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Phone firms spend big on 3G; Experts say they can’t afford it
Local mobile phone operators are spending billions of dollars to develop advanced third-generation services, but industry insiders said it may not be a safe bet.
Four telecoms approved in April to offer 3G mobile phone services in Vietnam are building their network infrastructure to prepare for the launch of the services later this year.
The operators – Viettel, Vinaphone, MobiFone and a venture between Hanoi Telecom and EVN Telecom, which is part of Electricity of Vietnam – are expected to invest a total VND40 trillion (US$2.25 billion) to 3G infrastructure and equipment.
But some consider the amount too big for the firms, not even including an additional combined deposit of VND8.1 trillion ($454.68 million) they have to put down to prove they are qualified service providers.
Truong Minh Ky of market research firm GfK said local phone users may benefit a lot from 3G services, but for telecom providers the new technology would just be a burden.
“I think at most only 5 percent of the existing mobile phone users would subscribe for 3G services,” Ky said.
According to local newswire VnExpress, Vietnam now has more than 80 million mobile subscribers but just less than half of them are active users.
Cao Manh Cuong, a Marketing Executive at MobiFone, said the operator can only recoup its investment if there is a large enough number of subscribers.
He estimated that in order to break even, the earnings from 3G services must be around $200 million a year for 10 years, which means MobiFone will need to have one million 3G subscribers.
But Bui Huu Thuan, Director of Telecom Service firm An Ba, said it would be hard to attract local phone users to 3G services.
“The total number of 3G subscribers in the country will be around one million maximum. Local people mainly use mobile phone to text messages and to make and receive calls. Other applications for movie and music can be used offline.”
3G refers to third-generation mobile networks that allow operators to offer more advanced services, including video calls and wireless broadband.
Similar services have been provided in Vietnam for three years via S-Fone’s CDMA network, but with limited success. Only 50,000, or 2 percent of S-Fone subscribers use the advanced services.
Analysts said in the next couple of years the services that local operators can offer on their 3G networks will be mostly simple ones such as television viewing, online movies and messaging.
More complicated applications, especially the integration of 3G with e-government, finance, education, health care and other sectors, will take local telecoms at least five years to develop.
Vinaphone and Viettel said local developers are only capable of creating simple entertainment applications. For other applications, they will have to hire foreign developers.
Cuong of MobiFone said his company was preparing with foreign partners for all digital services to be launched on its 3G network.
Vietnam’s telecommunications industry has enjoyed 30 percent annual growth in recent years and expects turnover of $7 billion in 2010, Viet Nam News reported.
thanhnien, sgtt
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