I. Introduction

Decree 121/CP of 15 August 1987, promulgated by the Council of Ministers (“Decree 121”), created the first legal framework for telecommunications and postal activities in Vietnam. Between 1987 and 1997, Decree 121 was the primary piece of legislation regulating the telecommunications industry.

With the rapid evolution of the industry, especially during the late 1990s, Decree 121 soon became obsolete. On 12 November 1997, the Government issued Decree 109/1997/ND-CP on postal and telecommunications activities (“Decree 109”) to replace Decree 121. A number of implementing sub-regulations followed. Most of these regulations had the purpose of protecting the State’s monopoly through tight control of the market.

Vietnam entered into a Bilateral Trade Agreement (“BTA”) with the United States in December 2001, in which Vietnam agreed to gradually open the telecommunications sector to United States entities. This commitment also set a schedule. Vietnam became a member of the WTO in January 2007. In its WTO commitments, Vietnam agreed to open telecommunications services to foreign investors under a prescribed schedule. As such, there was a need for a more comprehensive legal framework to manage a fully liberalized market.

Vietnamese telecommunications law has undergone several reformations in order to meet Vietnam’s international obligations. On 25 May 2002, the first Ordinance on Post and Telecommunications was approved by the Standing Committee of the National Assembly and became effective on 1 October 2002 (“Ordinance”)1. The Ordinance was then replaced by the Law on Telecommunications (“LOT”) which came into effect on 1 July 2010. The Law on Telecommunications represented the first time that regulations on telecommunications were compiled in a separate comprehensive law. It provides a legal framework for all telecommunications activities.

The LOT includes 63 Articles, which are divided into 10 chapters:

• Chapter I: General regulations;
• Chapter II: Telecoms business;
• Chapter III: Telecoms for public benefit;
• Chapter IV: Setting up networks and telecoms service supply;
• Chapter V: Telecoms operation licenses;
• Chapter VI: Connection and sharing telecoms infrastructure;
• Chapter VII: Telecoms resources;
• Chapter VIII: Management of telecoms technical standards, norms, quality, and fees;
• Chapter IX: Telecoms works; and
• Chapter X: Implementing provisions.

Decree No. 25/2011/ND-CP dated 6 April 2011 of the Government (“Decree 25”) implements the LOT. Decree 25 has been amended and supplemented by the Government’s Decree No. 81/2016/ND-CP dated 1 July 2016 and Decree No. 49/2017/ND-CP dated April 24, 2017.

Along with the LOT, the Law on Electronic Transactions issued on 29 November 2005, the Law on Information Technology issued on 29 June 2006, the Law on Radio Frequencies issued on 23 November 2009, and other lesser regulations all represent steady progress in the development of legislation on information technology and telecommunications.

II. Specific regulations

1. Status and powers of telecommunications regulators

Under Article 9 of the LOT, the Government is empowered to manage the telecommunications activities of the State. The Ministry of Information and Communications (“MIC’)2 is the State body in charge of telecommunications. The MIC has the following powers and duties:

• to promulgate or prepare drafts of legal regulations, technical specifications and standards, economic-technical norms of telecoms strategies and telecoms development plans;
• to implement legal regulations on telecoms, strategies, and telecoms development plans;
• to manage and regulate the telecoms market; to manage the telecoms service business and telecoms operation;
• to actively co-ordinate with the Ministry of Industry and Trade to manage competition in the formulation of telecoms infrastructure and to assure that telecommunications services are provided in accordance with the laws on competition;
• to inspect, verify, and resolve disputes, claims, and complaints, and to deal with violations in telecoms activities;
• to train, foster, and develop human resources; to study and apply science and technology in telecoms activities; and
• to organize international co-operation in the telecoms sector.
The LOT refers to the telecommunications specialized management agency (“TSMA”). This is a specific agency under the MIC that supports the MIC to carry out state management of the telecommunications sector. Decree 25 assigns TSMA the following tasks:
• to participate in drafting mechanisms, policies, strategies, plans, and legal regulations on telecommunications;

to manage the telecommunications market and universal telecommunications;
• to organize the implementation of legal regulations on telecommunications; and
• to carry out other state management missions in the telecommunications sector as delegated by the MIC’s minister.

