Hardware, Software and Digital Content Industry Revenue 2008

Long-distance phone rates have dropped significantly, forcing VNPT to reduce phone rates to compete with Viettel. When using Viettel's 178 service, customers will save 40% of the rate compared to regular long-distance calls and 15% compared to VNPT's VoIP 171 service and Saigon PosTel's VoIP 177 service. If in the past, customers had to spend at least tens of thousands for a call, now with VoIP service, customers only have to pay a few thousand VND per call (at least 768 VND for a call if using Viettel's VoIP 178 service) and up to now, 10 fixed-line phone service providers have appeared with rates of 600 VND - 1200 VND/minute.

+ Mobile phone service: In the early stages with the monopoly of Mobifone in the 90s, the telecommunications service fee was very high, up to 3000 VND - 4000 VND/minute with the birth of Vinaphone in 1996, later of Viettel in 2004, up to now there are 7 providers. In particular, the birth of Viettel with a shocking price of more than 2000 VND/minute led to fierce price competition between Mobifone and Vinaphone, causing mobile service fees to drop sharply. Currently, with 7 providers, including very strong newcomers such as Beeline, launching Bigzero, Big Kool, and call- forget-date packages, the network operators have continued to compete to reduce phone fees sharply, currently around more than 1600 VND/minute for prepaid subscribers and more than 1000 VND/minute for postpaid subscribers.

+ Internet service: Similar to the two fixed-line and mobile phone services, the internet service was initially exclusively provided by VNPT with very high subscription fees. Later, Viettel, FPT Telecom... appeared and offered cheaper packages, bringing internet services into the competition to reduce fees. Up to now, with 80 internet service providers, the fees have decreased sharply, the average internet subscription fee is about 50,000 VND/month, the fee per usage volume has decreased with many different service packages for individuals, households, businesses, and organizations.

This shows that the price war has made competition between businesses fierce, with the appearance of many later businesses offering cheaper prices, which has promoted strong price reduction competition, turning the Vietnamese telecommunications industry with fixed-line telephone, mobile phone and internet services from a service only for the rich to a service for the common people and the masses.

Comment: The number of enterprises providing telecommunications services in the telecommunications industry is too large but there is a serious imbalance due to the dominance of state-owned telecommunications enterprises in the market. The telecommunications industry has not really competed according to the market mechanism, the nature of competition is competition within the state sector with each other. This is what is causing negative competition in the telecommunications industry. To improve the competitiveness of the telecommunications industry, it is necessary to restructure the number of enterprises participating in the market in the direction of more market liberalization.

3.3.4. Related and supporting industries

Related industries and supporting industries for the telecommunications industry include:

- Providing telecommunications equipment: This is the industry that provides connection and operation equipment for telecommunications networks such as BTS stations, power cabinets, BTS mobile stations, optical cables, transmission, operating equipment, mobile, fixed and internet control centers. These are very high-tech equipment, with large investment capital and a strong team of experts. Vietnam has not been able to supply the above equipment for the domestic market and has imported it from abroad, mainly telecommunications equipment from famous brands in the world such as: ZTE, Huawei, Emerson... Vietnam has only been able to supply very simple equipment for the telecommunications industry such as electric wires, sockets, plugs, wires, batteries...

- Hardware, software and digital content industry:

In recent years, the number of personal computers in Vietnam, including desktops and laptops, has increased rapidly and continuously.

Table 3.22. Number of computers 2008 - 2011

Year

12/2008

12/2009

12/2010

12/2011

Number of desktop and laptop computers (estimated)

4,478,500

4,880,800

5,319,000

5,899,830

Number of personal computers/100 people

5.19

5.63

6.08

6.68

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Source: White Book on Information and Communication Technology 2012, Information and Communication Publishing House

The number of personal computers in Vietnam has increased rapidly over the years, which is an important condition for the development of the internet in recent years. However, the rate of personal computers per 100 people is still too low, less than 10%.

The hardware industry, software industry and digital content industry have positive developments with increasing revenue.

Table 3.23. Revenue of hardware, software and digital content industry 2008 - 2011

Year

12/2008	12/2009	12/2010	12/2011
Hardware industry (million USD)	4,100	4,627	5,631	11,326
Software industry (million USD)	680	850	1,064	1,172
Digital content industry (million USD)	440	690	934	1,165

Source: White Book on Information and Communication Technology 2012, Information and Communication Publishing House

The hardware industry has the highest revenue, the software and digital content industry has revenue that has increased rapidly over the years. The strong development of these three industries has made the application services on mobile networks such as: Video call, digital music, ringtones, reading internet newspapers, internet television... of the telecommunications industry become more developed.

