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|A booth set up by Viettel to provide visitors a taste of the 4G experience|
4G operators lining up
This week, VNPT-Vinaphone will be the first telecom company to start providing 4G services in Vietnam on a large scale, making the first advance in this new competition. With the pilot programmes of Viettel and MobiFone well underway, Vietnam is looking at a landscape that might robustly change in the coming time, much like it did in India. What lessons can be drawn from the uproar caused by 4G services in India?
Luong Manh Hoang, chairman of VNPT-VinaPhone, in June 2016 told ICTnews that 4G technology is an opportunity for breakthrough, giving the firm an opportunity to reclaim its second place in the mobile network market, with about 33 per cent share of domestic subscribers.
Hoang added that he sees 4G as a new beginning, putting all operators at the same starting line and success will come to those who make the best of the new opportunity.
This blooming competition has yet to show the new balance of scales. While it is clear that three mobile network operators Viettel, MobiFone, and VinaPhone are in the lead as they have already secured licences to pilot 4G services, it has yet to be seen which of these will emerge ahead.
However, a cursory look at India, which has been piloting 4G services since 2012, may allow certain insight to what awaits Vietnam. There are indeed many overlaps, as the majority of Indian telecom giants have opted for a similar course of action as two out of the three piloting Vietnamese mobile operators: a full-scale campaign aiming to offer 4G connectivity throughout Vietnam. On the other hand, VinaPhone and its Indian counterpart in this story, Vodafone, have opted for the waiting game and providing stability and reliability on smaller coverage.
The power of 4G
The shaping out of India’s telecom market may just provide glimpse to the future of Vietnam. With extremely fast growth in mobile phone sales that is projected to hit the billion mark by 2020, 4G connectivity is positioned as the key determinant of market success.
This can be seen in the impressive number of the projected 90 million subscribers using 4G by 2018 (remember, 4G has been rolling out in phases since only 2012), the fact that 4G is fast becoming the major source of data traffic, contributing 60 per cent of the incremental payload from 2015 levels (according to newindianexpress.com), and that the new contender Reliance Jio is making the top three mobile network operators quake in their boots with it super-aggressive 4G strategy.
Financed by India’s richest man Mukesh Ambani, the new telecom operator started offering free voice and cheap data plans until the end of March, effectively knocking competition out of their socks: within 170 days, Reliance Jio passed the 100 million subscriber mark. Adding to this, Reliance Jio’s pure-power 4G coverage it has more than double the number of 4G base stations than the entirety of its Indian rivals altogether and its promise that even after April voice calls to any operator will remain free, offers a clear explanation why the top 3 are in a frenzy.
The shifting balance of power through the emergence of 4G that led to the rise of the dark horse Reliance Jio was responsible for current numero uno Airtel (269 million subscribers) to gobble up Telenor India in February, adding 44 million customers, and the recent announcement of merger plans by number two and three Vodafone India (277 million) and Idea (177 million).
The quick advance of Reliance Jio and the pressure exerted on India’s largest network operators attests to the truth of VNPT-Vinaphone’s chairman Luong Manh Hoang’s assessment when he told newswire vietnamnet.vn that 4G technology is an opportunity for breakthrough, giving the firm an opportunity to reclaim its second place in the mobile network market, and that he sees 4G as a new beginning, putting all operators at the same starting line and success will come to those who make the best of the new opportunity. 4G does stir up a settled market.
What awaits Vietnam may just as well be remarkably shifting market shares and winners and losers being decided by where they fall along the 4G fault line.
Another important lesson from India: while with the promise of increased bandwidth and lower latency as well as higher download speed 4G just sells itself, Indian companies are painstakingly investing in infrastructure to do good on this promise, trying to avoid the disappointment over the same promises during the rollout of 3G.
Indeed, logic dictates that actually living up to the promise of greater speed and providing reliable, quality 4G services may just be the dividing line among mobile network operators. But what is the adequate business strategy? Going in hard and offering 100 per cent coverage (as did Airtel and Reliance Jio as well as Viettel and MobiFone) or concentrating on a smaller circle (Vodafone India and VinaPhone)?
Pick your weapon
The idea of 4G connectivity and all it encompasses generally prods for a universal approach: 4G anywhere, anytime. This has been the basic approach applied by most service providers and it just feels right, the way it aligns with the idea itself.
And there is much to be said for going all out: Airtel was the first to implement 4G in India in 2012 and to this day holds a heavy hand over competition: hailed as the “widest network” in India, it offered 4G services in 350 cities in 15 circles (India’s 29 states and seven union territories are broken down to 22 telecom circles) to a userbase of 2.5 million subscribers as of the first quarter of 2016. Following the acquisition of Telenor and smaller fish Aircel, Airtel remains in a strong position to face (but perhaps not face off) Reliance Jio.
Just the same, wunderkind Reliance Jio is causing a headache for its established rivals by offering the largest bandwidth with a nationwide licence and by having installed double the 4G base stations than the rest of the market combined. While Jio’s 4G services have not been launched yet due to repeated delays, it offers VoLTE technology to allow for high definition voice calls, providing stronger coverage and better quality than its counterparts.
It might not be a coincidence that both India’s “widest network” and the emerging dark horse have opted for the same rollout strategy. In this sense, Viettel’s and MobiFone’s approach is quite understandable.
As previously covered by VIR, Viettel went for a full-scale campaign right from the get-go, distributing free 4G SIM cards at 1,600 locations throughout the country since the end of 2016 to February 2017. Viettel wanted to launch 4G services as early as January this year, but was delayed by numerous technological problems.
MobiFone, either beaten to the punch or inspired by Viettel’s swashbuckling, came out with a similar campaign at the end of January. Until the end of March, MobiFone offers free 4G SIM cards with free 1.5 GB data for three days. Signalling success, about a million users converted their SIM cards already.
VNPT-VinaPhone and Vodafone India have decided on a different approach: recognising the difficulties in country-wide service provision, both companies took a step back and work on dominance in a smaller area. Vodafone’s 4G services are available in five states in India and the company has settled down to a waiting game to assess actual market demand before investing in the remaining 17 circles and expanding coverage. The company’s newly announced merger with Idea may signal that Vodafone has managed to find the pulse that market share in the coming years will ride on mobile data and 4G, which is spreading like fire all over India.
VNPT-VinaPhone first tested and installed 4G base transceiver stations on Phu Quoc Island. Earlier covered by VIR, VinaPhone focuses on speed and reliability at first, as stated by chairman Luong Manh Hoang. After achieving the coveted service quality, VinaPhone is planning to extend 4G services to Hanoi, Ho Chi Minh City, and 10 other focal cities and provinces over Vietnam. An ambitious move to catch up with domestic competition in terms of coverage, VinaPhone is planning to install 21,000 4G base stations in 2017.
The question remains to be answered: will Viettel and MobiFone’s all-out approach or VinaPhone’s slow and steady going make them king of the mountain? By arriving first, the proverbial early birds Viettel and MobiFone may crowd out VinaPhone even before it could make an appearance, but will they be able to provide quality on par with VinaPhone’s services?
Or going the other direction, will VinaPhone be able to provide services that are prominently faster, more reliable, and more stable than those of its competition?
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