2. Interconnection between networks

Article 42 of the LOT provides general principles for interconnection between networks. The basic principle is that all telecoms enterprises3 are entitled to connect with each other’s networks and services in order to take advantage of existing infrastructure. Stated differently, a telecommunications enterprise must allow other telecoms enterprises to connect to its network or services. Interconnection is based on negotiations intended to assure the equality, rights and benefits of the parties as well as the rights and benefits of telecommunications service users and related persons.
A facilities-based enterprise is responsible for providing connection at any point in the telecommunications network provided that it is technically feasible. It should not discriminate in terms of charges, technical standards, network quality nor telecommunications services. The interconnection charges must be calculated on the basis of market price, reasonably separate network components, or service phases without distinguishing service forms.
A private network may connect to a public network based on a written contract between a telecommunications enterprise and the owner of the private network. A private network cannot directly connect to another private network without the written consent of the TSMA.

3. Pricing guidelines

In its accession to the WTO, Vietnam committed to apply price controls in a WTO-consistent fashion. Telecommunications prices comprise charges applicable to telecoms service users and charges applicable as between telecoms enterprises. The LOT stipulates the following principles for determining telecommunications prices:
• to respect the rights of telecoms enterprises to determine the price and to compete in terms of price;
• to ensure the legitimate rights and benefits of service users, telecoms enterprises and the State;
• to ensure fair competition and to perform telecoms activities for public purposes; and
• to ensure equality and non-discrimination in the determination and management of telecoms charges, except in cases designed to encourage new enterprises to enter the market.

Telecommunications charges must be calculated on the basis of: 

• applicable policies and objectives of telecoms development; regulations on price management and international treaties to which Vietnam is a signatory;
• market price, market demand and supply, and an appropriate correlation with telecoms charges of regional and international countries; and
• no cross compensation among telecommunications services.

A telecommunications enterprise may determine the prices of services that it provides except the prices of services that must be determined by the State. On 13 May 2013, the MIC issued Circular 11/2013/TT-BTTTT promulgating the list of telecommunications services whose actual prices and projected price must be reported. They are:

Terrestrial fixed telecommunications services: local phone services, data transmission service, image transmission service, conference services, local long-distance phone services, international phone services, leased line services, Internet connection services, Internet access services;

• Satellite fixed telecommunications services: phone services, data transmission services, image transmission services, lease line services, Internet access services;
• Terrestrial mobile telecommunications services: phone service, SMS and MMS services, Internet access services (2G, 3G);
• Satellite mobile telecommunications services: phone services, data transmission services, SMS and MMS services, Internet access services (2G, 3G);
• Services of Vinasat satellite system: band lease services, transponder lease package.

Similar to the price of services, discount rates of telecommunications services generally can be decided by a telecommunications enterprise, provided that it must comply with the universal discount limit of 50% which is set by the Commercial Law on all goods and services. However, on December 29, 2017, the MIC issued Circular 47/2017/TT-BTTT which sets out a tighter discount limit on terrestrial mobile telecommunications services. Accordingly, post-paid mobile subscribers are still entitled to a maximum promotional value of 50% while, from 1 March 2018, the maximum discount is 20% for pre-paid mobile users.

4. Telecoms business

a. Telecommunications services’ classification

Decree 25 provides non-exhaustive lists of basic telecommunications services and value-added telecommunications services. The MIC is entitled to add more services to each list.

Basic telecommunications services include: (a) talking services; (b) facsimile services; (c) data transmission services; (d) image transmission services; (e) message services; (f) video conference services; (g) leasing private channel services; (h)

Internet connection services; (i) and other basic telecommunications services as regulated by the Ministry of Information and Communications (“MIC”).

Value-added telecommunications services include: (i) e-mail services; (ii) voice mail services; (iii) value-added facsimile services; (iv) Internet access services; and (v) other value-added telecommunications services as regulated by the MIC.

