VNPT –Vietnam internet market leader - 南郵政通訊公司(VNPT)的新興移動商務生態系統--以DoCoMo i-Mode 為標竿研究

IV. BENCHMARK

4.2.2 VNPT –Vietnam internet market leader

From 1997 when internet came to exist in Vietnam, Vietnam had only four Internet service provider VNPT, FPT, SPT and Netnam. Up to now Vietnam has 16 ISP, however taking lead in developing internet in Vietnam, VNPT is always the leader of internet infrastructure and internet service provider. It booted the number of internet user from 300 people in 1997 to 21.430.463 in QI 2010. VNPT has increased market share and hold three quarter of Vietnam internet market after 13 year development from 1997.

Figure 19 Internet market share of VNPT Source: Ministry of Information and Communications (MIC)

VNPT has connected the biggest regional and international optical fiber cable links, joining Vietnam to 240 countries worldwide. Via the T-V-H, CSC, SEA-ME-WE3 and satellite links connected directly to 37 countries with over 5,000 communications circuits, the outgoing international traffic capacity has exceeded 800 Mbps.

In order to be the dominator in Internet domain, VNPT have an advantage when running two VNPT‘s key sub companies are

- Vietnam Data communications Company (VDC) - Media & software Development (VASC)

VDC VASC

Functions ISP/IAP Software, Internet

Solutions

Mobile Telecommunications Software/Solution

Service/Product - MegaVNN (ADSL)

- VNN / Internet Leased Line - VNN/VPN-MPLS

- Services on mobile networks - Internet Services

Figure 20 Two key VNPT’s internet companies

Source: Ministry of Information and Communications (MIC) & VNPT

4.2.3 VNPT – a big player in Vietnam mobile market

In this part, this research creates a glance at Vietnam mobile market, and then thoroughly analyzes the current competition in that market in order to pinpoint advantage as well as

disadvantage of VNPT. A brief of related Vietnam’s conditions will be covered such as the technology, social economic situations in Vietnam. All factors are used as the ground for the proposal of services and revenue model for VNPT

In the end of 2009, Vietnam mobile market has total seven mobile telecom service providers.

Among them there are five 3G service providers with four 3G licenses granted as shown in the table 8. The significantly high mobile penetration rate in Vietnam has built up the subscriber growth over recent years. At the middle of 2008, with a penetration level of around 76% of the population there were about 66.3 million mobile subscribers in Vietnam. However the number of mobile subscriptions in the country has been surpassed the Vietnam population of 86 million at the end of 2009 by reaching 94 million. According to Vietnam Ministry of Information and Communications (MIC) the real number of people using mobile phone is around 70 to 76 millions. In other words, the number of users needs to serve left around 10 to 16 millions in 2010 Announcing plan of acquiring new mobile subscriptions for three big players- Viettel, Mobifone, Vinaphone this year will archive more 18 million users. It means that in 2010 Vietam mobile market will go to the saturated status.

Company name (Commercial brand)

Characteristic

Owned Network

Viettel Military-based 2G/3G

Mobifone VNPT‘s subsidiary 2G/3G

Vinaphone 2G/3G

EVN Telecom (E-mobile) State-owned utility Electricity of Vietnam 3G Hanoi Telecom(Vietmobile) Associated with Hong Kong's Hutchison

STelecom(Sphone) joint venture between SPT with Korean SK Telecom 2G/2.5G

Gtel Mobile (Beeline) Russia's VimpelCom owned 2G

Table 8 Vietnam mobile companies

Source: Ministry of Information and Communications (MIC)

High growth rate of mobile using from beginning up to now is mainly encouraged by three first comers such as Viettel Vinaphone and Mobilfone (see table 9).

