[Vnbiz] EIU Vietnam Infrastructure and investment

[Craig Stevenson]

Vietnam telecoms: Infrastructure and investment
   Printer version<http://www.viewswire.com.ezproxy.umuc.edu/index.asp?layout=IwPrintVW3&article_id=1561135141&printer=printer>
 September 4th 2006

   FROM THE ECONOMIST INTELLIGENCE UNIT

The telecoms industry is growing fast

Vietnam's telecommunications industry has been growing rapidly. The rate of
growth in the number of mobile-phone subscribers is outpacing that of
fixed-line subscribers, and, as a result, competition is intensifying in the
mobile-phone sector. Between 2000 and 2005 the penetration rate of
mobile-phone subscribers rose tenfold to ten subscribers per 100 population.
Despite the rapid pace of expansion, the number of mobile-phone subscribers
remains low compared with other countries in the region, such as Thailand
(at around 46 subscribers per 100 in 2005). In 2005 there were 5.7m fixed
lines, equivalent to a density of 6.8 lines per 100 population, up
from 3.2lines in 2000, but still low compared with around 12 in
Thailand and 28 in
China. Although the monopoly previously enjoyed by the state-owned
VietnamPost and Telecommunications Corporation (VNPT) has ended, with
five new
telecoms service providers in, or about to enter, the market, VNPT remains
dominant. There are two dominant providers of mobile-phone services:
Vinaphone, operated by Vietnam Telecoms Services Company (GPC), which is a
subsidiary of VNPT; and MobiFone, operated by Vietnam Mobile Service (VMS),
a subsidiary of VNPT (in co-operation with Comvik Group of Sweden until May
2005).

Internet usage grows slowly and is restricted

Internet services, which became available in mid-1998 in both Hanoi and Ho
Chi Minh City, are expensive, but there were around 4.3m Internet users in
2005. Internet access is generally slow, largely because of government
firewalls that limit access to certain websites from outside the country.
Most people wishing to access the Internet do so through Internet cafes,
which are now common in most urban areas. The dominant Internet service
provider (ISP) in Vietnam is the Vietnam Datacommunications Company (VDC, a
subsidiary of VNPT), which controls around 65% of the market. There are 12
other licensed ISPs. A number of ISPs have entered the broadband market,
using asymmetric digital subscriber line (ADSL) technology. Although ADSL
typically provides Internet access at speeds of up to 40 times faster than
regular dial-up connections, service quality in Vietnam has been fairly
poor, with capacity failing to cope with the sharp rise in demand since late
2004.

A government firewall blocks access to some pornographic and politically
sensitive sites abroad, but also limits bandwidth and makes confidential
business transactions difficult. In an effort to boost investment in the
information technology (IT) sector, the government is allowing a few firms
to avoid the firewall.
The Economist Intelligence Unit
Source: Country
Profile<http://www.viewswire.com.ezproxy.umuc.edu/accessFullReport.asp?product_id=30000203>
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