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Having low profit sharing ratios, vietnamese mobile content provider c ps have one foot in the grave
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Having low profit sharing ratios, vietnamese mobile content provider c ps have one foot in the grave

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  • 1. Having Low Profit Sharing Ratios, Vietnamese MobileContent Provider-CPs Have One Foot in the Grave 12, Nov 2012The draft of a new legal document is believed to “create an equality between content serviceproviders (CPs) and mobile network operators,” which is really the good news for CPs. However, whilewaiting for the new regulations to take effects, CPs have been trying to do everything they can tosurvive the current difficulties. Exhibition: a sms spamHow much for the involved parties?CPs have been repeatedly complaining that mobile network operators have been bullying them whenthey cooperate in providing content services.Currently, mobile network operators can enjoy the “bigger piece of the cake,” 60-70 percent of theturnover from content services, while CPs can pocket the remaining 30-40 percent.The Ministry of Information and Communication (MIC) has admitted that CPs have been on adisadvantage in doing business with mobile network operators. Since making modest profits, a lot of CPs 1
  • 2. have to take extra jobs to earn their living. Especially, many of them still have been found out asdelivering spam messages to get additional money.The draft decree on information technology services compiled by MIC is believed to settle the currentproblem – the unreasonable profit sharing ratio between CPs and network operators. The draftdocument clearly stipulates that the profit allocation needs to go in a transparent way, and that CPswould get the higher profit proportions than mobile network operators.The draft decree also stipulates that MIC would grant or allocate prefix number bands through auctionsand competitions directly to CPs, which means that CPs would not have to ask for the number bandsfrom telecom groups as currently said.The regulations, once taking effect, would create favorable conditions for content service enterprises todevelop, because they help CPs earn bigger money and stop the reliance of CPs on mobile networkoperators in terms of prefix number bands for SMS.In general, MIC has affirmed that the ministry now tries to set up a reasonable profit sharing profit toremove the discriminatory treatment which has been existing between content service enterprises andtelecom groups.CPs have to take extra jobs to surviveThe information proves to be the good news for CPs. However, they still have doubts if this would cometrue, since the regulations just remain on… paper. Meanwhile, telcos repeatedly say that the profitsharing is the own business of enterprises and involved parties, while the State should not intervenetheir business deals.Nguyen Manh Ha, General Director of VMG, said that while waiting for the new regulations to takeeffects, CPs have to do everything they can to live to wait for better things.He said that CPs have to cut down the budget for the media campaigns to introduce new services, whilethey have been living on old services (the services through SMS like lottery, music downloading, ring tondownloading, games…) on the basis of the existing clients and distribution channels, even though themarkets have become nearly saturated.“We get only 25 percent of the profit for the new services, which is even lower than the profit ratio forold services,” Ha said.As such, CPs have been falling into dilemma. The more they try to develop new services, the biggerlosses they would incur, because they have no budget for communication campaigns to developsubscribers. 2
  • 3. CPs have been advised to focus on developing apps for smart phones instead of the basic services onmobile networks. However, Ha said this is just an idea, not an effective solution to CPs, because most ofthe apps for smart phones have short life circles, while the investment rates are very high. (Source: Buu Dien) 3