Vietnamese Telcos’ Dumping Destroys International VoIP Call Service Market

In the past, inbound VoIP service providing was considered the goose that laid golden eggs because it brought fat profit to telecom groups. However, the market has been devastated by the groups themselves.

VoIP service fees dumped

In the last 10 years, Vietnamese telecom companies have got big money from foreign telecom exploiters paid for by the connection of the calls from overseas with the subscribers in Vietnam.

At that time, Vietnamese telcos were very happy because they did not have to make heavy investment in the service, but still could earn a lot of money.

Especially, a telco even said that this was a kind of service allowing to take back the investment capital just after one day. With the fat profit from the service, some bare-handed companies have become prosperous.

However, the Vietnamese telcos now cannot enjoy the tidbit any more. In order to obtain more clients, Vietnamese telcos have been trying to lower the service fees. The actions have not helped them obtain more clients, but have made them weaker.

In fact, Vietnamese telcos well understand that the dumping has done harm to them and that they need to join forces with each other to develop instead of extirpating others. However, since no proper solution has been found, they continue struggling with each other, even though they know the struggle may drag them to the abyss.

The telcos immediately broke the commitments on the floor service fees right after they made the commitments. They would be ready to go back on their words in return for the higher volume of VoIP.

In 2003, Viettel (which did not provide mobile service at that moment), planned to come forward and set up a VoIP association that connected telcos and acted for the common benefit. However, the plan then failed completely, because enterprises did not respect their promises.

Service fee down 10 times within 10 years

In the golden age, the incoming VoIP international call service fee charged by Vietnamese telcos was 35-45 cent per minute, or 7000-9000 dong.

In a recent decision released on March 2, 2011, the Ministry of Information and Communication decided that the floor price for VoIP international call service is 855 dong per minute, while the selling of services at the price lower than the floor price would be considered as an activity of dumping.

At a meeting gathering the leaders in the business field, including the Vietnam Post and Telecommunication Group (VNPT), Viettel, EVN Telecom, VTC, CMC and Indochinatelecom held in mid May 2011, enterprises committed to set up the service fee at 4.1 cent per minute, or 800 dong.

However, at that moment, the VoIP international incoming call service dropped to less than 3 cent per minute.

As such, VoIP service has turned from the fertile land into the exhausted field.

At a meeting with the Ministry of Information and Communication, an executive of VNPT, said Vietnamese firms have been continuously slashing the international payment charges, calling for the intervention from the Ministry of Information and Communication.

Also according to the executive, the average fee in the world market is 5 cent per minute, while Vietnamese enterprises accept the 2-3.2 cent per minute fee.

SPT has also confirmed that the price levels are nearly close to the production cost, and that if the prices are lowered further, telcos would incur losses.

VTC has also said that the service now cannot bring profits, and that Vietnam has been the unpaid worker for foreign companies.

Source: Buu Dien