use licenses a/ Satellite communication stations belong- shall be granted to organizations and individu- ing to public telecommunication networks run als entitled to exploit one or many radio fre- by telecommunication enterprises licensed to quencies and transmitters at specified locations establish networks and provide telecommunica- or in specified regions, prescribing the condi- tion services by the Ministry of Post and tions on receiving and transmitting frequencies, Telematics. technical parameters of radio transmission, com- b/ Satellite communication stations of munication conventions and other conditions. organizations and enterprises using the com- Article 17. Conditions for radio frequency munication satellite service provided by and transmitter use licensing telecommunication enterprises licensed by the 1. In cases where the fixing of radio frequen- Ministry of Post and Telematics. cies is feasible, the Ministry of Post and c/ Satellite communication stations in the

91 broadcasting-satellite service, which have the copy of the establishment decision, for organi- press activity permits for radio and television zations, the business registration certificate, for broadcasting via satellite, granted by the domestic enterprises, cooperatives, or the Ministry of Culture and Information. investment license, for foreign-invested enter- d/ Satellite communication stations in the prises or foreign parties to business cooperation maritime mobile- and aeronautical mobile- contracts. satellite services for maritime and aeronautical 2. For ship stations, radio stations on board safety according to the regulations of the river ships and boats, apart from the dossiers International Maritime Organization (IMO) or prescribed in Clause 1 of this Article, the follow- the International Civil Aviation Organization ing papers are also required: (ICAO). a/ The written certification of the gross ton- e/ Satellite communication stations of for- nage and the scope of operation of the ship or eign diplomatic missions and consulates, repre- boat, or of the number of seats (for passenger sentative missions of international organizations ships); in Vietnam, foreign high-level delegations visit- b/ A lawfully notarized or authenticated ing Vietnam and enjoying diplomatic privilege copy of the operator's certificate, granted or rec- and immunities (hereinafter called "foreign rep- ognized by the Ministry of Post and Telematics resentative missions"), foreign correspondents (for ship stations). entering Vietnam for shortterm press activities. 3. For radio transmitters on board fishing The Ministry of Post and Telematics shall means: a/ If they belong to organizations or assume the prime responsibility for, and coordi- enterprises, apart from the papers prescribed in nate with the Ministry of Foreign Affairs and Clause 1 of this Article, a lawfully notarized or the Ministry of Public Security in, detailing the authenticated copy of the fishing-ship registra- licensing of the use of satellite communication tion certificate or written certification of the stations for foreign representative missions. gross tonnage of the ship or boat is also f/ Under the international agreements required. between the Socialist Republic of Vietnam and b/ If they belong to cooperation groups or foreign countries or international organizations individuals, apart from the papers prescribed at on satellite communication. Points a and b, Clause 1 of this Article, a lawful- g/ Other cases prescribed by the Ministry of ly notarized or authenticated copy of the fish- Post and Telematics. ing-ship registration certificate or written certi- Article 18. Dossiers of application for radio fication of the gross tonnage of the ship or boat frequency and transmitter use licenses is also required. 1. Except for the cases prescribed in Article c/ The radio transmitters on board fishing 24 of this Decree, for independently operating means, which operate in the band of between radio transmitters and radio transmitters 26.96 MHz and 27.41 MHz, shall fall into the cat- belonging to the networks requiring no network egory of radio transmitters subject to condition- establishment licenses, a dossier shall consist of: al use and requiring no radio frequency license a/ The application for a license; as prescribed in Articles 24 and 25 of this b/ The declaration of application for a radio Decree. frequency and transmitter use license (made 4. For stations in the broadcasting service, according to a form set by the Ministry of Post apart from the papers prescribed at Points a and and Telematics); b, Clause 1 of this Article, the following papers c/ A lawfully notarized or authenticated are also required:

