The fixed broadband Internet has been likened to a bloody fighting ring as all mobile network operators have been battling to lure more clients by lowering service fees.

The Ministry of Information and Communications (MIC) has granted 19 licenses to provide internet fixed broadband Internet service ADSL/FTTH (Asymmetric Digital Subscriber Line/Fiber To The Home) to businesses. However, the market is controlled by the three biggest players - VNPT, Viettel and FPT.

Though the watchdog agency is open when licensing internet services, there have not been many newcomers in the market over recent years, except MobiFone. However, it holds a small market share.

The competition 

The internet fixed broadband market space has become saturated, which forces players to compete fiercely for a greater share amid limited demand.

The players in the market have accused each other of providing services at below production costs to lure more customers. 

Previously, mobile network operators collected an initial installation fee, but nowadays, while running a race to attract clients, most of them no longer collect the fee, and offer very attractive discounts and service fees to clients who pay once for one-year service.

On social networks, internet users shares experiences to evade internet service fees. Most mobile network operators offer preferences to new subscribers, so many people change networks frequently enjoy the preferences. They tend to leave the networks after the preferences end, and join a new network to enjoy new preferences.

The senior executive of a telco complained that “ADSL/FTTH subscribers change networks as regularly as change shirts everyday".  As a result, telcos have to spend high costs to lure subscribers, though the subscribers are not loyal and may leave anytime.

Some carriers, warned that the race to cut costs may lead telecom carriers to the verge of bankruptcy, have decided to stop the price competition.

CMC and NetNam, for example, have shifted to providing services to business clients in association with an ecosystem, rather than target individual clients like VNPT (Vietnam Posts and Telecommunications Group), Viettel and FPT. 

A senior executive of FPT Telecom said on average telcos have to spend VND2 million on cable, modem and other expenses when a new subscriber appears. It takes two years to recover the initial investment capital, not including sale promotion programs applied to new subscribers. However, after enjoying preferences, clients leave for another network.

“A mobile network operator offers an internet broadband package with the fee of just VND100,000 a month to lure customers. I am sure no telco can make a profit with such a low fee, unless it has other sources of income to offset the losses in internet service,” he said.

Huynh Quang Liem, VNPT CEO, also said the fierce rivalry among telcos has made the fixed internet broadband market slide, and may cause the market to collapse in the future.

Liem said fixed internet broadband needs huge costs for re-investment in transmission networks. In addition, Vietnam has to develop new submarine fiber cable routes. If telcos continue to run the price race, they won’t have money for re-investment, which will seriously affect Vietnam’s information security.

The final straw

A recent report showed that the number of subscribers using fixed internet broadband accounts for 80 percent of Vietnam’s international traffic, so when troubles occurred with all the five submarine fiber cable routes, it was the subscribers who suffered the most.

Analysts say that the long-lasting rivalry among network operators has forced them to reconsider business strategies to exist. They have all resumed the initial installation fee collection. New subscribers have to pay VND300,000 for the installation.

The next move taken by telcos to stop the price competition was the signing of an agreement among 10 telcos. 

Thai Khang