Phseng-Phseng by Ung Bun Ang: Thou Shall Not Compete

The bottom line is the consumers will pay more for the industry that is set to breed inefficiency. And the beneficiary of this floor pricing is some personal interest group [or, Viettel of the Vietnamese military] that has their fingers all over the telecommunication cake.

Phseng-Phseng

Thou Shall Not Compete

Ministry of Telecommunication, Public Announcement, 18 December 2013

The Ministry is worried about the lower prices for phone calls that it says violate the WTO regulations. Do they, really? Do the WTO regulations really encourage the Ministry’s floor price fixing?

The Ministry says the pricing war lowers service quality. It implicitly assumes the market is not capable of knowing and choosing between a bad service that costs less and a better service that costs more. Is the public really that stupid? Usually, the market will sooner or later send poor service providers broke, no matter how cheap they are.

Anyhow, if the Ministry is worried about consumer complaints over poor service of a particular provider, why can’t an appropriate regulation deal one-to-one with the service provider, rather than fixing the floor price that affects everyone?

The Ministry says the price fixing will prevent some providers from bankruptcy or takeover target. This is dead right; but why does bankruptcy or takeover, which is a commercial evolution in any market economy, worry the Ministry so much? Why does the public have to pay extra to keep poor and weak service providers operating?

The Ministry claims the illegal use of the SIMbox technology deprives it of State revenues. Unless the use of the technology is stopped with effective policing, how will the floor price prevent the use of it, now that the floor pricing gives ever more profit to those operators with SIMbox? Perhaps an investment in SIMbox detection technology and prosecution of culprits would yield a better outcome for the Ministry revenues.

Now the Ministry encourages a creation of a telecom association in which all service providers can discuss and speak in one voice to protect their business profitability. Some would say this is in effect an official sanction of trade collusion.

The bottom line is the consumers will pay more for the industry that is set to breed inefficiency. And the beneficiary of this floor pricing is some personal interest group [or, Viettel of the Vietnamese military] that has their fingers all over the telecommunication cake.

Ung Bun Ang, 2013