Vietnam Further Opens Telecom Market

 

Vietnam has recently witnessed a strong boom and fierce competition in its telecom industry. The Vietnam Post and Telecommunications Corp (VNPT) has taken major control over the domestic services, long distance domestic and international services, and leased line services in big cities.

 

In the mobile phone market, despite holding high competitiveness capacity, VNPT are now facing a lot of challenges and difficulties due to the entrance of new mobile phone service providers such as Viettel, SPT, and HN Telecom. The competition scale has, thus, been expanding. Since then, the number of mobile phone subscribers has increasingly been booming mostly thanks to a sharp cut in phone charges.

 

According to Truong Hoai Trang from Vietnam Datacommunication Company (VDC), the domestic telecom market has become more flexible, allowing one participant to freely compete with others in terms of service quality. Moreover, following the removal of the monopoly in 1995, the domestic telecom market has turned into a competitive one from the state-monopolized mechanism of the past.

 

In 1995, Vietnam had only one million landline subscribers and 23,500 mobile phone subscribers with low phone density per capita, reported at 0.4/100. The total number has to date increase to more than 10 million subscribers, and 50% of which is mobile users, with density of 10.4 phones/100 citizens.

 

Thanks to such strong development, Vietnam currently ranks among the top ten IT and telecom developers in the region, according to an access conducted by Saigon Post and Telecom (SPT). SPT also predicts that the subscriber density will reach 40 phones/100 citizens. The government of Vietnam has to date granted licenses to six companies to establishing landline telecommunication services, six more to providing mobile phone services, and a further 14 develop the internet service network. It has also worked out a roadmap to welcome increased participation from foreign-invested companies. The move will heat up the domestic telecom market in the upcoming years, resulting in a further cut in phone charges, a rise in service quality, and a boom in development.

 

 

The government is set to improve the competitive capacity of the telecom industry with aims to improve the sector. In fact, VNPT still holds the biggest share of 94% at the domestic telecom market. Taking advantage of being a state-run entity, VNPT has found it easy to knock its rivals out by pursuing unhealthy competition policies, raising technical difficulties for companies who wish to have connections with VNPT, offering high leased line service charges. Such barriers will halt potential companies from entering the local telecom market. "Investment should be funnelled into private firms rather than state-owned and joint stock ones," Trang said, explaining that if not, the telecom market will face slow development.

 

According to Pham Chi Lan, a member of Prime Minister Researching Committee, the government has recently followed a wide range of policies, allowing telecom service providers to freely compete with others. However, the domestic telecom market has not yet been completely opened to the world due to national security reasons.

 

In order to raise its competitiveness, a project to improve competitiveness, namely Vietnam Competitiveness Improvement – VNCI, has been worked out to give some suggestions on both telecom policies and telecom charge recalculation. The VNCI has also made detailed proposals on restructuring VNPT by launching additional instructions on telecom service linking and privatizing VNPT in terms of business sectors.