Oct 14, 2012

Vietnam - Telco’s MNV dream disillusioned

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VietNamNet Bridge – The door to the mobile telecom market has nearly shut before mobile virtual network operators (MVNO). Experts believe that the licensed MVNOs were wise enough not to enter the market. If they had done this, they would have swept away by the storm in the market.

Virtual network just an illusion

On August 19, 2008, the Ministry of Information and Communication officially granted the license to set up a MVN and develop mobile telecom services to Dong Duong Telecom.

This was the first MVN in Vietnam which shares frequency resource with another network and provides services to customers under the mode of retailing.

Just a short time after the license was granted, VTC and then FPT also asked for the permission for MVN.

VTC and FPT might think that this was really a lucrative business field, because they did not need to spend money to develop infrastructure, but still would be able to provide services. They might also have some other reasons to jump on the bandwagon.

However, at that time, specialists warned that the stiff telecom service market would not offer many opportunities for virtual networks, considered as the parasite living on others’ bodies.

And the specialists are right. No miracle has happened to help the MNVOs fulfill their dreams. Since the competition on the telecom market is too stiff, none of the licensed network operators has dared to join the market. The licenses for MVN have been kept in the companies’ drawers, because they still have not officially provided services.

Truong Dinh Anh, former General Director of FPT, once said on Buu Dien newspaper that the telecom market in Vietnam has become “brimful” with the three leading network operators MobiFone, VinaPhone and Viettel alone holding 95 percent of the market share already.

“We could not see any opportunities to enter the market at this moment,” Anh said.

“Now or never” - message released to MVNOs

MIC has threatened to revoke the licenses on running MVN granted before to Dong Duong Telecom and VTC, if they cannot give reasonable explanations about the tardiness in providing services after the licensing.

MIC, which has been criticized for “tolerating” the mobile network operators because it has not revoked the licenses granted before to the two telcos, has explained that MIC had reasons to do that.

In fact, according to Pham Hong Hai, Director of the Telecom Department under MIC, in 2011, the department decided to revoke the license from Dong Duong Telecom. However, the department later withdrew the decision after Dong Duong Telecom gave reasonable explanations and committed to begin providing services soon.

However, Hai said, if the enterprises “still keep quiet and make no move”, MIC would have to revoke licenses.

When asked about the reasons behind the delay of the two network operators in implementing their registered projects, Hai said that the main problem lies in the agreements with the partners in sharing the same infrastructure systems.

According to Dau tu, Dong Duong Telecom has not reached a detailed agreement with Viettel on the sharing of the 3G network infrastructure.

VTC, though having a detailed agreement on sharing 3G infrastructure with EVN Telecom, still cannot move ahead, because EVN Telecom, due to its problems, has merged into Viettel. This means that VTC would have to re-negotiate the terms of the agreement with Viettel.

It would be very difficult to negotiate for an agreement to share the 3G infrastructure with EVN Telecom. The problem is that the 3G license was granted to the joint name EVN Telecom and Vietnamobile. Meanwhile, one year after EVN Telecom merged into Viettel, it remains unclear about how to share the bandwidth.

As such, Dong Duong Telecom and VTC have been on the passive voice because they have to “sponge” on Viettel’s 3G network.

However, experts believe that the reasoned technical problems are just the “tip of the iceberg.” The real reason behind the slow project implementation should be the gloomy prospect for the new comers in the telecom market.

Compiled by C. V

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