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The Vietnamese prime minister Nguyen Tan Dung has approved a programme to expand fixed broadband internet coverage to at least 40% of households and individual subscribers in the country by 2020.
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As reported by Vietnam News, another goal is to have over 60% of internet subscribers in Vietnam connected to minimum downlink speeds of 25Mbps, and 100% of public internet access points nationwide to use a fixed broadband service by 2020. Over 50% of internet access points will use fixed broadband services with minimum speed downlinks of 50Mbps by 2020.
Besides improved broadband internet access, mobile access is another goal. The programme will also ensure that at least 95% of residential areas will be covered by 3G/4G networks with an average downlink speed of over 4Mbps in urban areas and 2Mbps in rural areas.
In line with these goals, the programme will aim to encourage businesses to invest in infrastructure development of broadband telecommunication networks, and to eliminate discrimination between state-owned and private companies.
Another area of focus is to promote the use of information technologies on broadband telecom infrastructures to meet socio-economic development, such as e-government, e-commerce and disaster prevention.
IDC’s Toan Nguyen, senior market analyst telecommunications at IDC Indochina, said the strategy is crucial for Vietnam in several ways.
Putting public services online
Internet speeds typically have a direct correlation with economic development. Vietnam’s internet services currently contributes approximately 0.9% of its GDP.
“The recent signing of the Trans-Pacific Partnership in 2016 is significant for Vietnam, resulting in a stronger flow of foreign direct investment into the country. Large hi-tech manufacturers such as Samsung, Microsoft, LG and Xerox have network infrastructure needs that Vietnam’s telecommunication backbone/infrastructure must be able to accommodate,” said Nguyen.
The development of e-government services in the areas of tax and smart city initiatives, for example, require faster internet connections. The government aims to make 100% of public services available online, allowing users to send documents online.
Vietnam had 7.6 million fixed broadband internet subscribers at the end of 2015, according to Vietnam’s Ministry of Information & Communications. The programme’s goal is to boost this figure to 40% (about 9.6 million) of the country's households connected to the internet by 2020.
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Barriers to investment
However, challenges remain, said Nguyen.
For instance, obtaining a telecommunication licence is a lengthy and bureaucratic process. The 4G network development and implementation is still a work in progress due to the weak returns-on-investment from current 3G network investment, and the local mobile network operators are cautious about 4G investment. There is also underinvestment in improving the internet submarine communication cable and infrastructure connections.
“There is a lack of policies that incentivise and encourage enterprises to invest in network infrastructure and accelerate digital services into the marketplace,” said Nguyen.
Other challenges include the weak digital content platform and the fact that network operators (government-owned) and content providers (privately-owned) don’t have the same opportunities.
Nguyen explained that Vietnam has a very weak ecosystem in fostering cooperation among the key players in the industry, where the state-owned players prefer to do everything on their own. In contrast, the private service providers lack the funds and size to undertake sizeable projects. A related factor is the strong protectionist business mindset that exists, where there is competition between state-owned and private organisations.