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Internet price wars on expanding grid

Last update: 17:37 | 15/02/2017

The domestic fibre optic cable market anticipates a tough race this year between leading players for larger market share and expanded service provision.


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Military-run telecom giant Viettel just won the rights to develop a fibre optic cable system for Trang An Complex, a major mixed-use development in Hanoi’s Cau Giay district.

Under current regulations, other internet service providers such as leading state-owned telecom company VNPT and private tech giant FPT can still provide service upon customer request, but they must pay a fee to Viettel.

Statistics released by the Ministry of Information and Communications’ Authority of Telecommunications showed that subscribers for fixed broadband internet services (both ADSL and fibre optic) rose from 7.7 million to more than 9.2 million last year – of which fibre optic cable subscribers numbered 5.5 million.

At the moment, state-owned VNPT leads in internet market share with nearly four million subscribers (including one million ADSL subscribers), accounting for 41 per cent of total market subscribers.

Viettel, which owns 500,000 kilometres of fibre optic line, covering 5,170 communes (46 per cent of communes nationwide), reports more than two million fibre optic internet subscribers.

These two players hold about 80 per cent of Vietnam fibre optic cable market share. The remaining 20 per cent is divided between FPT and other service providers.

During 2014-2015, Viettel was the largest provider of fibre optic cable services in the country. In 2016, however, they lost ground to VNPT, showcasing the tough race between these two leading players.

The race between internet service providers attempting to seize as many subscribers as possible has led to a gritty price competition.

According to provider calculations, a monthly fee of VND320,000 ($14.50) per subscriber will keep them solvent.

In fact, except for corporate customers who have to pay monthly fees from VND1 million ($45) depending on usage demands, the average fee for family households ranges from VND200,000-250,000 ($9-11) per subscriber per month.

VNPT VinaPhone general director To Dung Thai commented that this year will witness fierce competition between broadband internet services providers in the context of extremely low average revenue per user (APRU).

The service providers shared a common assessment that this year the race between fibre optic cable service providers in expanding their subscriber pool will move from big cities into rural areas.

A VNPT source shared that this year the group is set to add 1.2 million new fibre optic cable subscribers, and to achieve that goal, they will offer price discounts and try to shorten the time it takes for their services to reach their customer’s homes.

Accordingly, VNPT will expand its fibre optic cable coverage to more rural and remote areas. At present, the group’s fibre optic network covers 93 per cent of communes nationwide and is expected to reach 97 per cent within 2017.

Viettel’s strategy is to provide fibre optic packages suited to each customer group at reasonable fee levels. The group’s goal is to attain 20-25 per cent growth in fibre optic cable subscriptions this year against last year and expand fibre optic cable infrastructure coverage to 70 per cent of communes nationwide.

VIR

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