- Telecommunications terminal equipment supply industry:

Vietnam's terminal equipment supply industry has seen positive developments in recent years, with many telecommunications companies starting to produce their own phones, such as Viettel's homephone, Viettel, FPT, Vinaphone branded mobile phones, etc. However, these are cheap phones, using low technology with little added value and many components and chips still have to be imported from abroad, which the domestic market cannot meet.

The terminal market still belongs to famous foreign suppliers such as: Nokia, Samsung, Sonyericson, Motorola, LG, HTC, Black Berry, Vertu, Mobiado, iPhone, iPad,..

Thus, it can be seen that the supporting industry for Vietnam's telecommunications industry is still underdeveloped, the related domestic industry is also underdeveloped and the playing field belongs to foreign suppliers. Vietnam is also a country with a low level of development and low level of science and technology. In the telecommunications industry, from important network infrastructure technology and equipment, Vietnam imports and depends on the outside. This limits the competitiveness of the telecommunications industry in terms of service provision costs due to dependence on equipment prices from suppliers.

3.3.5. Government

- Regulations on telecommunications business licensing and special industry entry standards since Vietnam joined the WTO.

Vietnam is increasingly perfecting its system of policies to regulate and enhance the competitiveness of the telecommunications industry:

+ On October 17, 2000, the Government issued Directive No. 58-CT/TW on promoting the application and development of information technology to serve the cause of industrialization and modernization. The Party and the State consider telecommunications and information technology as the driving force and important tool to serve the cause of industrialization and modernization of the country. This is a very important directive that paves the way for the development of Vietnam's telecommunications market in the future.

+ On June 7, 2002, the President issued the Ordinance on Posts and Telecommunications No. 13/2002/L/CTN. On September 3, 2004, the Government issued Decree No. 160/2004/ND-CP detailing a number of articles of the Ordinance on Posts and Telecommunications on telecommunications.

in which regulations for Vietnamese organizations and individuals and foreign organizations and individuals participating in telecommunications activities in Vietnam include establishing telecommunications networks, providing and using telecommunications services, manufacturing and importing and exporting telecommunications equipment, and constructing and installing telecommunications works. The birth of the Postal and Telecommunications Ordinance and guiding decrees have provided a legal corridor for the establishment of telecommunications service providing enterprises, regulations related to management, regulation, and business of telecommunications activities, thereby opening up a direction for strong development of the telecommunications industry, enterprises of all economic sectors that meet the conditions will be granted telecommunications service licenses, opening up opportunities for the establishment and provision of diverse and competitive telecommunications services.

+ On November 7, 2006, Vietnam was officially admitted as the 150th member of the World Trade Organization (WTO). After many rounds of negotiations, Vietnam agreed to the WTO's commitments on telecommunications to open the telecommunications market, allowing foreign telecommunications enterprises to invest in Vietnam, for example, in land-based and mobile services: 3 years after joining, multinational companies were licensed to use satellite ground stations in Vietnam.

Facilities-based services: Immediately upon accession, joint ventures with telecommunications service providers licensed in Vietnam are permitted. Foreign capital contribution in the joint venture must not exceed 49% of the legal capital of the joint venture.

+ The policy on telecommunications development continued to be improved by the National Assembly promulgating the Telecommunications Law No. 41/2009/QH12 on November 23, 2009, effective from July 1, 2001. On April 6, 2011, the Government issued Decree No. 25/2011/ND-CP detailing the implementation of a number of articles of the Telecommunications Law, specifying clear regulations on telecommunications service business in accordance with the provisions of WTO accession commitments, including opening the door for foreign enterprises to invest in the Vietnamese telecommunications market in accordance with Vietnam's WTO accession commitments.

Vietnam has been in the process of perfecting regulations on conditions for licensing telecommunications services, including open-door licensing regulations, creating favorable conditions for foreign enterprises to invest in Vietnam. This has promoted joint venture cooperation and created many Vietnamese mobile networks with foreign elements such as Gtel, a joint venture between Gtel Global Telecommunications Company and Vimpelcom Group of Russia to establish the Beeline mobile network. At the same time, it has attracted all economic sectors with sufficient conditions to invest in telecommunications services, so in just a few years, Vietnam has had 10 fixed-line telephone service providers, 7 mobile service providers and 80 internet service providers.

- Regulations of the Government of Vietnam on attracting foreign investment and overseas investment in the telecommunications sector.

