Vietnam's Vietel turns one with high hopes
HANOI - Despite being the first telecommunications company firm to
launch a cut-price Voice-over Internet Protocol (VoIP) telephone
service, Vietnam's Military Telecommunications Company (Vietel) is
battling to keep up with its rivals.
In the year since Vietel's 178 service went live between Hanoi and Ho
Chi Minh City, state giant Vietnam Posts and Telecommunications Corp
(VNPT) has opened a competing service (171) covering eight major
urban and provincial centers and the international network.
Moreover, after the General Department of Posts and
Telecommunications took eight months to give Vietel the green light, its
three rivals - VNPT, Sai Gon Postel (177) and the Electricity of Vietnam
Information Company (179) - have won licenses much more quickly.
Vietel deputy director Duong Van Tinh admits that the first year has been
challenging, and the future looks much the same. For starters, he
explains, VNPT has taken a large bite of Vietel's revenue stream. Vietel
has to lease domestic channels from VNPT at a cost of more than
VND210 million (US$14,600) per month. Moreover, a third of the
income from the 178 service goes to VNPT.
Additionally, Vietel now has a 15 percent share of the domestic
telephony market, putting it within the 15-20 percent market share
bracket at which new regulatory burdens start to apply. Once this share
is reached, a telecom firm must provide social benefits at an additional
cost of VND200 per minute. This means Vietel has to pay VND720 per
minute to VNPT. So the 178 service costs VND2,000 per minute, while
VNPT's 171 service costs VND1,818 per minute.
This isn't Vietel's only problem. Tinh says the company is also facing a
capital crunch. "We have to mobilize capital from commercial loans,
domestic savings and foreign aid credits," he says.
Despite the obstacles, Vietel still has some reasons to celebrate VoIP's
first birthday. Total output has reached 20 million minutes, with
20,000-25,000 calls per day. The company has expanded its capacity
from four leased lines to eight. Le Dang Dung, chief of Vietel's investment
and development department, says Vietel is now using modern
equipment from Klaren, a US supplier.
Another reason for optimism is the company's contention that the
shortcomings of VoIP have been ironed out, with Vietel radually lifting
the sound quality and narrowing the time it takes to initiate a call. In
addition, billing is now computerized, which has kept customer
complaints about billing errors to just 56 in 12 months. Now, the
company hopes to expand the 179 service to Da Nang, Binh Duong and
Hai Phong in the near future, and to international destinations by the
year's end.
The Asia Times - October 18, 2001.
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