92 a/ A lawfully notarized or authenticated sion license (or the telecommunication network copy of the press activity permit, granted by the and telecommunication service experimenta- Ministry of Culture and Information (for appli- tion license or the exclusive-use telecommunica- cants being press agencies). tion establishment license). b/ A written proposal of the Ministry of Article 19. Extension of licenses Culture and Information or the Thirty days before the expiry of their licens- provincial/municipal People's Committee (for es, if the organizations or individuals wish to applicants not yet classified as press agencies continue using them (without amendments and but tasked to re-broadcast the programs of the supplements), they shall carry out the proce- central and provincial/municipal radio or dures for applying for extension of their licens- broadcasting stations. es. A dossier of application for license extension 5. For amateur stations, apart from the shall consist of: papers prescribed at Points a and b, Clause 1 of 1. The application for license extension; this Article, the following papers are also 2. A lawfully notarized or authenticated required: copy of the telecommunication network estab- a/ A copy of the amateur radio operator's lishment and telecommunication service provi- certificate, granted or recognized by the sion license (or the telecommunication network Ministry of Post and Telematics; and telecommunication service experimenta- b/ The copies of the passport and permanent tion license orthe exclusive-use telecommunica- residence card or temporary residence certifi- tion establishment license), which remains cates or cards (for foreign operators). valid, for equipment requiring network estab- 6. For cordless telephones (of the extended lishment licenses. subscriber type) not on the list of radio equip- Article 20. Amendment and supplementa- ment subject to conditional use and requiring tion of the contents of licenses frequency use licenses, the dossiers prescribed During the validity terms of their licenses, if at Points a and b, Clause 1 of this Article are the organizations or individuals wish to amend required. or supplement the contents of their licenses, 7. For stations belonging to foreign represen- they must compile dossiers of application there- tative missions, apart from the papers pre- for. A dossier shall consist of: scribed at Points a and b, Clause 1 of this 1. The application for amendment and/or Article, the written proposal of the Ministry of supplementation of the contents of the license; Foreign Affairs is also required. 2. An additional declaration of changes (if 8. For radio transmitters belonging to the any); networks requiring the network establishment 3. Other documents related to the amended licenses, apart from the papers prescribed in and/ or supplemented contents. Clause 1 of this Article, the following papers are Article 21. Time limits for licensing radio fre- also required: quency and transmitter use a/ A scheme on establishment of a radio- 1. The Ministry of Post and Telematics shall communication network, clearly stating the net- have to grant new licenses; extend the validity work configuration, scope of operation, and of license, amend and/or supplement the con- technology and frequencies applied for use; tents of licenses within 20 days after receiving b/ A lawfully notarized or authenticated the complete valid dossiers. copy of the telecommunication network estab- 2. If the dossiers are incomplete, within five lishment and telecommunication service provi- days after receiving them, the Ministry of Post

93 and Telematics shall have to inform the applying tions permit. organizations or individuals thereof and guide 2. When transmitting SOS information or them to supplement and complete the dossiers. signals, stations may transmit waves to attract 3. In case of refusal to grant new licenses; to the attention from frequencies other than those extend the validity of licenses, or to amend reserved exclusively for international and and/or supplement the contents of licenses, the national rescue. Ministry of Post and Telematics shall inform in 3. Upon receiving SOS information and sig- writing the applying organizations or individu- nals, stations must immediately stop transmit- als thereof, clearly stating the reasons therefor. ting waves on the frequencies which might Article 22. Places for receiving dossiers, cause interference to such SOS information, and guiding declarations, and handing and receiv- keep listening on the frequencies on which the ing licenses SOS signals are transmitted, and render immedi- 1. The places for receiving dossiers and ately all necessary assistance, and at the same handing and receiving licenses for the cases of time notify the search and rescue agency thereof. application for new licenses for equipment belonging to radiocommunication networks SECTION 4 requiring network establishment licenses and TYPES OF RADIO EQUIPMENT SUBJECT cases of application for amendment and/or TO CONDITIONAL USE AND REQUIRING NO supplementation of network establishment LICENSES licenses: a/ The Ministry of Post and Telematics; Article 24. Technical and operational condi- b/ The regional Post, Telecommunications tions and Information Technology Departments. 1. Radio equipment subject to conditional 2. The places for receiving dossiers and use include short-range equipment with limited handing and receiving licenses for the cases of capacity, unlikely to cause harmful interference application for new licenses, for extension of the and not to be protected against harmful interfer- validity of licenses, and amendment and/or ence. supplementation of the contents of licenses for 2. Technical and operational conditions of equipment requiring no network establishment radio equipment subject to conditional use licenses; and the cases of application for amend- include allocated frequency channels, limited ment and/or supplementation of network transmitting capacity, mandated transmitting establishment licenses which remain valid: mode, area permitted for operation, and other a/ The Radio Frequency Department; conditions. b/ The regional radio frequency control cen- 3. In each period, the Ministry of Post and ters under the Radio Frequency Department. Telematics shall prescribe and publicize the list Article 23. Use of radio frequencies and of radio equipment subject to conditional use. transmitters in emergency cases The contents of notification must contain fully 1. In emergency cases where the properties the technical and operational conditions of and human life are endangered, organizations equipment subject to conditional use. and individuals may temporarily use the unli- Article 25. Responsibilities of users censed radio frequencies and transmitters, pro- 1. Organizations and individuals using radio vided that they must notify such immediately to equipment prescribed in Article 24 must meet the Radio Frequency Department under the all the prescribed technical and operational con- Ministry of Post and Telematics when condi- ditions and shall not be required to apply for

