Телеком в Мире

Summary

This report focuses on the wireless networking equipment and solutions industry sector in Vietnam.  Although the wireless networking equipment and solutions market in Vietnam is presently still in its infancy, it will likely grow rapidly in the next few years as a sub-sector of the Information and Communications Technology (ICT) industry in Vietnam.  U.S. businesses and exporters of equipment and solutions for wireless local area networks (WLAN) and wireless Internet applications will find opportunities for sales and expansion in this market, particularly for those who come early and establish a proper presence in the market.

 

Vietnam has made the development of the ICT industry a national priority.  One of the primary areas that both local and foreign companies agree is a major hindrance to the development of the industry is Vietnam's sub-standard Internet capability.  In 2002, Vietnam revamped its strategy to meet new goals for the development of the ICT sector and for the development of the country.  Many development strategies and policies for the ICT industry were issued, creating a favorable environment for the vibrant development of this industry.  As a result of the Vietnamese Government’s priority for development of the ICT industries in Vietnam, the networking equipment sector and other ICT related industries in this emerging market have been growing rapidly following the entrance of newly-licensed telecommunications companies and Internet service providers, establishment of software parks, and infrastructure development by Government agencies and local enterprises.  Broadband Internet services, both wire and wireless protocols, have recently been offered in Vietnam.  This marks a critical turning point in the development of the local ICT market, especially the wireless networking market.

U.S. suppliers present in this market include Cisco Systems, Intel, Hewlett Packard, IBM, and 3Com, among others.  American companies are clearly the industry leaders in terms of technology, hardware supply and quality of service, and American suppliers of networking equipment have established leading positions in Vietnam’s emerging market.  American firms have emphasized cutting edge technology and training as their main competitive strengths.  According to many industry experts, Cisco Systems, a U.S. company specializing in networking equipment for the Internet, is the leading supplier of networking equipment in Vietnam.  Vietnam’s steady infrastructure investment and business development in this industry will continue to generate significant export prospects for U.S. companies.

Market Overview

The year 2003 marked a significant development for the Information and Communications Technology (ICT) sector in Vietnam.  For the first time, Vietnam was ranked together with 53 other countries in the Information Social Index (ISI).  The ISI is based on 23 factors associated with four groups: computer infrastructure, Internet infrastructure, information and social infrastructure.  In a global Information Technology (IT) report, the World Economic Forum ranked Vietnam at 68/102 for its Networking Ready Index (NRI) in 2003.  The NRI is based on the norms of network use (the rate of Internet and mobile phone users) as well as capability factors (access capability, policies, network society and economy).  The Internet channel capacity/Internet user index of Vietnam, according to the calculation methods of the International Telecommunication Union (ITU) is 600 Bps (byte/second), which is higher than China and equivalent to Thailand and the general level of the region.

Vietnam’s Internet development plan for the period 2001-2005 calls for about 1-1.2 million Internet subscribers and 3.2-4 million users, 3-5 Internet Exchange Service Providers (IXPs), 30-40 Internet Service Providers (ISPs), and many licensed On-line Service Provider (OSPs) by 2005.  The plan also calls for reducing telecom and Internet charges to below or equal to those in regional countries by 2005, to provide wider application of Internet-related services in the country, and to increase total revenue from Internet services to US$2 billion by 2005.  A sustainable integration and development strategy has been initiated as a cornerstone for the development of the ICT industry in the next 10-15 years.  Vietnam has four solutions to achieve such defined targets.  First, Vietnam will perfect the legal system and enhance the state administration in Internet.  This solution will require effective management of the Internet and establishment of suitable Internet tariffs.  Since 2002, the Internet access tariff has been adjusted to be comparable to other countries in the region.  Second, Vietnam will develop the infrastructure by expanding advanced technologies to all villages.  Third, Vietnam will develop Internet application services including the establishment of a national database and application of information technology in government management.  Fourth, Vietnam will educate present and future users about the Internet.

