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Vietnam: New Telecom Law’s implications on over-the-top communications, data center, and Cloud services in Vietnam

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In brief

  • On 24 November 2023, the National Assembly officially approved the new Law on Telecommunications (“New Telecom Law“). This new law will soon supersede the existing 2009 Law on Telecommunications, which has been effective since 2010.
  • The New Telecom Law will take effect on 1 July 2024, but its notable provisions regulating over-the-top (OTT) communications, data center (DC), and cloud computing (“Cloud“) services will take effect six months later, on 1 January 2025.
  • Many issues under the New Telecom Law will be explained in several governmental decrees and ministerial-level circulars. OTT communications, DC, and Cloud services will be regulated under one of the decrees, which is the decree detailing several articles and measures to implement the Telecommunications Law (“Draft Telecom Decree“).
  • In early February, the Ministry of Information and Communications (MIC) made the Draft Telecom Decree public for comments from relevant stakeholders.

Below are several key takeaways/implications of this new law, which may impact foreign businesses providing relevant online services in Vietnam.

Key takeaways

  1. New definitions

Local lawmakers introduce three notable definitions in the New Telecom Law: 

  • Basic telecom services on the Internet: Services that provide users with the features for sending, transmitting, and receiving information on the Internet.1

Local lawmakers’ intention is to use this definition to capture OTT services. However, based on the wording of the law, many online services could be deemed basic telecom services on the internet.

  • DC services: Telecom services that provide users with the features for processing, storing, and retrieving information via telecom networks by leasing a part of or the whole data center.2

This definition targets the services of leasing space or equipment in data centers.

  • Cloud services: Telecom services that provide users with the features for processing, storing, and retrieving information over telecom networks through a Cloud model.3

The definition of Cloud services is generally aligned with international standards. The language is sufficiently broad to cover common types of Cloud services such as Infrastructure as a Service (IaaS) or Platform as a Service (PaaS).

However, the New Telecom Law does not consider whether a service could be deemed both a basic telecom service on the Internet and a Cloud service.

  1. Foreign investment cap for OTT communications, DC, and Cloud services

There is no cap for foreign ownership in companies in the field of OTT communications, DC, and Cloud services.4 This suggests that a foreign investor would be able to set up a wholly-owned subsidiary in Vietnam to provide OTT communications, DC, or Cloud Services. With that said, given the new law’s infancy, it may take some time for local investment authorities to align with one another on this issue.

  1. Obligations of providers of OTT communications, DC, and Cloud services

The New Telecom Law provides two sets of obligations for onshore and offshore providers of OTT communications, DC, and Cloud services, respectively.

While onshore providers will shoulder a long list of obligations, offshore providers’ obligations are not set out in the law. 

Instead, the government will further regulate their rights and obligations on the principle of respecting independence, sovereignty, equality, ensuring safety, information security, and common commitments in international treaties to which Vietnam is a signatory.

  1. Draft Telecom Decree

On 2 February 2024, the MIC published the Draft Telecom Decree, which aims to elaborate on many issues under the New Telecom Law, including the regimes applicable to offshore providers of OTT communications, DC, and Cloud services. The deadline for stakeholders to submit comments to the MIC is 2 April 2024.

Local lawmakers aim to have the Draft Telecom Decree finalized and issued by 1 July 2024, which is the effective date of the New Telecom Law.

A more detailed alert on the Draft Telecom Decree will be provided shortly.

***

Should you need our assistance for this legislative progress, please contact us.

1 Article 3.8, New Telecom Law.

2 Article 3.9, New Telecom Law.

3 Article 3.11, New Telecom Law.

4 Articles 28.1(a) and 29.1(a), New Telecom Law.

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Author

Hung Tran is the practice group leader of the Intellectual Property (IP) and Technology Practice Groups of Vietnam offices. For years, he has been constantly ranked as a leading IP lawyer by numerous researchers such as Chambers Global and Chambers Asia.
He regularly writes articles concerning pressing legal issues in both English and Vietnamese, and his works have been published regularly in various reputable publications. He has assisted the government in reviewing and revising the IP Law, the IP provisions under the country’s criminal code, the draft e-Transaction Law, and the first draft Personal Data Protection Decree, etc.
He is also a respected presenter in the area of IP, Franchising, Data Privacy, and Entertainment Laws. In addition to authoring many publications, Mr. Tran has lectured at Waseda University School of Law (Japan), Vietnam-German University, Hanoi Law University, Diplomatic Academy of Vietnam, Foreign Trade University, an international MBA Program (CFVG) and IP laws for the Professional Training School of the Ministry of Industry and Trade. He used to serve as the Chairman of the Legal Committee of Hanoi American Chamber of Commerce.

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Huu Tuan Nguyen is a Senior Associate in BMVN International LLC, Ho Chi Minh City office.

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Huyen Minh Nguyen is a Senior Associate in BMVN International LLC, Hanoi office.

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Cam Tu Nguyen is an Associate in BMVN International LLC, Hanoi office.

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Tuan Linh Nguyen is a Government Affairs Manager in in BMVN International LLC, Hanoi office.

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Alex Do is an IPTech Executive in BMVN International LLC, Hanoi office.

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