Network(Company) 2006 2007 2008 2009 QI 2010

Mobifone (VNPT) 6,272,303 14,951,304 21,712,970 12,320,000 29,186,824 Vinaphone (VNPT) 7,500,315 13,104,908 21,188,864 32,148,000 27,784,841 Viettel Telecom 4,307,485 12,159,193 26,130,436 37,299,200 39,188,264 S-Fone (S-Telecom) 812,377 3,782,860 4,866,700 4,705,000 10,150,433 Vietnamobile

(Hutchison)

225,170 598,978 940,000 3,336,272 E-Mobile

(EVNTelecom)

810,613 973,340 1,052,800 1,389,880 Beeline

(GTEL-Mobile)

5,640,201 1,244,383 Total mobile

subscriptions

18,892,480 45,034,048 74,872,310 94,105,201 112,280,897

Table 9 Mobile subscriptions of Vietnam mobile companies Source: Ministry of Information and Communications (MIC)

Even though there are new entrants in recent years, Viettel (military-owned) and 2 VNPT’s subsidiaries Vinaphone and Mobifone still control around 90% market share. VNPT always dominate and control over 50% of this market.

Figure 21 Vietnam‘s mobile share market change over years Source: MIC, VNGOS

To have insight of current situation of Vietnam mobile market this part of research will analyze mobile competition and mobile competitors in Vietnam. The analysis of ongoing competition will lie in seven domains which try to follow the frame work of ―Seven Rs Rule‖ in supply chain strategies: having the Right product, in the Right quantity, in the Right condition, at the Right place, at the Right time, for the Right customer, at the Right cost[29]. Some of them could overlap when examined but they can be accordingly arranged as below

Seven Rs Rule Analysis domain

Right product Competition in Brand

Right quantity Competition in Customer Care

Competition in Quality of Service (QoS) Right condition

Right place Competition in Distribution

Right time Competition in Time

Right customer Competition in Customer Attraction

Right cost Competition in Price

The Vietnam mobile market has its own characteristic due to low household income, slow fixed phone penetrate and pre-WTO closed and monopoly market therefore to draw out the complete picture of competition some elements will be combine to analyze together to see the connection and linkage in the next part.

The recent distinguished 5^th Vietnam Mobile Award sponsored by the Ministry of Information and Communications in 2009 announced results for network operators as below.

 The operator with the most popular brand recognition system: Viettel

 The operator with the most attractive service package: Beeline

 The most favorite mobile network: MobiFone

 The operator with the best customer care service: MobiFone

 The operator with the most potential 3G services: Vinaphone

It will be addressed as a starting point to discuss further the current situation in Vietnam mobile market

In Vietnam mobile market: Right product to Right customer at Right cost or Completion in Brand to Attract Customer at Appropriate Price – Big gain for Viettel as well the later comers but great consequences

When the third network operators Viettel have not existed in market before 2003, the whole market was served by two subsidiaries of VNPT. Mobilfone and Vinaphone. The high demand was a simple voice service with no competitors which let Mobifone and Vinaphone enjoy the monopoly status. They so charged high price for whole market and focus only considerablely benefit customers. Viettel saw market potential then came to exist in 2003. Being a new entrance, it targeted to low income user such as student, farmer and countryside resident while Mobifone focused on high income one and Vinaphone aimed middle and urban habitants. As a result after three year, Viettel was quickly noticed and surpassed both VNPT‘s subsidiaries in term of mobile subscriptions in 2006. It gradually acquired more market share as shown in figure 19 above.

Viettel are so successful in identifying potential demand for mobile services of very large customer segments from low-income level which account for the majority of Vietnam population. Knowing exact needs of the market is the source for success in the development of Viettel. It can establish the number one position on the market today and its subscriber number grew quickly.

Figure 22 Mobile market share QI/2010

Source: Ministry of Information and Communications (MIC)

As seen in any market, price competition is a basic method of competition in the telecommunications sector. Telecommunications market in Vietnam has a severe price war similar to many other developing countries.

Recently the completion of price is more intensive. In May 2009 Viettel announced the largest fee reduction of over 30 percent of any charges, the two rivals mainly Mobifone and Vinaphone immediately discounted as well. The first time during seven year price of charge of VNPT‘s companies was lower than Viettel. Using price as mean to acquire market GTel which owns Beeline network released shock package - BigZero. This package gave Beeline 1 million subscribers after just two months of service announced which also started the free inter-call trend.