94 radio frequency licenses. ing and handling law violation acts in the radio 2. It is strictly forbidden to use radio equip- frequency domain. ment which fail to meet the technical and oper- Article 28. Examination forms ational conditions prescribed by the Ministry of 1. Regular examinations shall be conducted Post and Telematics. according to examination programs and plans approved by the Ministry of Post and Telematics. CHAPTER IV 2. Irregular examinations shall be conducted EXAMINATION AND CONTROL when settling complaints or when the Ministry OF RADIO FREQUENCIES, HANDLING of Post and Telematics detects signs of violation OF HARMFUL INTERFERENCE, of the law provisions on radio frequencies. MANAGEMENT OF ELECTROMAGNETIC Article 29. Measures to restrict harmful COMPATIBILITY interference 1. Organizations and individuals licensed to SECTION 1 use radio frequencies and transmitters shall EXAMINATION AND CONTROL OF RADIO have to abide by the provisions of their licenses FREQUENCIES, HANDLING OF HARMFUL and take the following measures to restrict the INTERFERENCE harmful interference-causing possibility: a/ To keep transmission frequencies within Article 26. Subjects to be examined and con- the permitted frequency deviation limit; trolled b/ To reduce the level of unwanted emission Vietnamese as well as foreign organizations to the minimum value; and individuals using radio frequencies and c/ To use the transmission mode with the equipment in the Vietnamese territory must minimum occupied bandwidth (excluding a submit to the radio frequency and equipment number of special cases like spectrum spread); examination and control by the Ministry of Post d/ To restrict wave transmission in unneces- and Telematics. sary directions; Article 27. Examination and control respon- e/ To use the minimum capacity enough to sibilities ensure the communication quality. 1. The Ministry of Post and Telematics shall 2. Stations in secondary services must not have to examine and control radio frequencies cause harmful interference to those in primary and equipment nationwide so as to monitor and services and must not complain about harmful measure technical and operational parameters interference from stations in primary services, as well as the band occupancy extents of sta- with their frequencies having been fixed or to be tions; determine interference sources; detect possibly fixed later. violating stations; handle harmful interference Article 30. Handling of complaints about in accordance with Vietnamese laws and inter- harmful interference national agreements on radiocommunication, 1. Organizations and individuals complain- which Vietnam has signed or acceded to. ing about harmful interference must send to the 2. The results of examination and control, Ministry of Post and Telematics the harmful measurement of technical parameters and loca- interference reports, made according to a set tion of radio equipment, spectrum forms of sig- form, and follow the guidelines of the Ministry nals, call-outs or identification signals and other of Post and Telematics in organizing the identi- evidences shall serve as the basis for determin- fication of interference-causing sources and

95 measures to handle harmful interference. between stations in service of socio-economic Organizations and individuals using radio activities and stations in service of defense and frequencies and transmitters in harmful inter- security ference-affected areas shall have to cooperate 1. Except for the bands already allocated for with the Ministry of Post and Telematics in, and defense and security for long-term use pre- create conditions for, detecting quickly and scribed at Point a, Clause 1, Article 8 of this accurately interference sources, and effectively Decree, when harmful interference occurs handling harmful interference. between stations in service of socio-economic 2. The Ministry of Post and Telematics shall activities and stations in service of defense and handle harmful interference on the following security, the stations in service of defense and principles: security shall proactively change their transmis- a/ Prioritizing within-band emissions and sion frequencies and technical parameters so as restricting unwanted emissions to the lowest to avoid interference. level; 2. In case of necessity, the Ministry of Post b/ Prioritizing primary services while and Telematics shall assume the prime respon- changing transmission frequencies and techni- sibility for, and coordinate with the Ministry of cal parameters of secondary services; Defense, the Ministry of Public Security and c/ In the same radio service, frequencies other concerned ministries and branches in, set- licensed later must be changed while frequen- ting up inter-branch examination teams to deal cies licensed first be prioritized; with harmful interference. d/ Organizations and individuals using radio appliances in science, industry or medi- SECTION 2 cine, electric and electronic equipment, when ELECTRO-MAGNETIC COMPATIBILITY causing harmful interference to stations, must MANAGEMENT take measures to eliminate such interference (except for cases where the radio appliances Article 32. Purposes of electro-magnetic operate in the right bands as prescribed) and compatibility management must cease using these equipment when such Equipment and equipment systems which, use causes harmful interference to the naviga- when being put into use, generate an electro- tion, safety and rescue services; magnetic energy in the frequency band of e/ Pending the overcoming of harmful inter- between 10 KHz and 3,000 GHz must ensure ference, the following measures may be electro-magnetic compatibility so that they can applied: changing frequencies, restricting trans- operate stably, neither being affected with infer- mitting capacity; changing the height and polar- ence nor causing harmful interference to other ization and directional characteristics of trans- equipment and equipment systems. mission antennas; re-distributing working time Article 33. Contents of electro-magnetic of harmful interference-causing stations and compatibility management other necessary measures, to such stations; 1. The State management over electro-mag- f/ The parties that cause interference due to netic compatibility covers the following con- their non-compliance with the contents of their tents: licenses shall have to pay the expenses for a/ Formulating, promulgating, and publiciz- change of frequencies and equipment as well as ing the application of, electro-magnetic compat- for handling of harmful interference. ibility standards; Article 31. Handling of harmful interference b/ Prescribing the electro-magnetic compat-

