SIGNAL PIRACY AND COMPETITION PROBLEMS IN VIETNAM'S TELECOM

UNCLAS SECTION 01 OF 02 HANOI 002477

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR E, EAP/MLS and EB/CIP RICH O'BRIEN
DEPT PASS TO USTR DAVID BISBEE AND JONATHAN MCHALE

E.O. 12958: N/A
TAGS: ECON ETRD ECPS KPRV WTRO VM
SUBJECT: SIGNAL PIRACY AND COMPETITION PROBLEMS IN VIETNAM'S TELECOM
SECTOR

SENSITIVE BUT UNCLASSIFIED. DO NOT POST ON THE INTERNET.

REF: A) State 140757 B) Hanoi 827 C) Hanoi 1451 D) Hanoi 2312


1. (SBU) Summary: Econ/C met with Director General (DG) Quan Dzuy
Ngan Ha of the Ministry of Posts and Telematics (MPT) to deliver a
strong message on USG concerns over signal piracy. DG Ha replied
that MPT has urged the state-owned broadcaster, VTC, to discontinue
its re-broadcasting of pirated satellite signals. Ms. Ha said the
MPT also advised VTC to conclude legal licensing agreements with all
foreign content providers as soon as possible. MPT will participate
with U.S. industry representatives in a seminar in December to
discuss ways to construct a viable business model in the pay-TV
industry in Vietnam. Ms. Ha also discussed MPT's efforts to address
competition issues, including intervening in an interconnectivity
dispute between VTC and a new competitor, EVN. End Summary.

MPT's Response on Signal Piracy
--------------


2. (SBU) Econ/C met with the Director General of the International
Cooperation Department of the Ministry of Posts and Telematics
(MPT),Ms. Quan Dzuy Ngan Ha, on September 7 to deliver a strong
message on USG concerns over signal piracy in Vietnam. He noted
particular concern about the unauthorized practices of state-owned
Vietnam Television Technology Investment and Development Company
(VTC) which broadcasts pirated content through its digital
terrestrial network.


3. (SBU) In response, Ms. Ha said that under a directive from the
Government of Vietnam (GVN),MPT has ordered VTC to report on its
activities and licensing agreements. MPT has also urged VTC to
negotiate legitimate licensing agreements for its broadcast content.
According to Ms. Ha, MPT will make a report to the GVN based on
VTC's submission, but she did not say when the report would be
ready. She added that VTC informed the MPT that it is currently in
discussions with foreign content providers in order to resolve
licensing issues. (Note: A private sector contact familiar with
similar discussions earlier this year characterized VTC's efforts as
"going through the motions." End note.)


4. (SBU) Ms. Ha said that VTC claims the growing number of
contracted distributors for foreign broadcast content (Q-Net,
NACENCOM, BHD and others) operating in Vietnam has made it difficult
to "know which are the legal representatives" of U.S. and foreign
firms. In response, Econ/C suggested that VTC discuss this issue
directly with the Cable and Satellite Broadcasting Association of
Asia (CASBAA) and foreign content providers, and offered the
Embassy's assistance in facilitating these connections.


5. (SBU) In addition, Ms. Ha indicated the Ministry of Culture and
Information (MOCI),the Ministry of Science and Technology (MOST)
and MPT are currently drafting guiding documents to implement the
recently-passed Intellectual Property Rights Law. She said these
guiding documents will help ensure greater accountability and
strengthen enforcement against violations of broadcast and
television copyrights.


6. (SBU) Regulatory responsibility for the television and cable
broadcasting sector in Vietnam is divided between MPT (transmission
and infrastructure) and MOCI (content management.) Ms. Ha noted
that rapidly developing technology has made this delineation more
ambiguous. Therefore, she said, MPT and MOCI are drafting a
circular more clearly outlining each ministry's regulatory
responsibility.


7. (SBU) Econ/C underscored that the Embassy, CASBAA and industry
representatives want to continue to work with the GVN to strengthen
copyright protection. Vietnam must do more to address illicit cable
and broadcast activities. Ms. Ha acknowledged the importance of
these issues. She responded that in an effort to address them, MPT
has been coordinating with CASBAA and MOCI to host a seminar on
December 14 to discuss ways to construct a viable business model in
the pay-TV industry.

Competition Problems in the Telecom Sector
--------------


8. (SBU) Econ/C also raised questions over the state of competition
within the telecom sector. For example, the press has reported
extensively on an interconnectivity dispute between the former
telecom monopoly VNPT and its rapidly growing competitor EVN. Since
the introduction of competition in the telecom sector, competing
companies, such as EVN, have often accused VNPT of using its
dominant position as the former monopoly to limit access to the
national telecom infrastructure.


HANOI 00002477 002 OF 002



9. (SBU) In responding, Ms. Ha referred to the MPT's action in July
in its role as regulator when it ordered the two firms to resolve
their long-running interconnectivity dispute by August 1. She said
that since the MPT issued its order, neither firm has raised
additional complaints. MPT therefore considers the dispute
resolved. As for related press reports that EVN's recent
application to expand its service area was rejected by MPT, Ha
explained that EVN was operating in violation of its license. She
asserted that the MPT denied EVN's latest application on the basis
of continued noncompliance with the MPT's technical requirements.


10. (SBU) Comment: The Director General's words were mostly
positive in tone, but MPT's deeds to date have not been sufficient.
Resolving the issue of signal piracy is a major objective for this
Mission. We will continue to press the GVN to protect the rights of
all affected U.S. stakeholders. We will also continue to encourage
the GVN to improve competition in the telecommunications sector,
which will help Vietnam's economic development. As Vietnam prepares
for entry into the WTO, and begins to implement commitments
providing more opportunities for U.S. firms, MPT will have to do
more to ensure a level playing field for competitors. How Vietnam
deals with the concerns of private Vietnamese companies, e.g., EVN,
is an indicator of how it might treat foreign companies. End
comment.

ALOISI