MIC tells MO to pocket 70% of information content service revenue at maximum

MIC tells MO to pocket 70% of information content service revenue at maximum

The Ministry of Information and Communication has limited mobile network operators’ profits from working with information content-service providers must to a maximum of 70 percent of the revenue, putting an end to a long dispute about profit sharing.

Mobile operators, which have an infrastructure base and technical solutions, and CSPs, which produce information content, had not been able to agree on the profit-share ratio.

They believed that without their infrastructure systems, the content services would never be able to reach to customers. The majority of the customers are the mobile networks’ users.

However, CSPs believe that content is the “spirit” of the service, and they deserve to enjoy higher profits.

But the mobile operators had only accepted to give 30 percent of revenue to CSPs, a ratio which CSPs said was too low and unfair for them.

As a result, the ministry, which said they should negotiate a soul between themselves, finally decided to issue a legal document stipulating the maximum profit proportions each party could enjoy.

Nguyen Thanh Chung, a senior official at the ministry, said the document would be referred to in case the involved parties cannot reach a consensus about the profit sharing.

Under the draft circular compiled by the ministry, if the service fees are VND1,000 or lower, mobile operators will receive no more than 70 percent of the services fees to be collected from customers.

As for the services with fees over VND1,000 and under VND10,000, the mobile operators will get no more than 50 percent of the services’ revenue. The ratio of 30 percent will be applied to services with fees of over VND10,000.

In case the charges are calculated on the basis of units of time (daily, monthly, yearly), the ministry will receive no more than 40 percent.

Chung explained that, in principle, CSPs will enjoy a higher profit share from their content services with higher fees. The same principle is used in many other countries.

The ministry’s Deputy Minister Le Nam Thang also said that, as partners in business cooperation contracts, the two should negotiate on profit sharing.

In principle, CSPs must have higher profits for services with content that has added value and is creative. As for services with simple content, it will be the ministry which can enjoy a higher profit share.

Reports showed that simple content services, such as messages about lottery information, account for 30-40 percent of CSPs’ revenue.

MobiFone and VinaPhone, the two largest mobile operators in Vietnam, say they offer 65 percent of revenue to CSPs.

vietnamnet