 |
| Installing a 5G telecom mast__Photo: VNA |
This article introduces highlights of Decree 163/2024/ND-CP detailing a number of articles of, and providing measures to implement, the Law on Telecommunications, particularly provision of telecommunications services and telecommunications service market.
Pham Nghiem Xuan Bac, Dang Trong Hieu, Tran Tu Anh
Vision & Associates[1]
On December 24, 2024, the Government issued Decree 163/2024/ND-CP, detailing a number of articles of, and providing measures to implement, the Law on Telecommunications (Decree 163). The Decree, effective on December 24, 2024, and replacing Decree 25/2011/ND-CP of April 6, 2011 (Decree 25), has been formulated based on Telecommunications Law 24/2023/QH15, which was adopted by the National Assembly on November 24, 2023, and took effect on July 1, 2024 (the 2024 Telecommunications Law), has a number of notable new or amended provisions when compared to Decree 25.
Dealing in telecommunications services
Regarding the classification of telecommunications services, based on the clear approach of the 2024 Telecommunications Law with respect to data center services, cloud computing services, and OTT services as telecommunications services, Decree 163 expands basic telecommunications services with transmission services for radio and television, transmission services for machine-to-machine connections, virtual private network services, services for leasing the whole or part of telecommunications network, and additional telecommunications services of basic telecommunications services; and concurrently adds data center services, cloud computing services, and basic telecommunications services on the Internet to value-added telecommunications services.
Regarding provision of telecommunication services, worthy of note, Decree 163 clearly stipulates that provision of telecommunications services includes resale of telecommunications services to telecommunications service users. Decree 163 maintains the provisions of Decree 25, saying that unless otherwise provided by a treaty to which Vietnam is a contracting party, the provision of telecommunications services across borders to telecommunications service users in the territory of Vietnam (but not only on the mainland as stipulated in Decree 25) must be through a commercial agreement with a Vietnamese telecommunications enterprise that has been granted a license to provide telecommunications services, including international communications. However, this restriction does not apply to data center services, cloud computing services, and basic telecommunications services on the Internet. Decree 163 also adds regulations on the provision of telecommunications services via satellite fixed telecommunications networks and satellite mobile telecommunications networks whereby telecommunications enterprises participating in commercial agreements with foreign organizations must have a plan so that all traffic generated by satellite subscriber terminals on the mainland territory of Vietnam must go through a ground gateway station (gateway) located on the territory of Vietnam and connected to the public telecommunications network.
Futhermore, Decree 163 clearly defines certain rights and obligations of a number of entities when providing and using telecommunications services. For example, the obligation of enterprises providing basic telecommunications services on the Internet, cloud computing services, email services, voicemail services, value-added tax services; foreign organizations providing basic telecommunications services on the Internet, data center services, cross-border cloud computing services to service users in Vietnam’s territory to notify the Vietnam Telecommunications Authority of service provision; the obligation of providers of basic telecommunications services on the Internet to register, store and manage information of service users; and rights and obligations of foreign organizations providing basic telecommunications services on the Internet, data center services, cloud computing services across borders to service users in the territory of Vietnam.
Specifically, foreign organizations providing basic telecommunications services on the Internet across borders to users in the territory of Vietnam have the following rights and obligations: (i) not to compensate for indirect damage or unearned profits due to the provision of telecommunications services that do not guarantee time and quality and have other rights as prescribed by relevant laws; (ii) not to cause harmful interference, damage equipment, construction works, telecommunications networks; or not to harm the legal operations of telecommunications infrastructure of other organizations and individuals; (iii) to urgently stop the provision of telecommunications services in case of riots, use of telecommunications services to oppose Vietnam, or violations of national security at the request of competent state agencies as prescribed by law; (iv) to prevent, combat, and block illegal messages and calls as prescribed by the Government; (v) to declare the quality of services provided by themselves if they own the network infrastructure or have an agreement with a telecommunications enterprise with a network infrastructure; declare the quality of services provided by themselves depending on the quality of the telecommunications network and telecommunications services managed and provided by other telecommunications enterprises if they do not own the network infrastructure or do not have an agreement with a telecommunications enterprise with a network infrastructure; (vi) to be responsible for the quality of services according to the declared standards; ensure the correctness, adequacy and accuracy of service prices according to the contract for providing and using telecommunications services; (vii) to be responsible for notifying users of the necessity and must obtain the user’s consent before accessing to the features on the service user’s terminal equipment to serve the provision of services if necessary; and (viii) not to take advantage of telecommunications activities to oppose Vietnam, infringe upon national security, social order and safety, or cause damage to the State’s interest and lawful rights and interests of organizations and individuals; etc.
