3G tariffs might increase again in Vietnam

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A man checks his cell phone in front of a signboard advertising Vinaphone's 3G service in Ho Chi Minh City / PHOTO: DIEP DUC MINH

After a stirring price hike in 3G tariffs by Vietnam's three largest telcos recently, fees will possibly continue going up because providers say they are still lower than capital expenditures.

The Thoi bao Kinh te Saigon (Saigon Times) Online newspaper quoted representatives of VinaPhone, MobiFone, and Viettel, which collectively hold 97.3 percent 3G market share in Vietnam, as saying on Wednesday that even after the latest adjustment in October, 3G services' prices still account for just 50-60 percent of their input costs.

Under Vietnamese laws and international conventions that Vietnam is signatory to, businesses are not allowed to sell their services at prices lower than input costs, and make up the losses with other services, Deputy Minister of Information and Communication Le Nam Thang said.

He said the ministry has allowed local businesses to offer their services lower than their costs, because when 3G was first introduced here, it was new to Vietnamese and there were not many subscribers, and services' outputs were low.

Businesses would have not been able to sell their services if they had set them at high prices, he said.

But since the number of subscribers has increased, businesses will have to adjust their prices in accordance with expenditures to recoup their investment and improve service quality, according to Thang.

The official, however, said that businesses will have to register their prices with the ministry so the latter can make sure that price hikes are reasonable and do not cause any "big" or "bad" influence on consumers.

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Meanwhile, Pham Thanh Van, vice director of the military-run Viettel, said if they were not managed by the government and regulated by such laws, they could decide on different prices that could allow them to attract as many consumers as possible.

But, whether the tariffs will increase this year depends on input costs and the Ministry of Information and Communication, she said.

Nguyen Dinh Chien, vice director of MobiFone, said they will try to adjust 3G tariffs so that it will least affect subscribers, probably by offering new packages with different speeds and prices instead of increasing the prices of current packages.

Nguyen Son Hai, deputy manager of VinaPhone's business department, also said his company will also offer new service packages.

On October 16, the 3G suppliers increased their tariffs from VND50,000 to VND70,000 a month, under Ministry of Information and Communication approval.

The hikes, which increased some of the companies' service packages by 20, 40, and even 330 percent, have since provoked widespread criticism.

Local experts and the public accused the companies of violating the competition law by increasing their fees at the same time. They also said that the law does not allow dominant companies to raise their prices by more than 5 percent per hike.

However, the Vietnam Competition Authority under the Ministry of Industry and Trade rejected the accusations early this week, saying that the price hike was "reasonable" and legal.

According to the Ministry of Information and Telecommunication, Vietnam now has around 20 million 3G subscribers.

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