The Internet market is witnessing a fierce competition among service providers. Prices are continually decreasing, while investment costs remain quite high, leading experts to conclude that the opportunities for latecomers are almost non-existent.
 |
|
The cost of Internet service is becoming increasingly affordable. Photo: Hoàng Hà |
Among the 18 companies licensed to provide Internet services (ISPs), only 9 are currently operational. However, of these 9 active companies, the majority of the market share is controlled by three major players: VDC, FPT, and Viettel, which together account for about 80% of the total market share of ISPs. These three companies are also struggling to implement their services, leading to profits from Internet connectivity being likened to “a cake that has lost its sweetness.”
A VNPT official commented that new ISPs entering the market will face significant challenges due to high input costs while access service prices continue to decline. For instance, in 1999, the subscription fee for VNPT’s indirect access service via the Public Switched Telephone Network (PSTN) was 320,000 VND per month, with access fees ranging from 180 to 250 VND per minute. After 10 consecutive price reductions, the current monthly subscription fee has dropped to 27,272 VND, and access fees now only range from 40 to 180 VND per minute.
For ADSL high-speed Internet access, VNPT’s maximum fee is currently capped at no more than 1 million VND per month, prompting other ISPs to adjust their fees to similar or lower levels if they wish to retain customers.
|
According to plans, Vietnam will officially join the World Trade Organization (WTO) in October. The telecommunications sector aims to attract foreign partners to invest in all areas upon market opening. However, in reality, while the United States has been allowed to participate in a 50/50 joint venture to develop Internet services in Vietnam, no joint venture projects have been submitted so far. Additionally, there has been minimal engagement from the U.S. regarding this matter. |
ISPs estimate that considering the current ADSL pricing along with other costs, providers will have no profit, and may even incur losses. Meanwhile, the investment required for an Internet network system is quite substantial. For example, a company wishing to enter this market must have capital of approximately 5 to 10 million USD, and to survive, they may need to accept losses in the first 2-3 years while seeking customers.
Moreover, investing in promising services such as broadband requires significant infrastructure spending. However, the ISP licenses granted by the Ministry of Post and Telecommunications to domestic companies often involve relatively small capital from certain private firms.
Experts note that when granting licenses to new ISPs, the Ministry of Post and Telecommunications seems to have overlooked financial capacity and human resources, leading many companies to obtain licenses but then remain inactive due to insufficient capability to operate. Consequently, new ISPs have found it genuinely challenging to “survive” as they struggle to identify strengths to compete with established ISPs, or in other words, there is no longer an opportunity for new companies.
Struggling with Profit and Loss Figures
Not only are new companies grappling with plans to enter the market, but even existing companies are facing challenges regarding profit and loss. At the end of 2004, Kasati Joint Stock Company tested several Internet-based application services (OSP) at “ultra-low” prices. They even planned to launch a device that could help those without computers connect and make low-cost Internet calls. However, after two years, this provider has not made any further moves, having not seen profits and citing a lack of capital as a difficult-to-discuss reason. A representative from Kasati stated that the company is still calculating to find a service that fits its business model. “However, with the current rate of development, it is indeed difficult for us to find growth opportunities“, he said.
Even Saigon Postel, after over five years of operation, has only provided ADSL services in the new urban area of Phu My Hung and is currently rolling out services to customers on its fixed network, but they are not able to offer widespread service due to the need to subsidize losses from both dial-up and ADSL services.
Unlike Saigon Postel, NetNam has been cautiously providing ADSL services only to organizational clients and agencies, as they cannot offer widespread service to Internet reseller clients without consuming a large amount of international bandwidth. Mr. Trần Bá Thái, Director of NetNam, stated that to survive and avoid losses, the company has had to diversify its business sources. Currently, NetNam’s revenue is no longer reliant on Internet service sales but rather on additional network solutions.
Hồng Anh