+ The promulgation of the telecommunications law, guiding decrees and Vietnam's commitment to join the WTO on telecommunications clearly shows that Vietnam wants to open its doors to attract qualified foreign investors to participate in the domestic market to improve infrastructure, service quality and increase the competitiveness of domestic telecommunications enterprises.

+ On October 18, 2001, the Government issued Decision No. 158/2001/QD-TTg approving the Strategy for the Development of Vietnam's Posts and Telecommunications to 2010 and Vision to 2020 , which clearly stated the continued innovation of policies to mobilize domestic resources, attract foreign resources for Posts and Telecommunications, promote international cooperation to serve development, and strongly mobilize foreign capital. "Taking full advantage of foreign capital sources; encouraging forms of foreign direct investment, especially investment in the postal, telecommunications, information technology, and service business investment, with investment forms suitable to the industry's roadmap for international economic integration. Allocate a portion of ODA capital to develop postal, telecommunications, and information technology in rural, remote and isolated areas".

+ On June 1, 2009, the Government issued Decision No. 698/QD-TTg approving the Master Plan for the development of information technology human resources to 2015 and orientation to 2020 , in which to develop high-quality human resources for electronics, telecommunications, and information technology, the Government proposed one of the solutions: "Create conditions for domestic and foreign investors to establish IT human resource training facilities in accordance with the provisions of law, invest in training IT human resources in the direction of IT services. Have policies for training facilities to enjoy incentives in IT training activities equivalent to software production enterprises"

- Telecommunications industry development planning:

+ On January 18, 2011, the Government issued Decision No. 119/QD-TTg approving the Project on developing information and communication in rural areas for the period 2011 - 2020 with the main contents of bringing telecommunications and internet to rural areas, building telecommunications infrastructure in rural, remote and isolated areas, accelerating the popularization of telecommunications and internet services, building broadband telecommunications infrastructure to communes, building specialized television channels for rural areas, developing the internet for rural communities, improving the ability to use computers and access the public internet in Vietnam. One of the important solutions proposed is: "Encouraging and supporting enterprises to invest in building infrastructure and providing services to rural areas in general through preferential policies on tax, capital, investment, and land in accordance with relevant laws" .

+ On September 22, 2010, the Government issued Decision No. 1755/2010/QD-TTg approving the project "Making Vietnam soon become a strong country in information technology and

communications”. With telecommunications goals such as: “By 2015: basically complete broadband network to communes and wards nationwide, Internet connection to all schools; broadband mobile information coverage to 85% of the population; Vietnam is among 65 countries in the rankings of the International Telecommunication Union (ITU). By 2020: complete broadband network to most villages and hamlets; broadband mobile information coverage to 95% of the population; Vietnam is among 55 countries in the rankings of the ITU (in the top 1/3 countries)”. Solutions are proposed to socialize investment, typically: “Actively socialize investment in information and communications technology, especially the development of broadband telecommunications infrastructure. Encourage all economic sectors to participate in building, developing and exploiting broadband telecommunications infrastructure, diversifying information technology and communications services, especially having mechanisms on capital, technology solutions and business models to attract economic sectors to participate in providing information technology and communications services to remote, border, island and disadvantaged areas" and especially "having appropriate mechanisms to mobilize investment capital from enterprises, organizations and individuals in socializing investment in developing telecommunications infrastructure, applying information technology and training human resources in information technology, developing new products...; researching and applying appropriate public-private partnership models for projects on developing information technology and communications infrastructure and providing services"

With a fairly open policy, strong calls and socialization of economic sectors to participate in investing in telecommunications, especially broadband, has made and will make the telecommunications industry more competitive with many service providers participating in the market, the trend of joint ventures and associations will take place strongly and quickly in the coming time.

+ On July 27, 2012, the Government issued Decision No. 32/2012/QD-TTg approving the "National Telecommunications Development Plan to 2020" with the goal of applying modern technology in the telecommunications industry, prioritizing the construction of modern telecommunications infrastructure, providing good quality telecommunications services and developing a sustainable and competitive telecommunications market in a healthy direction.

- The Vietnamese Government's mechanism is in the process of transforming the telecommunications industry from monopoly and state-dominated ownership to privatization and liberalization of the telecommunications industry.

