Ministry: OTT isn't to blame for recent 3G price hikes

Sep 10th at 13:30

10-09-2013 13:30:03+07:00

While a recent hike of 3G package costs was attributed to the rampant growth of Over-The-Top (OTT) services, the Ministry of Information and Communications has said it was in fact because 3G service fees were falling under production costs.

Speaking at a recent meeting, Information and Communications Deputy Minister Le Nam Thang said the rise of 3G service fees would help mobile carriers to cover their investment costs for building 3G network over the last several years.

"People should be familiar with the hike of telecom services, just like the up and down of prices in other services such as electricity, water and medical care," Thang added.

The country's three biggest mobile carriers, Viettel, MobiFone and VinaPhone, hiked their fees on 3G packages for mobile internet use by 25 per cent, from VND40,000 (US$1.9) to VND50,000 ($2.4) a month.

Viettel's deputy general director Nguyen Viet Hung said the company initially set a low 3G tariff to attract subscribers to fill the networks bandwidth, but as the number of users has increased substantially, it had to raise prices as current tariffs are under the production cost.

According to figures released by mobile operators in Viet Nam, the price of 3G in the country is reportedly 10 times lower than in China and 40 times lower than Europe.

The use of Over The Top (OTT) services comes mainly from foreign providers and is expected to cause losses of VND100 billion ($5 million) each month, around 9-10 per cent of the turnover of local telecoms companies.

Market watchers cited financial losses being made to popular OTT software companies such as Viber, WhatsApp, Yahoo Messenger, Facebook Messenger, Skype and iMessage that allow smartphone services based on 3G connections for free.

However, Deputy Minister Le Nam Thang said OTT is the outstanding technology success of recent times, which brings many benefits to mobile users with reduced prices.

"Therefore, we should encourage the development and use of OTT instead of curbing it," he added.

Thang said the ministry will compose a legal document governing OTT in which it will encourage co-operation between mobile carriers and OTT providers.

Viettel's deputy general director Nguyen Manh Hung agreed, saying that OTT is a milestone in the 100 years of telecommunications history, and this is the chance for mobile carriers to transform from traditional mobile service to non-voice services.

Deputy Head of the Telecom Department under the Ministry of Information and Communication Le Thi Ngoc Mo said OTT is a new technology trend that mobile operators cannot fight. "Instead, they should work with OTT providers in ways that could benefit both of them as well as mobile users."

MobiFone's deputy general director Nguyen Dinh Chien said there should be a "win-win" method between mobile carriers and OTT providers, which will benefit both.

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