VNPT's days of state monopoly numbered
Telecom services provided by VNPT and its affiliates are expensive and
sometimes not reliable. Foreign investors have complained many times
that telecom services in Vietnam are far more expensive than in other
countries. They are also not very reliable. On October 14, the
VinaFone network, one of the three mobile phone companies under the
umbrella of VNPT, was severely jammed. Subscribers could only use
VinaFone two days later. Two months earlier, the same thing happened
to MobiFone, another VNPT mobile phone company that is a joint venture
with Comvik from Sweden. These problems, market observers say, would
probably not happen if there was some competition forcing VNPT to be
more efficient.
The VNPT shadow has been dominant. Last year, in a bid to lessen this
monopoly, the government licensed two telecom companies, the Army
Electronics and Telecommunications Company (Vietel) and the Saigon
Post and Telecommunications Joint Stock Company (Saigon Postel). At
first, there was no real competition between VNPT and the two new
companies. Vietel and Saigon Postel still rely on the infrastructure
set up by VNPT, and have no access to long distance and international
telecom systems. Thus the launch of Vietel's long distance service is
a significant event for the telecom sector.
Saigon Postel is on the move as well. Last week, the company last week
announced it had signed a business cooperation contract with SLD
Telecom to develop a mobile phone network serving one million
subscribers. SLD Telecom is a joint venture of three Korean companies,
SK Telecom, LG Electronics and Dong Ah Telecom. With the latest code
division multiple access technology -CDMA IS-2000 - provided by the
Korean group, Saigon Postel expects to offer mobile phone users
cheaper prices and faster Internet connections than those currently
offered by VMS (MobiFone) and GPC (VinaFone). Saigon Postel CEO Trinh
Dinh Khuong says he expects to provide the service to subscribers in
Hanoi and HCM City by the end of April 2001. He also says that his
company has a plan to offer subscribers mobile phones at cheap prices
and even give them away for free.
All these developments are the first signals revealing that the days
of the VNPT monopoly are numbered. This has also pushed VNPT officials
to attach more interest to a recent proposal made by Ericsson who have
been keen to join up with VNPT in developing third-generation (3G)
mobile phone systems for Vietnam. At present Wireless Applications
Protocol (WAP) service is applicable on a trial basis. From this base,
the next step would be development of GPRS which Ericsson reportedly
wants to develop here.
The final nudge and poke to VNPT's privileged position is the trade
agreement signed between Vietnam and the US. Telecoms is one of the
areas where the market is expected to open up to US companies. Newly
arrived US telecom companies will finally have more than one choice of
partner and won't be forced into bed with VNPT.
It's always nice to have a choice. Let's just hope the army and Saigon
Postel can and will set its own rules and offer something unique.
Vietnam Business Journal - October 21, 2000.
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