On 18 May, 2012, the MIC issued Circular 05/2012/TT-BTTT to classify telecoms services (“Circular 05”). Circular 05 sets forth different criteria to categorize telecommunications services:

• According to technological characteristics, transmission methods, there are fixed telecommunications services (ie, terrestrial fixed telecommunications services, satellite fixed telecommunications services); and mobile telecommunications services (ie, terrestrial mobile telecommunications services, satellite mobile telecommunications services, maritime mobile telecommunications services, air mobile telecommunications services);
• According to the payment method, there are pre-paid services and post-paid services; and
• According to the scope of communications, there are home-network services (ie, services sending, transmitting, receiving and processing information among service users of the same telecommunications network); and inter-network services (ie, services sending, transmitting, receiving and processing information among service users of different telecommunications networks).

Circular 05 introduces the term “additional telecommunications services” which is intended to include more functions, utilities for telecommunications service users. Additional telecoms services are integral parts of and are supplied together with basic and value-added telecommunications services. They include services showing the number of callers, services which hide the number of callers, services to project phone display, service waiting call, service of call transfer, call baring, service of abbreviated dialing, and additional telecommunications services as prescribed by the MIC.

b. Telecoms enterprises and agencies

A telecoms enterprise that provides non facilities-based telecommunications services has the following rights and obligations:
• to construct, install and own telecoms equipment systems and transmission lines within its units and public utility points to provide telecommunications services to telecoms service users;
• to hire telecoms transmission lines to link its telecoms equipment system, units and public utility points together and to connect to public telecoms networks of other telecoms enterprises;
• to hire transmission lines or buy telecoms output of other telecoms enterprises in order to resell to telecoms service users;
• to sub-lease telecoms infrastructure to other telecoms enterprises;

• to allocate telecoms resources in accordance with master plans and regulations on the management of telecoms resources;
• to fulfill public utility telecoms obligations as assigned by the State and to make financial contributions to the Vietnam Public Utility Telecoms Service Fund4;
• to be responsible for service quality according to standards that have been registered or declared; to assure that the calculation of telecoms charges in a telecoms service use contract are correct, sufficient, and exact;
• to be controlled by the competent state agencies and to implement regulations on the assurance of telecoms infrastructure and information security; and
• to make periodic reports on or to be requested by specific telecoms management agencies to provide certain business activities; and to be responsible for the accuracy and timeliness of contents and data contracts.
Along with the foregoing rights and obligations, a telecoms enterprise that provides facilities-based telecommunications services has the following additional rights and obligations:
• to use the aerial space, land surface, underground space, river beds, and sea beds to construct telecoms infrastructure in accordance with master plans, technical standards and norms;
• to lease telecoms infrastructure to other telecoms enterprises; and
• to provide telecommunications services for the benefit of the public.

A telecoms service agent has the following rights and obligations:

• to establish terminal equipment systems at locations that are used to provide telecommunications services for telecoms service users as agreed in telecoms service agency contracts;
• to provide and resell telecommunications services in accordance with the LOT;
• to refuse to provide services for telecoms service users who violate the LOT or upon the request of competent state agencies;
• to comply with regulations with the assurance of telecoms infrastructure and information security;
• to request a telecoms enterprise that is a party to a telecoms service agency contract to guide and provide information on telecommunications services and to be inspected and supervised by such telecoms enterprise;
• to comply with local regulations pertaining to the time within which to provide telecommunications services; and
• to provide telecommunications services in accordance with the quality and telecoms charges stipulated in telecoms service agency contracts.

c. Telecommunications resale

Under the LOT, the resale of telecommunications services means that a telecoms enterprise or telecoms service agency provides telecommunications services to telecoms service users on the basis of leasing transmission lines or purchasing telecoms traffic under a contract with another telecoms enterprise. A telecommunications enterprise may hire transmission lines or buy telecoms output of other telecoms enterprises in order to resell to telecoms service users. Telecommunications services may also be resold by a telecommunications agency.

Decree 25 further provides that in order to resell fixed telecommunications services to users in a given area, an agent must obtain a business registration certificate and enter into an agency agreement with a telecommunications enterprise. In order to resell fixed telecommunications services at two locations or more, or to resell mobile telecommunications services, an enterprise must obtain a license to provide telecommunications services.

