Much ventured, little gained from 3G networks

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The commercial launch of high-speed 3G services two years ago was expected to help Vietnam's mobile operators increase their revenue, but the costly effort has not paid off.

3G networks are now available all over the country but the total number of customers is only around eight million, compared to more than 120 million regular mobile subscribers, news website VnExpress reported on Wednesday, citing the Ministry of Information and Telecommunications.

The 3G customer base is very low considering local operators have invested a total of VND33 trillion to build more than 30,300 receiver stations in the country. In return, they have earned revenue of VND3.6 trillion from 3G services so far.

Even Cambodia's small telecom market has fared better with the technology. The neighboring country has a large 3G base, with about 2.2 million customers in 2010, equivalent to 54 percent of total mobile users, consulting firm PricewaterhouseCoopers reported in June.

3G, or third-generation mobile networks, allows carriers to offer users a wide range of high-speed Internet and video services.

Vietnam issued the first four 3G licenses in 2009. Vinaphone launched the first 3G network in October 2009, followed by MobiFone and Viettel. The military-run Viettel committed to spending nearly VND13 trillion, the largest investment in 3G infrastructure.

"3G is an expensive venture," Tao Duc Thang, a senior manager at Viettel, told VnExpress. "Once they have started it, operators have no choice but to keep investing. Simply because 5,000 stations or even 10,000 are not enough for the technology."

"For 3G services to run smoothly, the number of stations must be tens of thousands," he said.

There is no half stepping in 3G technology because only a huge investment can help meet all technical requirements, an unnamed Vinaphone manager said. The problem is the number of users switching to 3G services is much lower than expected.

Most 3G subscribers do not use the services regularly, he said, adding that users are only equal to 1 percent of active 2G users.

"2G is still the main revenue earner for mobile operators. Each 2G subscriber generates a revenue of VND100,000-150,000 each month," he said.

Despite limited success, Vinaphone and its sister company MobiFone, both owned by state-run telecom giant VNPT, plan to pump another VND9.5 trillion into their 3G networks in the next three years.

EVN Telecom, the other company offering 3G services, has reportedly invested VND3 trillion into 3G, but 80 percent came from loans. Now that revenues from the business are low, the company is not doing well with the highly leveraged investment, according to VnEconomy.

For better or worse, the companies said they will take their time with newer technology, such as 4G.

MobiFone Deputy General Director Nguyen Dang Nguyen said moving up to 4G, the latest wireless generation, is a trend that all 3G networks should follow since they already have the core infrastructure required.

But Nguyen said even if MobiFone is capable of launching the technology, it will have to tread carefully. "4G should only be discussed in 2012 or 2013," he said.

EVN Telecom officials believe there is still much room for growth for 3G and it's not the right time to start a faster service yet.

Viettel in May announced that it had successfully tested its 4G services, becoming the first wireless network in Vietnam to apply the technology.

The company is running a customer testing phase for the 4G network through August 31. Only 240 select subscribers were chosen for the trial.

Viettel said the trial will allow the network to assess its capabilities before officially launching 4G services, without announcing any timeframe for the commercial launch.

The Ministry of Information and Telecommunications allowed four other companies, including VNPT, to test the 4G standard.

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