OTT apps are a threat to telecoms providers worldwide as most will offer equivalent or better services for free from which telcos have traditionally generated revenue. This turns the operators into “dumb pipes” as they are often referred – leaving them to deal with increasing amounts of data being passed through their networks by these services.
In Vietnam, the telecommunication ministry is drafting a bill which would bring foreign messaging apps under government control to continue operating in the country. Under the proposals, OTT services such as Viber, Line, Skype, and WhatsApp must install servers in Vietnam or sign deals with local telco companies in order for them to use and monetise from their networks.
A representative of Viettel – one of the largest telcos operating in Vietnam – reported last year: “We will lose 40 to 50% of our revenue if all of our 40 million customers use Viber instead of traditional call and text”. Since then, a local app called Zalo has gained in popularity and become a market-leader in Vietnam with over 20 million users…
(Chart Credit: Jana)
If the scale of the telcos’ problem isn’t yet apparent, IDC estimates there are around 21 – 22 million smartphone users in Vietnam. If correct, this would mean 95% of the country’s smartphone users are using Zalo for their calls and texts.
“While Vietnamese companies provide telecom services have to strictly follow Vietnamese laws, pay tax and fulfill many other duties, foreign OTT firms are providing services on the country’s broadband infrastructure and do not have to undertake any obligations,” a senior executive of a large mobile network in Vietnam said.
“This creates an unhealthy playing field for players, threatens the development of domestic businesses and affects national security,” he added.
But the government proposals are close to the criticised proposals by ISPs to their respectable regulators around the world which would allow them to charge OTT services for use of their networks. It is thought this could affect net neutrality as operators could introduce “fast lanes” for services who can afford to pay for a better service for their customers, and leave startups with “slow lanes” which would affect the competitive service they can offer against the bigger players.
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