VietNamNet Bridge – Many telecom service providers have expressed their determination to provide 4G technology-based services in Vietnam. However, they well understand that they will have to cope with several difficulties.

The Vietnam Post and Telecommunication Group (VNPT) and Russian Alltech Telecom have signed an agreement to set up RusViet Telecom joint venture which will provide broadband Internet services based on 4G/LTE (Long Term Evolution) in Vietnam.

Prior to that, in early October 2010, VNPT installed an LTE-based Base Transceiver Station (BTS) at Internet Building in Thang Long International Village in Cau Giay District of Hanoi to test 4G/LTE-based broadband wireless services.

The event is described as a “kick start” for the race to provide 4G services in Vietnam.

4G – the inevitable trend

It is clear that 4G/ LTE technology has much more advantageous than 3G technology. This has made domestic telecom service providers believe that 4G will be the technology of the near future, and sooner or later, Vietnamese people will use 4G services. This means that telecom service providers should be quick to seize the opportunities to develop their market share.

According to the Ministry of Information and Communication, the ministry has granted licenses to provide 4G/LTE service trials (for one year) to five telecom service providers, namely VNPT, Viettel, FPT Telecom, CMC Group and VTC.

Right after getting the license, VNPT has “moved ahead” by joining forces with a Russian partner to set up RusViet Telecom which will pioneer the “4G path”.

RusViet Telecom has the legal capital of 1600 billion dong, of which VNPT holds 51 percent. VNPT will use the technology and technical infrastructure of Alltech Telecom.

According to VNPT, in the first phase of operation, the joint venture will provide LTE based broadband wireless services in Hanoi, where the Internet access speed could reach 60 Mbps. In the second phase, the services will be provided in HCM City and some other provinces and cities.

The license to provide 4G services has more significance for other telecom service providers such as FPT Telecom, CMC, or VTC, because the licenses are considered the “passport” for them to become broadband service providers on the market, a lucrative market currently being held by VNPT and Viettel.

Big challenges ahead

However, business efficiency remains an unknown for service providers. In order to get licenses for providing 3G services, the service providers had to commit to invest tens of thousand of billion dong in the first three years to develop the network. Meanwhile, experts say the income from 3G services just accounts for 2-3 percent of the total turnover. 3G-based services have not become a trend in Vietnam and they are still considered “luxurious”.

“We need to consider two factors, the demand and the payment capability of clients. We think that it will take us seven years to earn back the investment capital we have injected in 3G services,” said Lam Hoang Vinh, Director of VinaPhone.

It is expected that service providers will also have to spend large sums of money to develop 4G services. According to Gartner, a market survey firm, in order to develop a 4G network, a service provider will have to install about 10,000 base stations, each of which will need hundreds of thousands of dollars.

Source: Thoi bao Kinh te Vietnam