Is Vietnam’s 3G too cheap or too expensive?

3G services have been supplied by Vietnam’s three largest telecom networks for nearly one year, but they don’t meet user expectations.

In the 15-year history of the telecommunication industry, the launching of 3G services is seen as a breakthrough that rubbed out the problems of data transmission speed and distance. 3G services are billed as a launching pad for the development of the telecommunication market or the digital content market for mobile devices.

The presence of 3G services in Vietnam also proves that local telecom firms are catching up with the world technology. However, since 3G services were offered in Vietnam, there’s been debate about the quality and effects of these services, and also the charges.

Experts say that with the average revenue per user (ARPU) of less than $5 a month, it is difficult to popularize 3G services in Vietnam. However, service providers have lowered the charges in order to bring these services to a mass market.

At the beginning, the charges of 3G-based data services in Vietnam were quite cheap. All three service providers – Viettel, VinaPhone and MobiFone – designed service packages without capacity restriction with a fixed monthly charges of around 250,000 dong ($12.50).

Recently, they have adjusted the offer. Unlimited capacity is gone, replaced by a 3 gigabite limit, and fixed charges were dropped to about 200,000 dong ($10) per month.

The sudden increase of telecom charges in Vietnam is an abnormal move. However, Vietnam’s 3G charges are still low compared to other countries. For example, Singaporean 3G users pay SG$20 (around 300,000 dong) to use 1GB data a month.

Though 3G charges in Vietnam are relatively inexpensive, customers have complaints. Many were upset when they were socked with big bills after the 3G providers cancelled their unlimited service packages. They say the cancellation was not properly announced.

Behind this story is a problem of the telecom market. As telecom networks have slashed mobile phone charges massively, users have come to expect telecom charges will go ever downward. When service providers adjust telecom charges to a profitable level, users complain that the services are expensive.

3G services are not for all users. In developed countries, most 3G service users are those who have to move about very often. In Vietnam, this service is used in a different way: customers download movies or music, or use 3G to replace wireless broadband Internet. As a result, service providers have backed away from unlimited capacity packages.

If telecom service providers were to continue to slash charges, Vietnam’s ARPU would approach to the world’s lowest level while users continued to demand the latest mobile technology.

In short, there’s good reason to seek better balance in the market. Charges for telecom services in Vietnam are now very low and if this trend continues, users too will suffer when service providers don’t have money to re-invest in their networks. Predictably, service quality will deteriorate.

Vuong Long