Viettel has recently proposed Ministry of Information and Communications (MIC) for mobile floor charge fee to avoid "dumping." Propose a plan for that particular pressure floor price of 800 VND per minute. But soon it broke down the floor price by giving discount to all pre-paid mobile packages and contract ones lower than 800 VND per minute. Vinaphone also offer package

"VNPT - Free talk" down from 990 VND to 790 VND per minute for calls between fixed lines VNPT and postpaid mobile subscribers in the same register group. Vinaphone and Mobifone also proposed MIC the plan to reduce charges further. Beeline re-release package Big and Cool prepaid package downgrade pre-paid price to similar levels of other mobile network contract user. Price has been still the key tool to gain market by network operators so far. It will lead to bad consequences such as:

 Minimize the profit which reduces reinvestment causing lower quality of service,

it is not sustainable business, it requires another way to compete that benefit both providers and users

 Lower price which create ―virtual‖ users who only use phone number for discount

that wastes number resource and complicate the user profile management

 Focus reducing price only on voice service which prevents extension to other

service like content service

Reducing price is a good but not optimized way. Market will gradually reach saturated point the same as DoCoMo case analysis with voice saturated service. At that point there are only few big players whose control most of market share. There exists a need to develop an ecosystem to

deliver the value-added to users rather than price benefit to achieve sustainable growth. in Vietnam, VNPT now need to see market in that way to build up an ecosystem of M-commecre rather than competing by price.

In Vietnam mobile market: Right quantity, in the Right condition, at the Right place, at the Right time or Competition in Quality of Service (QoS), Customer Care, Distribution and Time; Bigger players did better and be noticed

QoS

The measurement result of quality of mobile network reflects the quality of service of each mobile network operator in Vietnam market. In quarter II of year 2009 Directorate of Information Communication Technology Quality Control (ICTQ) announced the test result of April and May in 2009. In this assessment, Vinaphone surprisingly was the number one with the highest successful setting up call rate. Mobilfone and Viettel were followed. Every networks operators increase the quality but Viettel was down in quality of voice. S-Fone and EVN Telecom also exceeded industry standards but the average results are still lower than other networks, it signaled an alert when index just passed the threshold. This cause the trend that customers leave the worse network to move in the best ones like Vinaphone, Mobifone, Viettel

Vinaphone MobiFone Viettel Sfone EVN Telecom

Figure 23 Quality of Service index results for Vietnam mobile companies Source: Ministry of Information and Communications (MIC)

Customer Care

It was not coincident when Mobilfone won the prestigious awards of ―The mobile network with the best customer service‖ in four consecutive years at the end of year 2008 and ―The most favorite mobile network‖ in 2009. Customer service center of Mobilfone always gained the highest score among all mobile networks.

MobiFone always does the most proactive customer care program. Ten years ago there was only MobiFone program offering flowers or gifts to the contract customers for their birthday.

Distribution

Customer service space is where operator interacts with its customers. Considering this aspect Mobifone and Viettel Mobile created the competitive advantage by building up a system of its own branch everywhere. It so can actively control the quality of this d system. EVN Telecom and Vinaphone faced many disadvantages due to the distribution system based on the provincial electricity offices and postal branches. The lack of specialization and having heavy administrative units cause inconvenient for customers.

Time

Besides improving service quality, distribution network, Viettel showed itself very active and flexible in strategies such as coming first at discount price, enabling prepaid users roaming, allowing push mail, and catching fever of Black Bery and iPhone handset. It already created equipment production of its own handsets. It is now the first and only network operator implementing the network abroad in Cambodia.

Optimizing the production process ultimately shorten customer service. On this criterion, Viettel used military network, discipline and the advantage in bureaucratic procedure to deploy very quick infrastructure.

In brief, all things above create the whole picture of Vietnam mobile competition. It can be both as advantageous as well challenging for VNPT to stay as key market player in this market as it did in the past. In other words, it is advanced to have in hand many resources over other competitors but it is also not easy to efficiently control and systematically organize them to build an appropriate ecosystem to server right target customer in Vietnam. Fortunately, Mobilfone and Vinaphone still have much strength and few weaknesses to back up VNPT in more future competitive market. The external reasons for building ecosystem like i-mode will be discussed further in the next part.

4.3 Why “I-mode” Vietnam analysis – External factors

This research lists here some Vietnam economy indicators that show development of the industry service sectors in general and that of telecommunication in specific. These indicators shows favor for VNPT to develop new its ecosystem with appropriate kind of services.

