VietNamNet Bridge – The military telecom group Viettel has proposed the Ministry of Information and Communication (MIC) to increase the floor connection fee for incoming international calls from US4.1cents currently, to US6 cents per minute. If the proposal is approved, Vietnam would have 90 million dollars more a year.

Enterprises brought back to life

After a period of restricting the number of enterprises providing connection services for incoming international calls, MIC has admitted more telcos to the market. At first, only the Vietnam Post and Telecommunication (VNPT), Viettel and SPT were licensed. Later, FPT, Hanoi Telecom, CMC, Dong Duong Telecom, VTC and Vishipel also joined the playing field.

However, the small telcos had to leave the market because they could not survive the stiff competition with the elder brothers. The competition then led to the connection fees decreasing dramatically to the production costs.

Vietnamese service providers lost tens of millions of dollars just because they tried to eliminate each other from the market. The dumping of the service then led to the fact that small telcos owed big sums of money to the bigger ones VNPT and Viettel.

However, the market has witnessed the “shift of the wind” after MIC had a meeting with the service providers in September 2012. Le Dang Dung, Deputy General Director of Viettel, gave an initiative to stop the dumping of the service. The telco giant has raised the connection fee first, then joining forces with VNPT to push the connection fee from 2.6 cents per minute to 3.5 cents per minute and then to 4.1 cents– the floor connection fee set up by MIC.

The current minimum connection fee is high enough to bring profits to service providers. This has activated the telcos which left the market.

A senior executive of VNPT said that some telcos, which owed money to VNPT, for which VNPT cut the connection services, now try to pay debts to VNPT in order to be able to resume the services to foreign partners.

“Some enterprises have jumped on the bandwagon after they realized that they can earn money from the services,” he said.

US2 cents per minute more and VND1.8 trillion dong more

However, Vietnamese telcos want a higher connection fee level, believing that they can set up the service fees at a higher level – the average level now being applied in the world market.

Most recently, Nguyen Manh Hung, Deputy General Director of Viettel, has officially suggested MIC to raise the floor connection fee to US6 cents per minute.

“Foreign clients have to pay US$.50 -US$1 per minute to foreign service providers, while Vietnamese telcos receive 4 cents per minute only,” Hung explained.

Therefore, Hung believes that Vietnam should raise the fee to 6 cents per minute. If so, it would have $90 million more a year from the services.

In principle, Vietnamese telcos have the right to set up their service fees themselves. However, they still want MIC to raise the floor fee, which would be a reason to be cited by telcos in the negotiations with foreign partners.

In fact, MIC still plays a very important role in the development of the market. Though telcos have been making higher profit, there are still latent risks. Some small telcos have sent words that they agree with the suggestion by big telcos that they would have 20 percent of the market share.

Buu Dien