These provisions are still rather general. Further detailed guidance on technical and professional matters relating to the resale of telecommunications services is expected. We believe such guidance will deal with: the list of telecommunications services permitted for resale, specify individuals and organizations permitted to resell services, outline the scope of permissible resale, impose tariffs for the resale of services, the numbering protocol, interconnection, and channel leasing.

d. Ownership in telecoms enterprises

The State holds the controlling shares in telecoms enterprises that provide facilities-based telecommunications services, that play an important role in operating the national telecoms infrastructure and that have direct influence on socio-economic development, national security, and defense.

In order to ensure fair competition, Decree 25 limits the percentage of charter capital that an enterprise or an individual can own in enterprises that operate in the same telecommunications services market. If an enterprise or individual owns more than 20% of the charter capital or shares in a telecommunications enterprise, it is not allowed to own concurrently more than 20% of the charter capital or shares in another enterprise in the same telecommunications market. Such restrictions, however, only apply to terrestrial mobile communications services as listed in Circular 10/2012/TT-BTTTT of the MIC dated 10 July 2012.

e. Investment in the telecommunications sector

Decree 25 sets out the requirements on legal capital5 and investment commitments in relation to different categories of telecommunications networks.

The requirements can be summarized in the following table:

In order to guarantee implementation of a license for telecommunications services, Circular 12/2013/TT-BTTTT of the MIC requires telecoms enterprises to submit a form of guarantee, as follows:
• 5% of the investment committed during the first three years, and it must be paid as from the issuance of the license. This applies to a license to establish a terrestrial stationary public telecommunications network using radio frequencies and telecommunication numbers;
• 5% of the investment committed during the first three years, and it must be paid as from the issuance of the license. This applies to a license to establish a terrestrial stationary public telecommunications network using radio frequencies; and
• 5% of the difference between the investment committed during the first three years, and it must be paid as from the issuance of the license and the actual investment in the telecommunications network established previously. This applies to a license to establish a terrestrial stationary public telecommunications network using radio frequencies and telecommunication numbers and a license to establish a terrestrial mobile public telecommunications network. Foreign investors are subject to additional requirements. In addition to the basic licenses required by telecommunications legislation and the Enterprise Registration

Certificate (“ERC”) required by the Department of Planning and Investment, foreign investors that intend to provide telecommunications networks and services must first obtain an Investment Registration Certificate (“IRC”)6 issued by the investment registration authority. The investment registration authority may seek opinions on the project from the MPI, the MIC, and other organizations it may select. In the end, the Prime Minister must decide.

The ownership proportion of a foreign investor in a telecoms enterprise must comply with investment regulations and international treaties to which Vietnam is a signatory. In particular:

Vietnam’s commitments to the WTO

In the negotiations for Vietnam to become a member of the WTO, other WTO members, in particular the United States, EU, Japan, and South Korea, required Vietnam to commit to remove restrictions on foreign investment in the telecommunications sector.

In its accession to the WTO, Vietnam made commitments in certain specific areas:

• Facilities-based telecommunications services: Upon Vietnam’s accession to the WTO on 11 January 2007, joint ventures with telecommunications service suppliers licensed in Vietnam were allowed. Foreign investors may hold a maximum stake of 49% of legal capital. For US investors, Vietnam had already made this commitment in the BTA.
• Non facilities-based telecommunications services: Since accession, joint ventures with telecommunications service suppliers licensed in Vietnam have been allowed. Foreign investors may hold a maximum stake of 51% of the legal capital of a joint venture. Beginning January 2010, three years after accession, joint ventures have been allowed without any limitation on the choice of partners. The stake of foreign investors, however, may not exceed 65% of legal capital. For virtual private networks and value-added services [except Internet Access Services (“IAS”)], joint ventures have been allowed since accession, without limitation on the choice of partners. The stake of foreign investors, however, may not exceed 70% of legal capital.

f. Competition in the telecommunications sector

Like other enterprises, a telecoms enterprise must follow general regulations on competition under the Competition Law, which came into effect on 1 July 2005. Telecoms enterprises or a group of telecoms enterprises that dominate the telecoms market and hold “essential means”7 are prohibited from:

• carrying out cross compensation of telecommunications services in order to engage in unfair competition;
• using its advantage in terms of its network and essential means in order to hinder market access or to cause limitations and difficulties to other telecoms enterprises;
• using information obtained from other telecoms enterprises in order to engage in unfair competition; and
• not timely providing other telecoms enterprises with technical information of essential means and commercial information necessary for them to provide telecommunications services.

