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Yes, I care

Dear Vietnamese telcos, it’s time to wake up and create some new value

Anh-Minh Do
Anh-Minh Do
5:00 pm on Sep 27, 2013

vietnamese-telcos-wake-up

Vietnam’s 3G and mobile coverage has slowly gained a quiet reputation in the Southeast Asian region for being broad and reliable. It’s also known for being the cheapest and most convenient. Walk down any street in Vietnam and you can buy a brand new SIM card for less than $10, with enough credit for unlimited data for a month. If you want to top up your card, it’s just as easy. Scratchcard sellers are everywhere.

Vietnam’s telcos probably don’t like this so much [1]. After all, in a country where you can get a new SIM or scratchcard on any street corner, the telco offerings must be highly decentralized. Anybody can be a vendor for SIMs and scratchcards. And decentralization means less regulation and control over the product. But it’s also been a key reason why it’s grown so fast.

Unfortunately, that growth is one-dimensional. The government-owned telcos of Vietnam compete on price. They don’t compete on services. This is in stark contrast to Thailand’s telcos, who are on a quest to fund the next generation of mobile startups in their country. Some in the industry seem to think that this reflects Vietnamese consumers. As one of my undisclosed sources in a foreign telco mentioned to me:

Vietnamese customers are mostly interested in the price, it does not seem that innovation is a key factor for entering the market.

In other words, Vietnamese consumers just want to be able to text and call.

Here come the smartphones

At last count, Vietnam has over 140 million mobile subscribers, and only 20 to 30 percent of that number is on smartphones. And those are only numbers within the last few years. The smartphone revolution has come to Vietnam and the telcos need to wake up. By the end of next year, Vietnam will have near 40 percent smartphone penetration and by 2015 nearly 50 percent.

What Vietnamese telcos need to do is look at what the Thai and Sing telcos are doing. In Thailand, Dtac just released its Watchever app, which allows users to stream movies more efficiently over their telco services. Singtel is partnering with companies like Shopify to offer its customers more access to e-commerce products. There’s also huge possibilities in supporting more VOIP communication as well as online storage. I mean, I know the folks at Kleii, Vietnam’s Dropbox, have been working hard on getting cloud storage offerings for telco customers. There’s a lot of possibilities.

Rumors said Vietnam might ban chat apps. Whether or not this is true, it’s a clear indication that Vietnamese telcos are out of touch with services they could serve on top of their 3G lines. I’d say they’ve got within one year to rethink and start investing seriously the same way Thai telcos are. Otherwise, they risk holding back one of the most promising mobile markets in the region.

Recent reports might indicate that some telcos are waking up to this. But it’s too soon to say. We’ll be watching closely for any services they may roll out.


[1] Vietnam has three major mobile telcos, including Mobifone, Viettel, and Vinaphone.


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Have Your Say
  • http://www.chandlernguyen.com Chandler Nguyen

    Hey Anh Minh,

    Good article, and a good start. If I may add a few humble points from myself.
    I think Telcos in Vietnam are very smart, especially Viettel actually (I have no ties to Viettel whatsoever by the way).
    One example from the way they “encourage” users to spend more with the household internet data plan: some Telcos are (used to) hosting Blueray/HD quality movie sites etc… so that if you want to download these movies, you have to sign up with them. But that’s not all, these BR/HD movies are of very big sizes in comparison to normal DVDRip Movies 10Gb vs 700Mb so the more you download, the higher internet speed you need (more expensive Internet Plan) and more bandwidth you need…

    Right now from what I could see Telcos are trying various VAT services. If you allow them to send you promotional messages, you could receive on average at least 3 messages/day (that’s what I am receiving btw). Yesterday Mobifone just sent another message to me advertising for their video service on smartphone.
    It’s true that the scale of these services are not at the Whatsapp level etc…

    Also, it is actually quite expensive right now to use 3G properly in Vietnam. With each VND 50k ($2.2), you get only 600Mb data at 3G speed, the rest (so called “unlimited”) is at E speed. If you watch videos on Facebook, use iOS 7 (which automatically updating apps), use Facetime often etc… like me, I find myself constantly have to sign up for more to use 3G speed.

    Thanks,
    Chandler

  • Chris Harvey

    One VN telco policy that puzzles me to no end is the insistence to take a ~50% cut of carrier-enabled payments. As a result no one uses it.

    There are a lot of business models that would be enabled by cheaper mobile payments. Dropping the price would grow their business and they would make more money. I just don’t get it.