Is the road for 4G service easy in Vietnam?

The Vietnam Post and Telecommunications Corp (VNPT) and Alltech Telecom (Russia) have signed an agreement to establish a joint venture company named RusViet Telecom, which provides fourth generation (4G) internet broadband service based on Long-term Evolution (LTE) technology.

In early October, the first LTE base transceiver station (BTS) was installed and transmitted signal successfully, located in internet house, Lot 2A, International Village of Thang Long, Cau Giay, Hanoi, This LTE BTS delivers test mode services.

4G service— inevitable trend

4G/LTE offers 100 Mbps download rate and 50 Mbps upload rate within 20 MHz bandwidth. Maximum data rate is expected to be 250 Mbps. LTE is optimised for low speeds (0-15 kilometres/h) but will still provide high performance to 120 kilometres/h with support for mobility maintained up to 350 kilometres/h (or even higher speeds up to 500 kilometres/h depending on frequency band).

For such superiority, many telecommunications and information technology companies have proactively welcomed 4G into Vietnam.
According to Ministry of Information and Communications, to date, the ministry has issued licences to test 4G/LTE service in a year for five companies, including VNPT, Viettel Corp (Viettel), FPT Telecom, CMC Group and Vietnam Multimedia Corp (VTC).

Although many people believe that when 3G technology has not yet developed, companies applying for permissions to test 4G are just to “book the places”. However, after receiving the licenses, VNPT has immediately coporated with Alltech Telecom to establish a joint venture RusViet Telecom to begin offering 4G service.

Under the signed agreement, RusViet Telecom will have legal capital of 1.6 trillion dong, of which VNPT accounts for 51% stake. VNPT will use technology and technical infrastructure of Alltech Telecom. VNPT said in the first stage, the pilot project would provide LTE broadband wireless service coverage in Hanoi area. The internet access speed is up to 60 Mbps.
LTE-based internet broadband service will provide applications requiring large bandwidth, such as video, HDTV, and online entertainment, etc. After the first stage, VNPT will expand 4G testing in HCM City and some other cities.

Meanwhile, for FPT Telecom, CMC and VTC, the 4G service is not only a technology tendency but also considered as a “laissez-passer” to become a real provider of broadband service in telecommunications market— the fertile ground where the two “giants” VNPT and Viettel are dominating.
Great challenge

Nevertheless, those businesses that hold 3G licenses have not yet been satisfied and still concerned on how to operate this 3G business effectively. To get the 3G licenses, those service providers have committed that the total capital investment in the first three-years would be up to dozens of trillions dong.

However, according to evaluations of some telecommunications experts, revenue from 3G service of those service providers currently accounts for two to three%, the remaining is from traditional services that are calling and messaging. In fact, although 3G has existed for over a year, the service based on 3G technology is still expensive and has not yet become a consumer trend.

Many services such as Mobile TV, Mobile Camera and Video Call are still feeble, only internet service offered on mobile and computer via 3G is taking priority in the usage demand and comsumption trends, but the number of users and frequency of use are still very limited, since the charge remains expensive and transmission speed is slow.

“Building 3G is based on two basic criteria that are demand of use and affordability of customers. This is the difficulty for the 3G operators at the present. Lam Hoang Vinh, director of VinaPhone said they estimated that it would take about 7 years to recover the capital invested in 3G service”.

The capital investment in 4G is as costly as in 3G, and even more. According to analysis of market research company Gartner, to fully carry out a 4G network, some mobile service providers would have to install about 10,000 base stations. Each station could cost up to hundreds of thousands US dollar.

While cooperating with VNPT to set up RusViet Telecom joint venture to carry out 4G service, Chair of Alltech Telecom Coporation Evgeny Roytman said that the investment for the testing phase would be approximately US$5 million and the total investment could be up to US$500 million when the project is completed.

This venture expects to achieve the target of return on investment ratio within five to seven-years.

Nevertheless, some experts in telecommunications and information technology acknowledged that the success of 4G service in Vietnam is still a great question, while there has no real answer for 3G issue. – Vneconomy

Tags: 4G, 4G Vietnam