Telecom needs a push to maintain growth

After a rapid development period, mobile network operators have entered a new period when they see the slowdown in growth, due to the stiffer competition and the lack of innovative services.

The income of telecommunication networks has been mainly coming from telephone services, while content services just can bring 20 percent of the total revenue. Meanwhile, the investments in telecom networks prove to be very big: every network operator has injected trillions of dong in 3G technology infrastructure.

Telcos understand well that it is the time to compete by providing added value services to create differentiations, not by slashing call charges. However, no one can do that.

According to the International Telecommunication Union ITU, if the number of mobile service users increases by one percent, the GDP of the country may increase by 200 dollars per head. As for Internet users, the figure would be 400 dollars.

Lacking innovative services to stimulate the demand

Experts have pointed out that the above said criteria could not be applied to the Vietnamese telecom market, because network operators, in the stiff competition, has been trying to increase the numbers of subscribers at any cost, thus having generated “virtual growth rates”.

According to BMI, Vietnam had 155 mobile subscribers in 2010, which meant the population penetration ratio of 176 percent. And once the figure rises to 180 million subscribers, the ratio would be 200 percent!

Buu dien newspaper has reported that FPT Telecom, after deciding to exclude the “virtual subscribers” (the subscribers, who registered services, but have not been using the services), now sees the number of subscribers decrease by 200,000, or 1/3 of the market share of the enterprise.

If the move is followed by other network operators, i.e that the other operators also don’t count on virtual subscribers, the actual numbers of subscribers would be much lower than the declared figures.

A big challenge for Vietnamese telecom service providers now can be seen in the high expenditures on developing 3G and the low ARPU (average return per unit).

Hoang Ngoc Diep, a consultancy expert, said on Saigon Tiep thi that the unsustainable development of big mobile networks on the 3G basis can also be seen in the high percentage of pre-paid subscribers. He said that once pre-paid subscribers still account for more than 90 percent of the total subscribers, one should not believe in the loyalty of users.

Telcos told to take full advantage of the community’s dynamism

Diep believes that developing telecom infrastructure is just a simple work, while the more important thing is to develop important procedures, including the customer service systems, security solutions, or charge calculation. Vietnamese network operators have got good technology foundations such as GPRS, EDGE and 3G, still cannot provide diversified services except the basic services which bring low income.

Meanwhile, network operators have thrown much money into 3G, and they can only succeed once the service applications are accepted by the market. However, network operators have never had open policies, which allow to mobilize the community’s strength in designing content services and designing applications.

The unreasonable mechanism on profit sharing applied by network operators to intermediate developers for a long time has also hindered the development of the market.

Dr Mai Liem Truc, former Deputy Minister of Post and Telematics, also said that Vietnam has been wasting resources when nearly all network operators try to develop infrastructure just to serve the market with 100 million of population. This means that the network operators have to bear high investment rate.

Truc believes that the best solution for the telecom market in the new period, is the investment socialization mechanism under which capital from different sources will be mobilized for developing telecom.
vietnamnet