4.3.1 Favor economic and social indicators of Vietnam

According to CIA World Fact Book and UN report, Vietnam economics grew stable at 7.5 to 8.0 percent annually from 2008 to 2010. The important sectors of economics such as industry and services expanded to 40% of GDP in 2009

Figure 24 GDP - composition by sectors -2009 Source: UNDP

In addition, Vietnam has young population, over two third of population is in working age. This group will more be sensitive with new way of technologies such as internet or mobile commerce application

15-64 years 92%

65 years and over

Age structure

Median age:

Total: 27.4 years Male: 26.4 years

Figure 25 Vietnam age structure 2009 Source CIA World fact book

Age statistic indicators shows that age median is under 30. Young people who are tech savvy will be another favor factor for any high tech service to serve

4.3.2 The saturation of voice service but non-data service

Vietnam telecoms market is booming with growth of mobile communication market. There are more and more promotion and discount campaigns of mobile network operator to attract customer. This trend combined with a decline of mobile handset price let number of mobile phone user increase spectacularly. To the end of year 2009 Vietnam had total of mobile network users surpassed the population. In other words, number of subscriber per 100 inhabitants reaches over 130.

Figure 26 Mobile phone subscribers per 100 inhabitants Source MIC

According to Ministry of Information and Communications (MIC) the voice service market has oversupplied at middle of the year 2009 when Vietnam population is at 85.79 million.

Therefore mobile market will approach the S-curve of voice communication and turn to the second S-curve of non voice or content communication similar with analysis of DoCoMo i-mode case

4.3.3 Low wired internet market penetration

Internet Access has a potential in Vietnam but it is still in early stage of development. There are total around 6.7 million internet subscribers for population of over 86 million. Only 24.87% of

population use the internet for work, information, entertain or business. It is due to the low possession of personal desktop and laptop (see table 10). While young Vietnamese people with large portion in population love to keep updated with internet, they do not have the PC to connect to the web. In other words, the internet participation is going high while the portion of population owing PC is very low (5.19:100) but mobile phone is much bigger. Therefore it could be considered as another factor favoring for VNPT to create great market for mobile internet by using its great existing customer base.

Total number of internet users 21.430.463

Internet users per 100 inhabitant 24.87

Total number of desktop, laptop computers 4.478.543*

Personal computer per 100 inhabitant 5.19*

Table 10 Statistics on Internet development up to 3/2010 Source: The Vietnam Internet Network Information Center (VNNIC)

Note *: 2008 estimated

0.3 0.4 0.8 1.7 2.9 4.1 5.2 6.7

0 2 4 6 8

2001 2002 2003 2004 2005 2006 2007 2008

Vietnam Internet subcriptions (millions)

Figure 27 Vietnam Internet Subscription

Source: The Vietnam Internet Network Information Center (VNNIC)

VNPT can use its current advantageous status of being main internet supplier to support the its current users and potential customers in the future if it can create an moderately attractive mobile commerce market toward users.

Figure 28 Internet Service Provider Market share 3/2010 Source: MIC

4.3.4 Emerging mobile and banking bond-trend of mobile banking

There are three main types of mobile payment existing in the world and Asia so far[2]

Mobile money Market required characteristics Example Operator-centric

Operator providing prepaid top-up services,

- The majority of the population has not access to banking services.

- No routine use of non-cash means of payment.

- Community use of large mobile phone.

- The demand for money, small payments in high population.

G-Cash (Philippines) — mobile banking

M-PESA (Kenya) — mobile transfer

Bank-centric - Bank building applications

- banking services highly developed and most people have bank accounts

- transactions and payments on personal bank account

Smart Money(Philippines)

—

mobile banking

Payment network or third parties

- Cooperation between identities to build whole payment system

PayPal Mobile (UK and

US) — mobile banking

- Based on power of third parties - Capitalize on each parties

- Hinder the rapid adoption in complex collaboration

WIZZIT (South Africa)

— mobile banking

Crandy (Africa) — mobile transfer

Table 11 Mobile money business model Source: Mobile banking KPMG A glance of banking market in Vietnam in 2009

- 12 million people own bank accounts - 17 million cardholders

- A national payment system that connects 89 bank members with 694 affiliates that reduces fund circulation from 3 -5 days in 2001 to 30 minutes in 2009 - Only 50 retail banksa

- ATM and POS: 8,500 ATM; 27,000 POS

Figure 29 Number of POS and ATM Source: Techcombank Vietnam

What is the chance and model for Vietnam‘s mobile money?

