VietNamNet Bridge – Vietnamese telecom firms have unanimously charged foreign telecom exploiters higher for the services of connecting the inbound calls with the subscribers in Vietnam.
Building up agreements and then breaking them
The firms have raised the service fee from 2.6 US cent per minute to 3.5 cent per minute.
Ten years ago, the service was considered “the goose that lays golden eggs” for Vietnamese telcos. This then prompted a lot of investors to jump on the bandwagon. Since they did not have to make heavy investment to develop the infrastructure system of their own and only had to pay low expenses, they tried to dump the services, offering low service fees to foreign partners to scramble for clients.
In fact, Vietnamese telcos understood that by dumping the services, they lost a lot of money and harmed the national interests. Especially, their dumping behavior would kill themselves one day, once the profits cannot cover operation expenses.
However, they still kept a deaf ear to the problem, just trying to scramble for clients.
The watchdog agency, which was aware of the problem, took drastic measures to prevent enterprises from dumping services. However, its efforts were in vain. The telcos, after sitting together at some meetings and agreeing not to dump the service, immediately broke the promise after they left the meetings.
Under the latest decision made on March 2, 2011, the Ministry of Information and Communication suggested the service fee of 855 dong per minute, or 4.1 US cent. It also stipulated that one would be considered as conducting the dumping behavior, if it provides the service at below 15 percent of the above said price level.
However, telcos then still kept dumping, leading to the service change plunge to 2.6 cent per minute, hitting the production cost.
A telecom expert said that the inward output to Vietnam is about 3 billion minutes a year. If Vietnamese telcos charge 4.1 cent per minute, they would gain 123 million dollars.
Meanwhile, with the price of 2.6 dollars per minute, the Vietnamese telecom industry could earn 78 million dollars only. As such, Vietnam loses 45 million dollars a year because of the service dumping.
Connection fee would be 4.1 cent per minute
However, things would change since most of the telcos have affirmed that they have canceled the previously signed contracts, while having raised the connection fee for the inward calls to 3.5 cent per minute from 2.6 cent.
Deputy General Director of Viettel Le Dang Dung Ha affirmed that Viettel and VNPT have charged 3.5 cent per minute since October 1, 2012. The two giants have also agreed that they would further raise the service charge to 4.1 cent as suggested by the Ministry of Information and Communication.
A senior executive of CMC has also confirmed that after the meeting gathered by the watchdog agency in September 2012; telcos have unanimously raised the service fee to 3.5 cent.
However, telcos said that though the service has been raised, it’s still too early to say that the dumping has finished. They have urged the watchdog agency to take drastic measures to prevent the problem.
A senior executive of VNPT said the average service fee now is five cent per minute on average, or 1000 dong per minute.
Meanwhile, Pham Hong Hai from the Ministry of Information and Communication said a foreign consultancy firm thinks Vietnam could charge 10-12 cent per minute. However, Hai said, this would come true only if Vietnam can keep strict management over the market.
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd (SBC), Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at email@example.com. Many thanks.