Under the recently implemented Vietnam - US Bilateral Trade Agreement (BTA) Vietnam has committed to liberalizing the telecom service market according to a staged schedule of implementation.  As the BTA is implemented by Vietnam, new opportunities will open up for U.S.  equipment and services providers.  For example, six years after the BTA enters into force (December 2007) U.S. service providers will be able to form joint ventures with Vietnamese partners with up to 49% U.S. equity ownership for voice telephone services.  As of December 2003, U.S. service providers may form joint ventures with up to 50% U.S. equity ownership for all value added services except Internet services, which open up in December 2004.

The newly established Ministry of Post and Telematics (MPT) is currently the sector administrator.  As such, MPT is responsible for developing the national information infrastructure, including issuing the equipment standards (called TCVN), popularizing telecom services, and contributing to national socioeconomic development.

Market Trends

Under the development plan, all provinces and cities in Vietnam are to be connected to broadband networks by 2005.  Teledensity is expected to increase to 8-10% in 2005 and 15-18% by 2010 from 7% in 2002.  By 2010, the national information highway will be connected to all communes and districts nationwide by cable and other high bandwidth methods, with at least 30% of subscribers able to access the Internet.  Also by 2010, telephone and Internet use is targeted to reach the regional average, with 60% of households owning telephones.  While increasing telecom capacity, Vietnam has reduced international telecom charges by a yearly average of 10% and international volume has increased by 18% annually.

To accommodate those projected developments together with rapid Internet development, the MPT has translated its commitments into concrete actions.  The national backbone network has been upgraded and is on the way to the next-generation network.  Many legal documents in the industry have been released to create a better competitive environment in which those smaller service providers whose market share is less than 30 percent can set their own service price to the end users.  Goals have been set for the abolition of other corporate monopolies, enabling rapid transition into a competitive market.  According to this strategy, private and certain foreign invested enterprises are now able to take part in post and telecom services supply.  The non-state sector is expected to increase its service market share in post and telecom markets by 25-30% by 2005 and 40-50% by 2010.  The government is encouraging all forms of foreign investment, including 100% foreign-invested firms, to transfer technology into the country.

Many new value-added services have been introduced in the market, including broadband Internet access via Integrated Services Digital Network (ISDN) and Asymmetric Digital Subscriber Line (ADSL).  These kinds of services, serving as broadband “backhaul” connections, will help to grow the wireless Internet access.  The official launch of the first public wireless fidelity (Wi-Fi) hotspot on June 12, 2003 in Hanoi marked the introduction of the usage of Wi-Fi for Internet access in Vietnam.  The launch was the result of Vietnam Data Communications Corporation (VDC) and Intel’s co-operative agreement to drive the deployment and application of 802.11-based WLAN in Vietnam.  This will enable notebook users to wirelessly connect to the Internet and corporate networks at broadband speeds in airports, airport lounges and other public places across the country.  Following this launch, VDC immediately added more than 40 hotspots to serve the 22nd South East Asia Games (SEA Games) hosted by the country in December 2003.  By 2005, VDC plans to expand the number of Wi-Fi hotspots to 1,000 in more public areas of big cities, industrial zones, and the most populated residential areas in the country.

The wireless Internet access service provided by VDC, called Wi-Fi@VNN, is currently available for pre-paid users only.  VDC will expand this service to post-paid users within 2004 as well as to international roaming registered users.  Besides VDC, there are several other commercial applications of wireless Internet access provided by a number of hotels in Hanoi and Ho Chi Minh City.

The wireless networking market in Vietnam is heating up as the recent introduction of the next-generation mobile communications networks including the General Packet Radio Service (GPRS) networks and the debut of the third-generation (3G) mobile network using Code Division Multiple Access (CDMA) enable users to wirelessly connect to the Internet or company emails and data.  Both GPRS networks have been upgraded from Global Systems for Mobile Communications (GSM) networks of Vietnam Mobile Services Company (VMS), Vietnam Telecom Services Company (GPC or Vinaphone).  The CDMA-based network, S-Fone, is operated under a business cooperation contract (BCC) between Saigon Postel (SPT) and a South Korean partner, SLD Telecom.  Despite the rapid development in wireless communications infrastructure in Vietnam, applications and services for those networks are very much lacking.  There are a number of applications and services that have been run on a trial basis including information, entertainment, trade, and banking services over the mobile networks in Vietnam.
 