Telecommunications service market
Regarding the holding cap in telecommunications service business, previously, according to Decree 25, individuals and organizations holding more than 20 percent of the charter capital or shares in a telecommunications enterprise were not allowed to own more than 20 percent of the charter capital or shares of another telecommunications enterprise operating in the same telecommunications service market on the List of telecommunications services. Decree 163 now loosens this regulation, stipulating that the above-mentioned ownership restriction only applies to shareholders who own more than 20 percent of total voting shares at a telecommunications enterprise and does not apply to shareholders who own shares of other types.
With regard to the telecommunications service market, Decree 163 provides specific criteria to determine the State-managed telecommunications service market and telecommunications enterprises with a dominant market position on the State-managed telecommunications service market.
Accordingly, the criteria for determining the telecommunications service market managed by the State include three, of which two are quantitative criteria: (i) an index measuring the level of market concentration of over 1,800 (with formula), and (ii) the proportion of service revenue accounting for 10 percent or more of the total revenue of telecommunications services of the entire market.
Meanwhile, the determination of whether or not a telecommunications enterprise holds a dominant market position on a certain telecommunications service market managed by the State is based on the enterprise’s market share, i.e., the percentage of one of the following factors: telecommunications service revenue; number of telecommunications subscribers generating traffic; number of other service units sold over total telecommunications service revenue; or total number of telecommunications subscribers generating traffic or total number of other service units sold on that telecommunications service market. A telecommunications enterprise will be determined to have a dominant market position if it has a market share of 30 percent or more or has significant market power on the State-managed telecommunications service market.
A telecommunications enterprise is determined to have significant market power on the State-managed telecommunications service market if it has a market share of between 10 percent and under 30 percent on that telecommunications service market and falls into one of the following cases: (a) the total assets recorded in the enterprise’s balance sheet in the financial reporting system of the previous year account for 30 percent or more of the total assets in the financial reporting of the previous year of telecommunications enterprises on that telecommunications service market; (b) the enterprise’s North-South backbone capacity[2] accounts for 30 percent or more of the total North-South backbone capacity of telecommunications enterprises participating in that telecommunications service market; or (c) for the telecommunications service market on the terrestrial mobile telecommunications network (terrestrial mobile telecommunications services), in addition to the criteria specified at points (a) and (b) above, the enterprise is also determined to have significant market power if the number of telecommunications service points with a specific address owned and established by the enterprise itself accounts for 30 percent or more of the total number of telecommunications service points with a specific address of telecommunications enterprises participating in the terrestrial mobile telecommunications service market, or the rate of the population covered by the enterprise’s terrestrial mobile telecommunications network is 90 percent or more of the total population of the country.
Regarding competition in telecommunications business activities, Decree 163 has cancelled the regulations related to the handling of competition cases in telecommunications activities and economic concentration in telecommunications business activities, leaving it to the law on competition. From now on, economic concentration activities in the field of communications no longer need to seek the opinion of the line management agency and will comply with the general provisions of the Competition Law regarding notification of economic concentrations.
Charter capital and conditions for telecommunications network deployment
Fixed-land public telecommunications networks
An enterprise applying for a license to provide fixed-land public telecommunications services with network infrastructure, which is a type of fixed terrestrial public telecommunications network, without use of radio frequency bands, must continue to meet the condition on charter capital and condition on telecommunications network deployment[3] as prescribed in Decree 25.
However, if the applicant uses radio frequency bands, the conditions under Decree 163 will be different from those under Decree 25. While maintaining the condition on network deployment prescribed in Decree 25, Decree 163 no longer sets a fixed legal capital but requires a minimum charter capital and, more importantly, says that the applying enterprise must have fully contributed charter capital in accordance with the enterprise law.
Specifically, in case of applying for a license for establishing a network within a region[4], the enterprise must have a charter capital of at least VND 100 billion and commmit to investing total capital investment of at least VND 300 billion in the network within the first three years after obtaining the license;
For those wishing to establish a nationwide network[5], this figures will be VND 300 billion and VND 1 trillion. However, the condition that the enterprise must commit to investing at least VND 3 trillion in 15 years to develop the telecommunications network as prescribed in the license under Decree 15 has been abolished.
If the use of radio frequency bands or radio frequency channels is granted through auctions or competitions for the right to use radio frequencies or re-issuance of radio frequency band use licenses, the condition for deploying telecommunications networks will be similar to that for deployment of telecommunications networks when participating in an auction or a competitive offer for the right to use radio frequencies or applying for re-issuance of radio frequency band use licenses according to the law on radio frequencies.
Terrestrial mobile telecommunications networks
Similarly to those applying for licenses to establish fixed-land public telecommunications networks, those wishing to establish fixed terrestrial mobile telecommunications networks are no longer subject to legal capital requirement but must possess a certain charter capital level and have fully contributed such charter capital in accordance with the enterprise law.
