VietNamNet Bridge – The Internet charges have been on the decrease, while the input costs have been increasing, thus requiring high investment capital, which both have put big difficulties for Internet service providers (ISP).
It takes an ISP at least two or three years to break even; therefore, ISPs cannot make heavy investment to develop the network. Meanwhile, the operation costs have been increasing, since everything is getting more and more expensive, from electricity to petrol prices.
Vietnam’s Internet charges lowest in the world
Mai Sean Cang, General Director of Intel Vietnam, said that 16 years ago, the Internet access fee in Vietnam was considered the highest in the world. However, things have got quite different: the Internet service charges in Vietnam are now the lowest in the world.
He said that 16 years ago, when came to Vietnam to set up a software outsourcing firm, he had to pay 2000 dollars for high speed Internet service, while his firm just has to pay tens of dollars for fiber Internet service.
Sharing the same view with Cang, General Director of FPT Telecom Nguyen Van Khoa has affirmed that Vietnam’s Internet access fee is the cheapest in the world. Three or five years ago, the average monthly Internet fee was high enough to afford 10 glasses of coffee, while the fee is just equal to three glasses now.
The report of the Ministry of Post and Telecommunication, now the Ministry of Information and Communication on the Internet development in Vietnam in 2001-2005 showed that at that time, ADSL service packages had the fees of 200,000-320,000 dong, down by 3-4 times from the fee set in 2003, when ADSL services first hit the market.
At present, the big service providers such as VNPT, Viettel or FPT are offering the fees of between 200,000 and 230,000 dong at the lowest. The service fees of ADSL packages seem to be unchanged, but users have got more benefits from the packages, as the bandwidth of the packages has been upgraded regularly.
MegaSTYLE (FPT) package, for example, with the speed of 1526 Kbps/512Kbps had the fee of 250,000 dong a month when it was launched in 2005. The package has turned into MegaYOU which has the speed raised to 6114 Kbps/640Kbps with the same charge.
Meanwhile, in the years from 2006 to 2011, Vietnam continuously saw the inflation rates at two digit levels, except 2009, with the average increase of 11.5 percent per annum. Especially, the highest inflation rate was seen in 2008, at 19.87 percent.
Businesses cannot survive with too low charges
Khoa said that the low Internet service fee has put a hard pressure on service providers. Once launching low-fee service packages with the fees equal or lower than the production costs, enterprises would not have money for re-investment and network expansion.
An executive of FPT Telecom said that it takes at least two or three years to break even. As businesses operate for profits, they would not be able to reach out remote areas, while they have to focus on big cities such as Hanoi or HCM City.
The representative of another Internet service provider has commented that the Internet service infrastructure war would be a long race, and one should not expect to get profits in the immediate time, especially when the Internet fees have become so low.
He went on to say that his enterprise has decided not to provide ADSL services with copper cable to households, because he can anticipate big losses and cannot see any opportunities to make profits.
Source: Buu Dien