Wireless networking in Vietnam is still in the very early stage of infrastructure development and has a limited number of providers and users as well as applications and services.  Together with the rapid development of the networking equipment and services industry in Vietnam, these will be the main drivers to grow this market in the future.  U.S. equipment suppliers and services providers will find great opportunities in this particular market as Vietnam is anxious to catch up to the latest technology and make use of it to improve economic development.

Import Market

Vietnam was rated second in the world in ICT development growth rate by the ITU, trailing only China.  The ICT industry sector is currently among of the fastest growing industries in Vietnam.  The total revenue of the ICT sector reached US$ 530 million last year, of which computer hardware (including some wireless networking equipment) accounted for US$ 325 million.  Many industry experts believe that the growth rate of wireless networking equipment in Vietnam is also driven by the growth of general networking equipment.  While there are no specific statistics on wireless networking equipment, which is still a very small industry in Vietnam, the table below describes the overall networking equipment market.

The above statistics are in US$ millions and are unofficial estimates.

Estimated Future Inflation Rate for 2004: 4% (Source: Vietnam News)

Like many other emerging markets, the target markets for WLAN service providers in Vietnam can be categorized into two major markets:  the general consumer market for homes, and the enterprise market for business and public access.  The market demand for equipment and solutions can also be divided into two categories:  ISPs and enterprises.  It is estimated that several thousands of wireless networking units have been sold in the country.  The equipment for WLAN services basically consists of access points (AP) and wireless network interface cards (NIC).  APs, connected to the end of the broadband wired-line LAN, act as a gateway to the wireless terminals, such as notebooks, Personal Digital Assistants (PDA) or other handheld devices.  Wireless NICs are bundled within a wireless terminal, as a PCMCIA card type or embedded as a network card, to implement wireless communication between the AP and the terminal.  Based on the current Wi-Fi 802.11b standard which supports up to 11Mbps on the 2.4GHz spectrum band, one AP can cover 20m ~ 150m and serve 25 ~ 50 terminals simultaneously.

Competition

Cisco Systems is the leading provider of networking equipment in Vietnam.  Its wireless networking equipment brand name, Linksys, is also recognized in Vietnam.  It is estimated that more than 100 units have been sold in Vietnam, mostly by Cisco's distributors.  Other private sector firms in Ho Chi Minh City have estimated that over 1000 units have been sold.  Other suppliers are from regional countries such as Taiwan and South Korea.  Most of the major brand names in wireless networking equipment are in Vietnam such as Net Gear, Linkpro, D-Link, Edimax, Planet, Infosmart, etc. 

The market is seeing the appearance of regional suppliers, such as Asus and MSI, who are beginning to sell wireless networking technology bundled in notebook and desktop systems, which will also enable users to access the Internet or establish networks wirelessly.  However, Intel’s Centrino® technology which is licensed to most of notebook manufacturers and assemblers in Vietnam is still dominating this market segment.

While other country suppliers try to offer price competitive wireless networking products, U.S. suppliers’ competitive advantage can be attributed to their strength in core technology, marketing expertise, brand value, stability, and backward compatibility with backbone investment in ISPs.  U.S. suppliers will continue to target and expand in this market with differentiated strategies and services.

End Users

The end users for WLAN services can be ISPs, enterprises and individual consumers.  In Vietnam, ISPs usually purchase directly from the equipment manufacturers’ distributors while enterprises can purchase from system integrators (SIs) or the manufacturers’ resellers.  Consumers usually buy from ISPs or they can buy the wireless networking devices bundled in notebook or desktop systems.

Sales Prospects

Best prospects for U.S. suppliers of wireless networking equipment and solutions include 2.4GHz/ 5GHz technology migration to Wi-Fi IEEE802.11a/g WLAN standard.  The number of wireless networking users is increasing as people learn the benefit of wireless networking access and particularly, Internet access through Wi-Fi connection in public areas.  There is also an increasing demand, especially from small-and-medium sized enterprises in Vietnam, for data networks, and WLAN is considered a competitive, convenient solution to meet those demands.  This will create another sales opportunities for the WLAN equipment and solutions suppliers who offer WLAN switches incorporating wireless security, certification, remote network management, and roaming solutions for a secure wireless environment.