Only about 12 million people have bank accounts in a population of more than 80 million people i.e. equivalent to 15% of the population. Vietnam shows the coverage of personal banking services is low. There exist about 17 million cardholders, both international and domestic, however common payment of cash still play major roles in retail transactions. People and

businesses offering goods and services are not acquainted with the use of bank cards for payment purposes. Hence card payment through POS is still certainly unfamiliar and inconvenient.

Meanwhile Vietnam has seven mobile network service providers which have the widespread coverage of overall country. According to the Ministry of Information and Communications, Vietnam in QI 2010 reached up to over 120 million subscribers, average people register more than a mobile phone subscriber. The use of mobile phones is not only popular among youth in urban areas but that is common to all other age and area. Therefore Vietnam market has a great potential to exploit the mobile payment service

There are more than 50 banks are active and involved in the retail banking market in Vietnam.

The banks are competing fiercely through continuous improvement and offering new products and services, including Mobile Banking Product (Bank-centric model). However, the bank offers products which can only offer certain functions or do not meet all the needs of customer‘s payment. In addition, a number of e-wallet products came out, but only supported payment transactions on the Internet. The market of mobile payment is still unanswered.

In this context, providing mobile payment solutions for mobile phone customers who have no bank account is suitable. It benefit is:

 To create convenient payment applications for customer

 Bring more benefit for the mobile service provider

 Lead to the tendency of not using so much cash

 Save society‘s cost and furnishes the development of the economy.

In a word, there do exist in Vietnam opportunities either for Operator-centric model or for third party-centric using the mobile transaction ecosystem. It owing to Vietnam financial market characteristics:

 The majority of the population has not access to banking services – low personal account

rate

 No routine use of non-cash means of payment – culture behavior

 Community use of large mobile phone

 The demand for money, small payments in high population

There are also many legal documents supporting for electronic transaction such as:

 Law on E-Transaction (Mar, 2006)

 Government‘s Decree on e-commerce (Sep, 2006)

 Government‘s Decree regarding digital signature and digital signature-certification services (Feb, 2007)

 Government‘s Decree on e-transitions in financial activities (Feb,2007)

 Government‘s Decree on banking e-transitions (Mar, 2007)

4.3.5 Stand out of intensive competition by ecosystem

Strong with capital, well-known by brand and being big player in almost telecommunication but VNPT have to face new threat when Vietnam more open after joining WTO. They are:

 Large-scale foreign corporations such as Motorola, Nokia, Ericson, Alcatel, NEC, SK

Telecoms, Hutchinson etc, already came and will seek the investment opportunities in Vietnam when government no longer protect its monopoly position

 Local emerging and fast growing corporation such as Viettel coporation is another direct

threat. Only by advancing in new way of providing service or creative business model VNPT would be able to stand out and win the market.

4.3.6 Emerging digital content industry

The Ministry of Information and Communication has drafted a master plan for digital content development. The target is for the digital content industry to earn about USD 400 million in revenues by 2010. To this end, some 300,000 content industry experts will be trained. The industry will include key activity areas such as e-learning, games (online, interactive and mobile), online publications, content development for the Internet, digital libraries, digital film and multimedia, and other value added services (VAS). At present there are about 400 enterprises working in the content industry and they are concentrated in Hanoi and Ho Chi Minh City. On 3 May 2007, the government signed Decision No.56/2007/QD-TT to ratify the development of the digital content industry. The emerging trend of digital content can see in figure. When revenue from software industry only grow with rate of below 30 percent per year, digital content industry growth rate are always more than 50 percent annually.

Figure 30 Emerging of digital content industry in recent years Source: MIC

4.4 Vietnam and Japan general comparison

Last but not least, in this part the study will make a brief comparison between Japan and Vietnam at the time which i-mode has a potential to exist. This will give a more insightful look at the picture of society and economy. The comparison will be summarized in this table in term of

在文檔中南郵政通訊公司(VNPT)的新興移動商務生態系統--以DoCoMo i-Mode 為標竿研究 (頁 43-0)