June 26, 2023
Vietnam Signals Intent to Loosen Control Over OTT Telecom and Cloud Services

Vietnam’s Ministry of Information and Communications (MIC) organized a workshop with industry representatives on June 19, 2023, to discuss its future policy direction for over-the-top (OTT) telecom services and internet data center (IDC) and cloud computing services. OTT telecom services, in the MIC’s interpretation, are communication services such as text messages or voice calls provided over the internet—for example, the services of Zalo, WhatsApp, WeChat, etc.

The workshop, the first in an expected series, focused only on the discussion of policy on how to regulate these services.

Light-Touch Management Approach

A very positive signal of the MIC in the workshop was its clear intention to apply a “light-touch” approach to management. For cross-border provision of OTT telecom services and IDC/cloud computing services, the MIC intends to require notification and a post-check mechanism, instead of a heavy licensing or commercial arrangement regime like the one applicable to traditional telecom services. In addition, there is no limitation on foreign investment if foreigners would like to provide these services in Vietnam.

With regard to domestic service providers, the MIC proposes a registration regime with a similar post-check mechanism. The MIC’s reason for registration instead of notification is because the provision of these services by domestic companies may involve setting up data center/cloud systems which require consideration of various issues including location, electricity sources, and connection with telecom infrastructure such as marine cable. However, the MIC is also hoping to make the registration process as light as possible for enterprises (for example, using online registration) to provide a favorable environment and conditions to facilitate development of the industry without obstacles or cumbersome administrative procedures for companies’ operations.

For providers of these services, the MIC is also considering an exemption from the responsibility to pay fees for telecommunications activities rights, and from payment to the Telecom Universal Service Fund, which traditional telecom companies are subject to. However, the provision of these services still needs to comply with relevant regulations on consumer protection, data protection, cybersecurity, network information security, national security, and service quality.

The MIC is contemplating the requirement of a service quality announcement. If the OTT telecom or IDC/cloud computing service providers can assure the quality of their services, they should let users know. If they cannot assure the quality of their service—for example, if they have no commercial arrangement with telecom service providers for the provision of their services or their service quality depends entirely on the service quality of the telecom carriers—this also needs to be publicly announced.

Regulated Under the Telecom Law?

Whether these OTT telecom services and IDC/cloud computing services should be regulated under the Telecom Law was a key issue discussed in the workshop. The MIC explained that the WTO defines value-added telecom services as services for storing and retrieving information through telecom networks, and Vietnam’s schedule of commitments on telecom services in the WTO also mentions information storage and information retrieval services. As IDC/cloud computing services involve storing and retrieving information through telecom networks, they should be considered telecom services. Countries such as China, Thailand, Korea have set a precedent by regulating IDC/cloud computing services as telecom services under their telecom laws. Currently, there are no regulations on conditions for market access and business conditions for providing these types of services, while Vietnam’s Investment Law clearly stipulates that data center services are conditional services. Thus, there is a need to regulate these services under the Telecom Law to overcome legal gaps and create facilitation and transparency for enterprises investing in and providing these services.

With regard to OTT communication services, 27 countries of the EU, China, and Korea are considering these services as telecom services and regulating them under their telecom laws. These OTT services are used more and more frequently and potentially will replace traditional telecom services, while the existing Telecom Law does not regulate these services, leading to the rights of users and information security not being ensured. Therefore, according to the MIC, it is appropriate to regulate these OTT services under the Telecom Law. However, according to the MIC, the Telecom Law will only provide a framework and will leave all the details to be regulated by a decree.

It is worth noting that the MIC only intends to regulate the provision of OTT telecom services when such services are the primary business of a company. When communication functions are merely add-ons and the company’s main business is not telecom services—for example, the chat/call functions of transportation services like Grab or social networks like YouTube—the MIC will consider exempting these add-on services from the scope of application of OTT telecom services.

While the industry representatives in the meeting were highly appreciative of the MIC’s approach and its openness and willingness to work closely with businesses and take their input into account, they expressed a strong sentiment for not including these services under the Draft Telecom Law. Rather, if these services need to be regulated, they should be regulated in a separate legal document.

The industry argument was that with the convergence of technology and the integration of many sectors and services, the differences between value-added telecom services and IT services have become very blurred and many countries have started deviating from this distinction. Data center/cloud computing services are more of the nature of IT services instead of telecom services. Also, OTT communication services do not use telecom resources such as frequency or numbering, they do not own telecom infrastructure to provide services, and they do not require interconnection to the public telecom network; they are essentially just applications and, like any application, they use the internet for service provision. Therefore, they should not be considered telecom services.

If the MIC still considers them telecom services and wishes to regulate them under the Telecom Law, the industry representatives strongly recommended that there should be separate chapters of the law and separate rules for these services, and the language of the law must clearly exempt these services from general rules governing traditional telecom services. In addition, the wording of the regulations should be straightforward and easy to understand, to avoid ambiguity and confusion in interpretation and implementation.

The MIC reassured the industry of their light-touch management approach and said this was just a matter of drafting techniques in putting those provisions under the Draft Telecom Law, and the MIC will involve the industry closely in the drafting process to ensure there is no confusion as to the policy intention in regulating these services.

 Moving Forward

The MIC appeared very open and willing to take input from the industry. It will continue holding workshops and dialogues and closely engage the industry in the drafting process, so that the Draft Telecom Law (amendment) which will be submitted to the National Assembly for a second reading and approval in November 2023 will achieve the purposes of creating transparency and facilitating an environment for business development and technology innovation.

It is therefore strongly recommended that businesses, associations, and experts should pay attention to the drafting process of this Draft Telecom Law and actively contribute opinions to the MIC.

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Giang Thi Huong Tran
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