A telecoms enterprise, a group of telecoms enterprises that dominate the telecoms market, or a telecoms enterprise holding essential means are required to keep separate statistics and accounting records for the telecommunications services they provide in order to determine the cost of telecommunications services for competition purposes. Telecoms enterprises that together have a market share ranging from 30% to 50% after shares are consolidated must notify the TSMA prior to economic consolidation. If the market share exceeds 50%, the Ministry of Industry and Trade8 will accept the exemption only upon receipt of a MIC’s exemption acceptance.

The TSMA is responsible for settling telecommunications competition cases within 30 days from the date of receipt of a dossier. Although the parties in a competition case must comply with the TSMA’s decision, any party may appeal the decision if it does not agree with it.

On 15 November 2012, the MIC issued Circular 18/2012/TT-BTTTT setting out a List of Dominant Telecoms Enterprises, Groups of Telecoms Enterprises. The list was amended by Circular 15/2015/TT-BTTTT dated 15 June 2015 and is, as follows:

5. Establishment of telecoms networks and provision of services

Telecoms networks are established and developed, with reference to approved strategies, master plans, and technical standards.

To provide services, a telecommunications service provider must follow the rules on connection, management of telecommunications resources, telecommunications standards and norms, and related regulations. Telecommunications services can be provided directly or can be resold on the basis of contracts executed between telecoms enterprises/agencies and users. Contracts must be registered with the competent authorities. If a telecommunications provider fails to comply with the terms of the contract, it must reimburse all or a part of the service fees it has collected.

• A telecoms enterprise that fails to provide timely services and agreed quality must refund all or a part of the charges it has collected;
• A telecoms enterprise need not compensate for indirect damages or unrealized profit because of its failure to provide agreed telecommunications services on time;
• Either party must compensate the other party for direct material damages that it causes.

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This book was written by lawyers from Russin & Vecchi. This edition is current through July 2018.

1 An Ordinance is a legal instrument passed by the Standing Committee of the National Assembly when the National Assembly is not in session. An Ordinance has the same effect as a Law.

2 The MIC (formerly the Ministry of Post and Telecommunications) was established in August 2002 to assume the telecommunications functions of the General Department of Post and Telecommunications, People’s Committees, and certain other Ministries.

3 Article 3.23 of the LOT states that a telecommunications enterprise is one that is incorporated under Vietnamese law and is granted a telecoms business license. Telecoms enterprises include enterprises which provide facilities-based services and enterprises which provide non facilities-based services.

4 The Vietnam Public Utility Telecoms Service Fund is a non-profit financial organization managed by the State. Its purpose is to assist in the realization of the State’s policies on the provision of universal telecommunications services. The Vietnam Public Utility Telecoms Service Fund is financed by: (i) contributions from telecoms enterprises in proportion to their income; (ii) sponsorship and voluntary contributions from local and foreign organizations and individuals; and (iii) other legitimate sources.

5 The legal capital is the minimum capital that is required by law to set up an enterprise.

6 The Law on Investment and the Law on Enterprises of 26 November 2014 and their implementing regulations provide rules and criteria for a foreign invested enterprise to receive an IRC and an ERC.

7 Article 3.19 of the Law on Telecommunications defines “essential means” to be important parts of the telecoms infrastructure which infrastructure is exclusively or largely held by one or some telecoms enterprises in the telecoms market, moreover, it is economically or technically infeasible to establish new parts of the telecoms infrastructure to replace them.

8 Under the Law on Competition, the Ministry of Industry and Trade is the state authority in charge of competition management.