Vietnam is switching off its 2G network after more than three decades, closing an era that began with $1,000 mobile phones and helped transform how the country communicates.

A historic bet on GSM when mobile technology was prohibitively expensive

In the early 1990s, as demand for mobile communications began to emerge in Vietnam, choosing which technology to adopt was far from straightforward.

According to Mai Liem Truc, former deputy minister of Posts and Telecommunications, Europe was rolling out the GSM digital cellular standard between 1991 and 1993. At the time, however, GSM was still being refined and had yet to achieve widespread commercialization.

Mobile systems had already been in use around the world for about two decades, but most were still based on analog technology. Some in Vietnam also advocated adopting analog systems to meet emerging market demand.

Instead, Dang Van Than, then head of Vietnam’s General Department of Posts and Telecommunications, and other industry leaders opted for digital GSM, with the goal of building a modern, synchronized telecommunications network in which both local networks and transmission systems used digital technology.

The decision came at a time when GSM still faced significant limitations. The technology was not yet mature, commercialization remained difficult, handsets were scarce and could cost thousands of dollars each.

Vietnam even considered another option: satellite-based mobile communications. The technology offered a major advantage in coverage, potentially allowing people to use mobile services in many parts of the world, and was attracting significant investment in the US and Europe.

The General Department of Posts and Telecommunications studied the option, but after considering the market, technology, handset availability and its ability to manage the system, regulators decided to build a terrestrial GSM mobile network instead.

What followed showed that the decision had been carefully calculated. Satellite mobile technology struggled, while the cost of GSM network equipment and handsets rapidly declined, paving the way for GSM to be commercialized and adopted worldwide.

In 1992, the General Department began negotiations with partners to prepare for a nationwide GSM rollout. In July 1993, Alcatel was selected to deploy the first mobile network in Hanoi. In late 1993 and early 1994, GSM was expanded to Ho Chi Minh City in partnership with Ericsson.

By 1994, GSM networks had been established and commercial services launched in several major cities.

When a mobile phone cost $1,000

On April 16, 1993, MobiFone, Vietnam’s first mobile network, officially began operations.

At the time, mobile phones were still unfamiliar to most Vietnamese. Infrastructure was limited, there was little experience in building and operating mobile networks, and both handsets and services were prohibitively expensive.

MobiFone initially operated a switch with capacity for 2,000 subscribers and seven base transceiver stations, or BTS, in Hanoi. In southern Vietnam, it had a switch capable of serving 6,400 subscribers and six BTS sites covering Ho Chi Minh City, Bien Hoa, Long Thanh and Vung Tau.

Limited coverage, combined with expensive devices and service charges, meant subscriber numbers remained low during the network’s early years.

A mobile phone cost around $1,000. Users also paid approximately $200 to connect to the network, around $30 in monthly subscription fees and roughly $0.30 a minute for local calls in Hanoi or Ho Chi Minh City.

Against income levels in Vietnam at the time, owning a mobile phone was a costly luxury.

From that modest beginning, however, GSM coverage steadily expanded, handset prices fell and mobile phones became an everyday means of communication. The choice of technology helped lay the foundation for the rapid development of Vietnam’s mobile telecommunications industry.

Vietnam’s telecommunications history also demonstrates how technology choices can determine the fate of an entire mobile network. After GSM had become firmly established, several Vietnamese operators adopted CDMA technology.

According to former minister of Posts and Telecommunications Do Trung Ta, CDMA was technically a strong technology.

The problem was timing. By the time CDMA entered Vietnam, GSM already accounted for 86% of the global mobile market. CDMA was primarily used in markets including Japan, South Korea, Hong Kong and the US.

Four operators in Vietnam deployed CDMA: VNPT, SPT, Hanoi Telecom and EVN Telecom. Despite being highly regarded by technical experts, CDMA ultimately failed to gain a lasting foothold in the Vietnamese market.

2G era ends as Vietnam makes room for 4G and 5G

After more than 30 years, GSM/2G has reached the end of its lifecycle in Vietnam.

Plans to switch off 2G were first set out in 2019. In preparation for the transition, the Ministry of Information and Communications and mobile operators introduced measures to encourage users to move from 2G-only handsets to smartphones while expanding mobile broadband infrastructure.

Under the roadmap, 2G mobile systems are permitted to operate only through Sept. 15, 2026, except for services covering the Truong Sa and Hoang Sa archipelagos and Vietnam’s DK offshore platforms.

More recently, the Ministry of Science and Technology auctioned the 900 MHz spectrum previously used for 2G, allowing it to be repurposed for 4G and 5G development. VNPT, Viettel and Vietnamobile won spectrum in the auction, with combined winning bids exceeding VND3 trillion ($114 million).

More than three decades after choosing GSM over analog technology, Vietnam is once again at a major technological turning point.

The first transition saw the country embrace digital mobile technology when the market was still taking shape. This time, retiring 2G is designed to free up room for 4G and 5G and support Vietnam’s broader national digital transformation.

Thai Khang