~ Le Vięt Nam, aujourd'hui. ~
The Vietnam News

[Year 1997]
[Year 1998]
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[Year 2001]

Internet in Vietnam seen as gateway to other business

HANOI - Hand Be Street flirts with chaos, as dozens of moped riders dodge and weave among bicyclists and pedestrians. But inside a half-dozen businesses on the block, matters could not be more in lock step. The impetus is the Internet, which has caused the outbreak of a price war, providing a textbook case of capitalism.

Recent months have seen a boom in the number of Internet cafes, not just on Hang Be but in several districts of the city as well. In turn, access prices have dropped so rapidly that cafe owners have taken to writing over outdated prices or even printing them on disposable signs. It is a price war that conjures a bit of mystery because it now costs but pennies an hour to be online here, far less than the price of access in the United States. Dang Duc Thuc said the matter was as plain as a plate of white rice. "The more cafes, the cheaper the price," said Mr. Thuc, who owns a chain of AtoZ Queen Cafes, which are among the two dozen or more businesses now loudly advertising Internet access in Hanoi.

The cafes, hostels and tour offices that offer Net access are interspersed on tourist streets with stores selling counterfeit compact discs, trinkets or inexpensive meals. Employees of the Internet shops beckon passers-by with promises of "fastest Internet" or "cheap Internet" like madams cajoling cowboys into an Old West brothel. Mr. Thuc said his cafes had two advantages: they were the oldest in Vietnam and offered the fastest connection. But other cafe owners made clear that these are widely shared distinctions, and each claimed to have brought the Internet to Hanoi in 1997. There is one matter on which all agree: the cost of access. They say it started at about 800 dong a minute, or about $3 an hour. It quickly declined to 700 and then started falling faster than the Nasdaq. In the last year, it has slid to 300 dong from 500, and more recently to 200 or 150 a minute, depending on the establishment. It turns out that such a price war was not unique to Hanoi in this part of the world. Travelers in the region say access prices dropped in the tourist area of Katmandu, Nepal, over the two weeks they went on a trek.

Joe Cummings, an author for Lonely Planet guidebooks in Southeast Asia, said Internet access charges were dropping across the region. In particular, he said, rates have dropped some in Laos and steeply in Thailand, where a cutthroat price war has driven costs to a few pennies an hour to log on. Mr. Cummings was at a loss to explain the phenomenon. "I don't know how they're making money," he said. Back at the AtoZ cafes, the same question was put to Mr. Thuc: If computers cost $500, can you make money charging less than $1 an hour? "Maybe not," said Mr. Thuc, who turned out to be a man of few words, or at least few words of English. He did, though, manage to convey that the Internet nevertheless has a value to the cafes, tourism shops and hotels that offer it. The reason, he explained, is that the entrepreneurs use the Internet to attract customers and then sell them other services, like tour packages, hotel rooms or a cup of coffee and a fried egg.

Matei Mihalca, the Internet analyst at Merrill Lynch in Hong Kong, filled in an additional piece of the puzzle. Mr. Mihalca said Internet entrepreneurs hoped to make money by buying one connection to the Internet and then splitting it among a handful of computers. This method, he said, keeps costs down. But, he added, that still doesn't make it easy to make money, given how low the prices have dropped. Then again, the price reflects the overall cost of living here. A sumptuous feast of chicken in garlic sauce, rice and beer costs $2, tops. A night in a charming, French-influenced hotel costs $20.

But local incomes are commensurate, which means many Vietnamese have neither the money — nor the training — to venture into cyberspace themselves. Vu Van Phuong, 28, who taxis people around the city on his Honda 50 Deluxe moped for about $1.50 a day, said he had heard of the Internet but did not know what it was and found the idea of spending 200 dong a minute amusingly extravagant. His attitude may help explain the low prices charged by people like Ng Thang Hang. "Most Vietnamese think the Internet is useless," said Ms. Hang, the manager of the Trekking Cafe, outside of which Mr. Phuong had parked his bike. A sign outside the Trekking Cafe advertises a 10 percent discount on Internet access (ordinarily 200 dong a minute), but Ms. Hang said there was another advantage to logging on at Trekking: "In my shop, the speed is the fastest." The sharing of one Internet connection among many users has a side effect: during busy times, access can be painfully slow. Such pain registered glaringly on the face of Verity Sessions, a 34-year-old British woman who was waiting to download e-mail at the AtoZ cafe on Hang Be Street.

"I've been waiting like eight or nine minutes for the page to come up," Ms. Sessions complained. Then again, Ms. Sessions said she couldn't complain about the price. Nor does she shop around, looking to save a few dong. "I'll go anywhere where the price is close" to the going rate, she said. If recent history continues to serve as a guide, she'll be able to do just that: go anywhere. The prices appear to be continuing to drop, lock step, among the growing number of cafes. At this rate, it's only a matter of time before the Internet is ubiquitous — and cheaper than spending an afternoon eating a plate of garlic chicken and drinking a beer.

By Matt Richtel - The New York Times - March 5, 2001.