3G not catching on in Vietnam

TN News

Email Print

Five months after their release in Vietnam, 3G mobile services are still obscure and unpopular here.

The statistics look good on paper: VinaPhone, the first wireless carrier to offer high-speed 3G mobile services last October, has announced its 3G subscribers already exceeded seven million. MobiFone, a supplier of several 3G services including video call, mobile Internet and mobile TV, also reported more than six million subscribers.

But though these subscribers have registered for the pay-as-you-go services, most aren't using them, which means that most aren't paying either.

VinaPhone refused to disclose the number of real users, saying it needs more time to prepare the statistics. Meanwhile, MobiFone admitted that current subscribers are only using around 10 percent of its 3G capacity.

Dinh Viet Hung, marketing manager at MobiFone, told the Vietnam Economic Times last week that more than 90 percent of 3G users only use 3G services to access the Internet and ignore 3G programming's other functions.

Other 3G services, especially video calls, were expected to attract a large number of young mobile phone users, but the forecast turned out wrong, he said.

Le Ngoc Tan, a media and telecommunication expert, said young people may give the new services a try for the sake of curiosity. But the real demand, however, is low as the services are expensive and not really popular, he said.


"¢ April 2009: The government licensed four telecoms firms to offer 3G mobile phone services

"¢ October 12, 2009: VinaPhone launched its 3G service, becoming the first 3G provider in the country

"¢ December 15, 2009: MobiFone began providing 3G services

"¢ December 29, 2009: The launch of 3G technology was named the most outstanding information and communication technology event of the year by local journalists of the Information and Communication Technology Press Club

A representative from Beeline, a mobile network operated by a joint venture between Global Telecommunication Corporation and Russia-based VimpelCom, said with the average income of local consumers still low, now is not the time for 3G mobile phone services to grow in Vietnam.

"We will rent VinaPhone's facilities to offer 3G services, but there's no rush. The plan for 2010 is to continue developing 2G infrastructure and expand our coverage nationwide."

3G, or third-generation mobile networks, allows carriers to offer users a wide range of high-speed services not available on previous 2G packages, such as Internet browsing and video conferencing.


The government in April awarded the first four 3G licenses to companies last year. Besides Vinaphone and MobiFone both run by state-owned telecom giant VNPT, military-run Viettel and a consortium between Electricity of Vietnam (EVN) Telecom and Hanoi Telecom also won the licenses.

According to the companies, it will cost them a combined VND40 trillion (US$2.1 billion) to develop 3G facilities, not including operation and management costs. Viettel alone has committed to spending nearly VND13 trillion, the largest sum among the four firms, on building 3G infrastructure.

Dao Van Hung, chairman of EVN, said at a conference in Hanoi last week that the total investment of the four companies to 3G services may finally reach $6 billion. He said it was a "wasteful" use of money.

Wireless carriers in other countries often sign roaming agreements to provide services to each other's subscribers so that they can save as much as half of their total infrastructure investment, he said.

He said the overlapping investments by local telecoms were highly inefficient. EVN itself is now locked in a dispute with Vietnam Post and Telecommunications Group as the electricity firm wants to increase the rent it charges the postal group for using its infrastructure.

The problem is that the hefty costs will not translate to huge earnings for the firms anytime soon.

With the Average Revenue Per Unit for 3G services starting at only $10 per month, it will take carriers between seven and ten years to recoup their outlays, but only if they are able to retain one million regular users, said Cao Manh Cuong, deputy marketing manager at MobiFone.

"One million seems like a small number but it is difficult to have that many subscribers using 3G services regularly," Cuong said.


Tong Viet Trung, deputy general director of Viettel, said his company decided to set a low target for 3G subscribers in 2010 despite its big investment.

"The main goal for Viettel this year is to improve infrastructure and look for content partners as well as suppliers of cheaper cell phones that can access 3G services," Trung said.

The company said it would officially launch 3G services later this March, three months earlier than its previous plan.

Analysts said such a move showed that Viettel does not want to wait any longer after seeing VinaPhone and MobiFone both entering the market.

Even though an estimated 30 million people in the country are still not using mobile phones, the three largest mobile networks have all forecast a tough competition this year and cut their targets for total new subscribers sharply.

Viettel, the carrier recording the highest growth in new subscribers recently, plans to gain around seven million new clients in 2010, much lower compared with 42 million new subscribers it reported last year.

VinaPhone and MobiFone plan to attract five million new phone users each this year, only half of their previous targets in 2008 and 2009.

For the 3G segment alone, the competition is expected to become tougher as EVN Telecom has set a launch date for its services next month, following Viettel.

In a move interpreted as preparation for a possible race between four 3G providers, MobiFone has announced it plans to cut 3G services prices in the second quarter this year because it wants to "encourage" more phone users to choose 3G.

Viettel said it had set comparatively low prices on its broadband service as most customers in the country are young and price sensitive. 3G should be a popular and affordable technology for many people, the firm said.

More Business News