Floor Prices Imposed on Rebated Mobile Charges

At a ministerial meeting on February 6, 2012, Mr Pham Hong Hai, General Director of Telecommunication Department, said some small mobile networks like Beeline continued applying service packages that show signs of dumping. Beeline argued that if it did not offer at lower tariff rates, it found it hard to attract new subscribers in the context that the mobile market is approaching the saturation level.

 

Anticipating that small network operators would continue ‘dumping’, he proposed the Inspectorate of the Ministry of Information and Communication to probe such cases to maintain the sustainable and healthy development of the market.

 

If a company dumps, others will follow up and the market will hardly develop sustainably. For instance, if the so-called billionaire promotion programme launched by Beeline was not stopped, dominant market players like Viettel and VinaPhone would be forced to introduce dumping-styled promotional programmes.

 

Sharing this standpoint, Mr Le Huu Phuong, Second Chief Inspector at the Ministry of Information and Communication, stressed that charges in Beeline’s billionaire package are less than VND10 per minute of on-net calls.

 

He added that the current tariff rate applied by major market players ranges from VND500 to VND600 a minute. If the Beeline billionaire package was accepted, the charge will be less than VND10 per minute of intranet calls (VND2,700 for 110 minutes of calls).

 

If Beeline is not strictly treated, other small networks will launch a variety of incentives to keep existing subscribers and attract new ones. For instance, they will send bonus charges for subscribers with signs of leaving their systems. They will persuade such subscribers to top up VND20,000 or VND30,000 to get an account balance of VND100,000.

 

Authorities agreed that Beeline is ‘dumping’ the market but there is now no official policy on how to quantify a price and rate it ‘dumping.”

 

The Law on Telecommunications and the Decree that guides the enforcement of the law have defined what ‘dumping’ is referred to but they do not define how much above the average rate is branded dumping. The fixing of dumping depends on industries.

 

The Ordinance on Pricing only specifies that selling prices below the average degree of the market are called dumping but it does not mention how much above the average is called dumping.

 

According to regulations subjected to international telephone payment, the price that is 15 percent or more lower than the market average is regarded as dumping. However, many proposed the price 20 - 30 percent lower than the market average is treated as dumping act.

 

Therefore, at a recent meeting, Deputy Minister Le Nam Thang asked the Telecommunication Department to compile a circular on pricing management, including regulations on the ‘floor price’ - a foundation for determining the threshold of dumping.