Network operators join forces to prevent Internet market collapse

The fixed broadband Internet market is likened to a red ocean, because it is a fierce competition between businesses in the battle for customers and market share.

Fixed broadband internet is likened to a "bloody arena"

Up to now, the Ministry of Information and Communications has granted 19 licenses to provide fixed broadband Internet ADSL/FTTH services to businesses. However, the service market share is mainly in the hands of 3 providers: VNPT, Viettel and FPT. Although quite open in licensing, in recent years there have not been many new businesses entering the market other than MobiFone. However, the appearance of MobiFone is quite dim and the market share is also very small.

The fixed broadband Internet market is considered a "red ocean" because it is a fierce competition between businesses in the battle for customers and market share. There have been accusations between businesses regarding price gouging, even selling below cost. If in the past, network operators set an initial installation fee, in the race to win customers, they have simultaneously announced free installation fees, and at the same time, strongly promoted customers who pay in advance for 1 year of service.

On some social networking sites, groups have appeared sharing ways to “skip” Internet fees from network operators or how to switch networks to enjoy promotions for new subscribers. One network operator complained that customers using ADSL/FTTH Internet “change networks like changing clothes”, causing them to spend too much money.

In the tight race, businesses like CMC and NetNam have shifted their focus to providing services to corporate customers with an ecosystem rather than targeting individual customers like VNPT, Viettel and FPT.

Sharing with VietNamNet , a leader of FPT Telecom said that when a new subscriber registers for the service, the provider will have to invest in cables and modems at a cost of about 2 million VND. To recover the initial investment, the network will have to take 2 years. That is not to mention the promotional program for new subscribers. However, after the promotion ends, these subscribers switch to other networks, even "skip" the service provider's fees, causing them to suffer double losses.

“Some network operators have launched broadband Internet packages for only VND100,000/month to attract customers. With this price, only cross-subsidization from other services can the network operators maintain their operations,” said a representative of FPT Telecom.

Mr. Huynh Quang Liem, General Director of VNPT, shared that excessive competition among businesses has caused the fixed broadband Internet market to plummet and become unprofitable. If this continues, the market will collapse.

According to Mr. Huynh Quang Liem, fixed broadband Internet requires huge costs to reinvest in the transmission network. In addition, Vietnam also needs to invest in more submarine fiber optic cables. However, if businesses rush into fierce competition, they will have no money left to reinvest. This will affect both customers and information security in Vietnam.

The last straw and the opportunity for network operators to "start over"

A recent statistic, after 5 submarine cable lines in Vietnam were broken, showed that fixed broadband Internet subscribers accounted for 80% of Vietnam's international capacity. Therefore, when submarine cable problems occurred on all 5 lines, fixed broadband Internet subscribers were most affected.

The battle for customers was like the “last straw” that forced network operators to recalculate their future. For the first time, network operators simultaneously re-imposed the initial installation fee for new subscribers at 300,000 VND. The re-imposition of the initial connection fee surprised many customers. However, when network operators applied the same price, this was accepted by the market.

There are also skeptics who believe that at some point the story of excessive competition will flare up again, leading to the risk of market collapse. But it seems that the network operators are now better united to prevent market collapse. Yesterday (August 29), under the witness of the Telecommunications Department (Ministry of Information and Communications), 10 network operators took another step forward when they signed a commitment to refuse to provide services to customers who "skip" their fees.

Accordingly, businesses including Viettel, VNPT, MobiFone, FPT Telecom, CMC Telecom, SPT (Saigon Postel Corp), HTC-ITC, Indochina Telecom, Netnam and VTC Digicom have committed to refusing to provide services to new customers registering for fixed Internet access services if they violate their payment obligations to one of the parties.

The businesses also agreed to transfer data of violating customers to the Storage and Support System for Inquiry of Violating Customers located at the Center for Support of Network Development and Services of the Telecommunications Department. This is an intermediary system to store and support businesses in querying violating customers.

The move to “start over” by ADSL/FTTH Internet service providers, if taken seriously, is a good sign for customers. Because only when businesses make profits will they have money to reinvest and ensure the quality of services provided to customers.

Vietnam is aiming to bring fiber optic internet to 80% of households and 100% of communes by 2025. However, this goal can only become a reality when the market balances the interests of both service providers and users, with reasonable rates and guaranteed quality.

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