96 ibility certification for radio equipment, into use or circulation on the market. telecommunication equipment and radio appli- 3. The certification and publicization of elec- ances in science, industry and medicine; tromagnetic compatibility standard compliance c/ Accrediting and designating laboratories shall comply with specific regulations of the to test and agencies to recognize electro-mag- Ministry of Post and Telematics. netic compatibility standard compliance; Article 35. Electro-magnetic compatibility- d/ Inspecting, examining and handling law testing laboratories and -certifying agencies violation acts in the field of electro-magnetic The Ministry of Post and Telematics shall compatibility management. prescribe the requirements on the capability 2. The Ministry of Post and Telematics shall and operation of electro-magnetic compatibili- formulate and promulgate regulations on elec- ty-testing laboratories and -certifying agencies tromagnetic compatibility management. and the procedures for designation of such test- Article 34. Certification and publicization of ing laboratories and certifying agencies. electromagnetic compatibility standard compliance Only the results of electro-magnetic compat- 1. Certification of electro-magnetic compati- ibility testing and certification by testing labora- bility standard compliance tories and certifying agencies designated or In each period, the Ministry of Post and accredited by the Ministry of Post and Telematics shall prescribe the list of radio Telematics may be used in electro-magnetic equipment, telecommunication equipment and compatibility management activities. radio appliances in science, industry and medi- cine, which must be certified for electro-mag- CHAPTER V netic compatibility standard compliance. INTERNATIONAL COORDINATION Organizations and individuals manufactur- AND REGISTRATION OF RADIO ing and/ or importing equipment on this list FREQUENCIES AND SATELLITE ORBITS shall have to carry out the procedures forstan- dard compliance certification and affix the elec- Article36. Subjects of international coordina- tro-magnetic compatibility standard compli- tion and registration ance marks according to regulations on their Organizations and individuals, when using manufactured and/or imported equipment radio frequencies for international radiocom- before putting them into use or circulation on munication, for the systems of satellites on the the market. geostationery or non-geostationery orbits or 2. Publicization and assurance of electro- when using radio frequencies in such a way magnetic compatibility standard compliance of likely to cause harmful interference to radio equipment. services of other countries, or wishing to be Organizations and individuals manufactur- internationally recognized, must effect interna- ing and/ or importing electric and electronic tional coordination and/or registration of radio equipment for civil use, equipment with unwant- frequencies or satellite orbits. ed radio emissions and other equipment shall Article 37. Responsibilities of the Ministry of have to publicize and ensure their equipment be Post and Telematics compliant with relevant electromagnetic com- The Ministry of Post and Telematics shall patibility standards and affix the electromagnet- have the following responsibilities: ic compatibility standard compliance marks 1. To organize the coordination with other according to regulations on their manufactured countries and the registration with the and/or imported equipment before putting them International Telecommunication Union of

