VietNamNet Bridge – Vietnam once witnessed the boom of Internet ADSL services. The number of ADSL subscribers once grew so sharply that the service quality upgrading could not catch up with the increase. However, things are different now.

Until 2010, the ADSL service in Vietnam had been witnessing impressive growth rates. The number of subscribers doubled year on year. The market was held by three biggest telecom service providers VNPT/VDC, Viettel and FPT Telecom.

In 2009, VNPT made a breakthrough when obtaining 2.5 million of ADSL subscribers by the end of that year. Meanwhile, Viettel announced it had had 530,000 subscribers by the same time and FPT Telecom 440,000.

However, the upward trend is over. The increase in the number of subscribers has slowed down. FPT Telecom had only 60,000 new subscribers by the end of 2010, raising the total number of subscribers to 500,000. Meanwhile, Viettel’s subscribers had dropped to 300,000. VNPT had had over 2.6 million subscribers by the end of last year.

The problem lies in the fact that the total number of ADSL in Vietnam has not increased. Clients just leave one service provider for another one. They terminate contracts with one network after a short period of using services and enjoying preferences and shift to use services of another network. And this has been blamed on the unreasonable sales promotions offered by service providers.

In order to attract new clients and scramble for users from other networks, service providers have been regularly launching promotions. They offer free modems, exemption from coverage charges, exemption from monthly subscription fees for a certain period, and even offer free services for several months. Therefore, after enjoying all the preferences, clients will “say goodbye” to one service provider and leave to seek preferences from another network.

Telecom companies have admitted that they can attract new subscribers very rapidly, but they also see a big number of leaving subscribers. For FPT Telecom, for example, the percentage of leaving subscribers is now 40 percent.

As a result, network operators cannot make profit from new subscribers and they cannot take back the investment capital because subscribers leave directly after the offered preferences finish.

ADSL service providers have admitted that they need to reconsider their sales policies. For example, they will not launch promotion campaigns on a massive scale any more, but will focus on some key markets. Analysts also say that though Vietnam’s market is still far from becoming saturated, it is the right time for service providers to think about measures to retain existing subscribers instead of focusing on attracting new subscribers.

A representative from an enterprise said that in 2011, together with the development of new subscribers, preserving the current number of subscribers would be the top priority. The enterprise, for example, will give preferences to “awake” “sleeping” subscribers. For example, it may offer reductions in charges for one month after every three months of using services, or it may give presents to subscribers once the subscribers use certain volumes of capacity. “Sleeping” subscribers are understood as the subscribers who remain on the network following the introductory offers, but the volume of used capacity is very low, and they may terminate subscription contracts at any time.

Service providers also understand that they need to “renovate themselves” by upgrading service quality. Clients have too many choices today, while they have become choosier about selecting services.

C. V