Market Access

Equipment standards are developed and regulated by the MPT.  Before any equipment can be imported it must comply with these standards.  Compatibility of new equipment with existing equipment and certification of compliance with technical standards may also pose a challenge to the foreign equipment supplier.

All equipment imported into Vietnam must go through a trading company that has a telecom equipment import/export license.  Each shipment must also have an import permit (foreign trade permit) from the Ministry of Trade in order to clear customs.  Business and consumer telecom products are subject to import duties, which vary according to the product.  For example, wireless networking components such as AP, NIC, wireless router, etc. are categorized under computer components, to which a five percent import duty and a five percent value added tax (VAT) is applied.
The majority of the imported telecom equipment is sold directly to the local telecom service providers or their subsidiaries.  These State-owned enterprises and local private companies have flat distribution channels, because these organizations sell directly to the equipment buyers or consumers.  Local distributors must have an import license for telecom equipment or should have an existing relationship with licensed trading companies.
Foreign suppliers will need to allocate a sufficient budget to handle the training of distributors.  As some of the wireless telecom equipment is new to the market, preparation and training are essential. 

Enforcement of all forms of intellectual property rights (IPR) in Vietnam is very weak.  While Vietnam has committed to improve its IPR enforcement under the BTA, it will take years before an effective IPR regime is in place.

Key Contacts

The following key addressees that we encourage interested U.S. companies to contact.  However, the U.S.  Commercial Service offices in Hanoi and Ho Chi Minh City are pleased to work with interested U.S. companies for any possible business opportunity.

Ministry of Post & Telematics (MPT)

18 Nguyen Du Street, Hanoi, Vietnam.

Tel: (844) 822-6622

Fax: (844) 822-6590

URL: www.mpt.gov.vn

Vietnam Post & Telecommunications Corp. (VNPT)

18 Nguyen Du Street, Hanoi, Vietnam

Tel: (844) 825-6936

Fax: (844) 825-5851

URL: www.vnpt.com.vn

Vietnam Mobile Telecom Services Company (VMS)

811 A Giai Phong Street, Hai Ba Trung District, Hanoi, Vietnam.

Tel: (844) 864-9533

Fax: (844) 864-8534

URL: www.mobifone.com.vn

Vietnam Telecom Services Company (GPC)
Road No 1A Nam Thanh Cong, Dong Da District, Hanoi, Vietnam
Tel: (844) 835-7501

Fax: (844) 835-7502
URL: www.gpc.vnn.vn

Saigon Post & Telecom Joint-Stock Corporation (SPT)

45 Le Duan Street, District 1, Ho Chi Minh City, Vietnam.

Tel: (848) 824-1605

Fax: (848) 829-4602

URL: www.saigonpostel.com.vn

Military Electronics & Telecom Corporation (Viettel)

1 Giang Van Minh, Ba Dinh District, Hanoi, Vietnam.
Tel: (844) 846-1453
Fax: (844) 846-0486

URL: www.viettel.com.vn

Hanoi Telecommunications JS Company

811 Giai Phong Street, Hai Ba Trung District, Hanoi, Vietnam.
Tel: (844) 664-3732

Fax: (844) 664-3716

URL: www.hanoitelecom.com.vn

Electricity Telecommunications Company (ETC)

53 Luong Van Can Street, Hoan Kiem District, Hanoi, Vietnam.
Tel: (844) 934-3611

Fax: (844) 825-6658

URL: www.etc.com.vn

Upcoming Trade Shows

CommunicAsia2004 (Endorsed by the U.S. Commercial Service)

- Venue: Singapore Expo (1 Expo Drive, Singapore 486150)

- Date: June 15-18, 2004

Vietnam IT Expo and Vietnam IT Forum
- Venue: HIECC (Ho Chi Minh City’s International Exhibition & Convention Centre)
- Date: July 8-11, 2004.

Consumer Electronics Expo Vietnam 2004
- Venue: Venue: HIECC (Ho Chi Minh City’s International Exhibition & Convention Centre)
- Date: September 2-5, 2004.

Vietnam Telecomp 2004

- Venue: Vietnam Exhibition & Fair Centre
- Date: November 9-13, 2004.