97 radio frequencies and satellite orbits in order to and compare them with the international and protect the national interests and sovereignty. national regulations on technical and profes- 2. To specify the management, use and inter- sional standards so as to reach agreement on the national registration of satellite orbits under contents of, and carry out the procedures for, Vietnam's sovereignty. international registration. 3. To assume the prime responsibility for, 4. The use and exploitation of internationally and coordinate with the Ministry of Foreign recognized radio frequencies must comply with Affairs, the Ministry of Defense and the the provisions of the international Radio Ministry of Public Security in, organizing the Regulations. coordination of radio frequencies with other Article 40. International registration of satel- countries bordering on Vietnam. lite orbits Article 38. Responsibilities of organizations Organizations and enterprises wishing to and individuals make international registration of satellite orbits 1. Vietnamese as well as foreign organiza- must submit their dossiers to the Ministry of tions and individuals in Vietnam shall be Post and Telematics and strictly carry out the obliged to comply with the regulations of the procedures prescribed by the International Ministry of Post and Telematics in effecting Telecommunication Union and the Ministry of international coordination and registration of Post and Telematics. radio frequencies and satellite orbits. 2. Organizations and individuals wishing to CHAPTER VI use the positions of satellite orbits under COMPLAINTS, DENUNCIATIONS, Vietnam's sovereignty must obtain the permis- INSPECTION AND HANDLING OF sion of the Ministry of Post and Telematics and VIOLATIONS observe the regulations on satellite orbit regis- tration and coordination charges and other rele- Article 41. Inspection vant law provisions. All Vietnamese and foreign organizations Article 39. International registration of radio and individuals in Vietnam, that use radio fre- frequencies quencies, manufacture and use radio equip- 1. A dossier of application for international ment and/or equipment subject to electro-mag- registration of radio frequencies shall consist of: netic compatibility certification, shall submit to a/ The official dispatch, applying for inter- the inspection and examination by the special- national registration of radio frequencies; ized post, telecommunication and information b/A copy of the license for use of radio fre- technology inspectorate and by competent State quencies and transmitters; c/ The written declaration for international agencies. registration of radio frequencies (made accord- Article 42. Handling of violations ing to a set form). 1. Organizations and individuals commit- 2. Dossier-receiving place: ting acts of violating the law provisions on radio The Radio Frequency Department, the frequencies shall, depending on the nature and Ministry of Post and Telematics. seriousness of their violations, be administra- 3. Basing itself on the dossiers of application tively sanctioned or examined for penal liabili- for international registration of radio frequen- ty, if causing damage, they must pay compensa- cies, the Ministry of Post and Telematics (the tion therefor according to law provisions. Radio Frequency Department) shall consider 2. Those who abuse their positions and pow-

98 ers to commit acts of violating the provisions of CHAPTER VII this Decree and other relevant law provisions in IMPLEMENTATION PROVISIONS the radio domain shall, depending on the nature and seriousness of their violations, be Article 44. Implementation effect disciplined or examined for penal liability, if This Decree takes effect 15 days after its pub- causing damage, they must pay compensation lication in the Official Gazette. All previous reg- therefor according to law provisions. ulations contrary to this Decree are hereby Article 43. Complaints and denunciations annulled. 1. Organizations and individuals shall have Article 45. Implementation responsibility the right to complain about administrative deci- The Ministry of Post and Telematics shall, sions and acts of State agencies, officials and within the scope of their functions and powers, employees in the implementation of this Decree. have to guide the implementation of this 2. Individuals shall have the right to Decree. denounce to competent agencies organizations' The ministers, the heads of the ministerial- or individuals' acts of violating the provisions level agencies, the heads of the Government- of this Decree. attached agencies and the presidents of the 3. The competence, order and procedures for People's Committees of the provinces and cen- settling complaints and denunciations shall trally run cities shall have to implement this comply with the law provisions on denuncia- Decree. tions and complaints.

On behalf of the Government Prime Minister

PHAN VAN KHAI

99 End Notes

Concessioning of Services the following information on call comple- tion ratios. In Vietnam there has been no concessioning Successful call ratios: of local or other telecommunications servic- es. There has been little or no discussion of using Build-Own-Tranfer (BOT) or similar 2000 43.5% 60% 2001 43.25% 64.45% mechanisms in telecommunications. As 2002 53% 63% discussed in the paper, private sector par- ticipation to date has been limited to: 1. Source: VNPT, 2003 figures. business cooperation (BCC) schemes, which convey no ownership rights, even tem- These ratios would appear to be quite porarily, or 2. investment via the Vietnam- low by world and regional standards. US BTA. Focus on Telecommunications Quality of Service This chapter focuses largely on telecommuni- Data are not available from the ITU, VNPT or cations, rather than ICT, in order to be compat- MPT on the number of faults per 100 lines per ible with the overall study on infrastructure month in Vietnam. However, VNPT did supply issues of which this chapter forms a part.

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