According to the Telecommunications Law on ownership ratio in telecommunications companies, specifically "An organization or individual that owns more than 20% of charter capital or shares in a telecommunications enterprise is not allowed to own more than 20% of charter capital or shares of another telecommunications enterprise operating in the same telecommunications service market in the list of telecommunications service markets prescribed by the Ministry of Information and Communications" . This is a decision to increase independence and autonomy in development for telecommunications enterprises, with this regulation forcing VNPT Group, which currently owns more than 20%

The charter capital and shares of both networks, Vinaphone and Mobiphone, will have to change the ownership ratio to comply with the law.

The Government has been determined to promote the equitization of telecommunications enterprises such as Mobifone, Viettel Telecom, and Vinaphone in the coming time to increase competitiveness, autonomy, and business efficiency.

Vietnam's commitments to join the WTO on telecommunications have made the telecommunications market more open and freer for foreign investors to participate in the Vietnamese telecommunications market. The Government's policy of calling for socialization of telecommunications investment, especially broadband investment in rural areas, has promoted a more competitive telecommunications industry.

The policy factors that have been perfected in recent times to promote investment cooperation in the telecommunications industry, regulate business activities, and make competition in the telecommunications market more transparent and healthy have also revealed many shortcomings such as the slow issuance of policies following reality. For example, the Telecommunications Law issued on November 23, 2009 took effect from July 1, 2010, but it was not until April 6, 2011 that the Government issued a guiding decree, meaning that the decree was issued more than 9 months later than the law took effect. Administrative procedures for attracting investment and policy mechanisms are still cumbersome, hindering investment. The requirement to equitize state-owned telecommunications companies has been put forward for a long time, but the equitization process has been too slow, and great inertia has led to delays in the privatization process of the telecommunications industry in state-owned companies.

Telecommunications Industry Business Environment (TBER)

By the end of the first quarter of 2011, Vietnam's business environment index ranked near the bottom of the Asia-Pacific region, just above Sri Lanka with a ranking of 17/18.

Vietnam's telecommunications market index is the lowest in the Asia-Pacific region, at 37.5 points, 36.1 points lower than the telecommunications market score of the leading country, Japan, at 73.6 points. It is clear that the gap in the development level of Vietnam's telecommunications market compared to other countries in the region is still too far and weak.

With Vietnam's telecommunications market index ranking near the bottom, just above Sri Lanka, there is an urgent need for reform to improve the competitiveness and attractiveness of the telecommunications industry. Although Vietnam is a country with the fastest telecommunications growth rate in the region, the rate of fixed-line telephone users, mobile subscribers and internet is among the highest in the region, however, the telecommunications business environment is still not good, with a large gap compared to other countries in the Asia Pacific region. To improve the competitiveness of the telecommunications industry

It is necessary to improve the business environment towards more freedom, more open policies and competition needs to follow a more market mechanism.

Table 3.24. Asia-Pacific business environment rankings in the first quarter of 2011

Nation

Achievements		Risk
Industry Achievements	National Achievement	Industrial Risk	Country risk	General assessment	Rating
Japan	73.6	66.7	90	86.8	76.4	1
Singapore	55.0	83.3	90	90.9	72.6	2
Australia	64.1	83.3	70	78.1	71.8	3
Korea	62.5	66.7	90	76.3	69.7	4
Hong Kong	55.0	76.7	80	85.4	68.6	5
Malaysia	55.0	66.7	90	75.4	66.2	6
Taiwan	52.5	63.3	90	77.6	64.5	7
India	70.0	39.0	70	56.3	60.4	8
China	63.3	35.0	70	70.6	58.4	9
Indonesia	52.5	42.7	60	51.1	51.0	10
Philippines	47.5	46.7	70	53.1	50.0	11
Pakistan	50.0	45.3	70	28.1	48.6	12
Bangladesh	52.5	36.0	60	44.5	48.4	13
Laos	40.5	60	50	49.9	48.1	14
Cambodia	46.8	54.0	50	36.4	47.5	15
Thailand	40.0	32.7	60	62.2	44.5	16
Vietnam	37.5	33.7	60	47.8	42.2	17
Sri Lanka	33.8	30.0	50	59.9	39.2	18

Source: BMI and Vietnam Telecommunications Report, Quarter II/2011, VNPT Information and Public Relations Center, June 2011. BMI

The above analysis shows that: In the past time, the Government has made great efforts in perfecting the policy institutions, promulgating laws, decrees, circulars, and planning the telecommunications industry towards international integration. The Government is also demonstrating political will, determination, and clearly seeing that if Vietnam's telecommunications industry wants to improve its competitiveness, it is necessary to promote restructuring the telecommunications industry, and equitize state-owned telecommunications enterprises so that the private sector can participate more. However,