For those enterprises applying for a license to establish a terrestrial mobile telecommunications network that does not use radio frequency bands (also known as virtual mobile telecommunications networks), the conditions are: having a minimum charter capital of VND 300 billion and having fully contributed charter capital in accordance with the enterprise law; committing to investing a total investment capital of at least VND 1 trillion in the network in the first three years after being licensed; and having a written agreement on leasing a terrestrial mobile telecommunications network. The condition that enterprises must commit to investing at least VND 3 trillion in 15 years to develop the telecommunications network as stipulated in the license under Decree 25 has been removed.
As for enterprises applying for a license to provide telecommunications services with network infrastructure - a type of public terrestrial mobile telecommunications network, using radio frequency channels, the following conditions must be met: having a minimum charter capital of VND 20 billion and having fully contributed charter capital; and committing to investing a total investment capital of at least VND 60 billion in the network in the first three years after obtaining the license.
If the right to use radio frequency channels is granted through auctions or competitive offers for the right to use radio frequencies, the condition on telecommunications network deployment are the same as cases of participating in auctions or competitive offers for the right to use radio frequencies in accordance with the law on radio frequencies.
If the right to use radio frequency bands is granted through auctions or competitive offers for the right to use radio frequencies, or a license to use radio frequencies is re-granted, the conditions include having a charter capital of at least VND 500 billion and having fully contributed charter capital; and commiting to deploying the telecommunications network when participating in the auction or competive offer for the right to use radio frequencies or applying for the re-grant of the license for use of radio frequency bands as prescribed by the law on radio frequencies (in lieu of a commitment to investing at least VND 2.5 trillion in the first three years and at least VND 7.5 trillion in 15 years to develop the telecommunications network as stipulated in the license as prescribed in Decree 25).
Satellite fixed and satellite mobile public telecommunications networks
For enterprises applying for a license to provide services with network infrastructure, which is fixed satellite or mobile satellite public telecommunications network, the conditions are: having a charter capital of at least VND 30 billion and having fully contributed charter capital and committing to investing a total investment capital of at least VND 100 billion in the network in the first three years after obtaimning the license.
Noteworthily, Decree 163 has a completely new provision on determination of compliance with investment capital requirement, which is part of the condition on telecommunications network deployment. Accordingly, an enterprise applying for a license for provision of telecommunications services with network infrastructure will be regarded as meeting the investment capital requirement if the investment capital amount stated in its letter of commitment to fulfulling the condition on telecommunications network deployment is not lower than the corresponding minimum investment capital prescribed in Decree 163. Except cases of applying for modification or re-issuance of a telecommunications service business license, an enterprise will be deemed as meeting the requirement on investment capital if it falls into either of the following cases: (i) the actual amount invested to establish the previous telecommunications network (calculated according to the value at the time of investment) is not lower than the corresponding total minimum investment capital prescribed in Decree 163; or (ii) the investment amount stated in the written commitment to implement the conditions on telecommunications network deployment is not lower than the difference between the corresponding total minimum investment capital prescribed in Decree 163 and the amount the enterprise has invested to establish the actual telecommunications network previously (calculated according to the value at the time of investment).
Other contents
Decree 163 also provides specific measures and guidelines for fulfillment of administrative procedures in the field of telecommunications. Accordingly, enterprises applying for grant, modification and renewal of licenses for provision of telecommunications services, licenses for installment of telecommunications cables at sea or licenses for testing telecommunications networks and services will have to send just a single dossier to the Telecommunications Authority under the Ministry of Information and Communications, rather than submitting three to five dossiers to different telecommunications management agencies.
Regarding the management of terrestrial mobile subscriber information and terrestrial mobile SIMs, previously, the authentication, storage, use of terrestrial mobile subscriber information and processing of terrestrial mobile SIMs with non-compliant mobile subscriber information in telecommunications service business were regulated and guided in different circulars and guidelines; now Decree 163 has for the first time provided specific and systematic instructions on this issue.-
[1] Hanoi Office
Add: Unit 308-310, Floor 3, Hanoi Towers
49 Hai Ba Trung St., Hoan Kiem Dist., Hanoi, Vietnam
Tel: +84-24-3934 0629 Fax: +84-24-3934 0631
Email: vision@vision-associates.com
Ho Chi Minh City Office
Add: Unit 905, Floor 9, CitiLight Tower
45 Vo Thi Sau St., District 1, HCMC, Vietnam
Tel: +84-28-3823 6495 Fax: +84-28-3823 6496
Email: hcmvision@vision-associates.com
Website: http://www.vision-associates.com
[2] The design capacity of the wired telecommunications transmission line passing through Hanoi, Da Nang and Ho Chi Minh City at the same time.
[3] The making of a commitment to investing a certain capital amount in the telecommunications network in a certain period of time after being licensed is considered satisfaction of the condition on network deployment.
[4] A region under Decree 163 embraces between two and 30 provinces and/or centrally run cities, instead of between 15 and 30 provinces and/or centrally run cities as prescribed in Decree 25.
[5] Over 30 provinces and centrally run cities.
