The paradox in the 3 g market

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The paradox in the 3 g market

  1. 1. The paradox in the 3G market VietNamNet Bridge – In general, service providers will ease the service fees step by step to attract more users. However, this is not the thing happening in the Vietnamese 3G market. 3G service fees on the rise The 3G market was scorching hot since its early days. The stiff competition forced service providers to continually ease the serve fees, launch attractive service packages and offer big sale promotion campaigns, turning Vietnam into one of the countries with the most attractive 3G service fees. Analysts noted that the domestic 3G service fees were sometimes just equal to 50 percent of the production costs. At present, Vietnam’ 3G service fee is 10 times cheaper than that of China and 40 times cheaper than European countries. A representative of Viettel said the sharp fall in the service fee has led to the rapid increase in the number of 3G subscribers. However, the revenue from 3G service has increased inconsiderably. In 2012, the revenue from mobile data service increased only by 7 percent, while the figure is expected to be at 10 percent in 2013. Meanwhile, the mobile network operator has spent a lot of money to improve the infrastructure and upgrade the system.
  2. 2. Therefore, mobile network operators all are considering raising 3G service fees. The plan to increase 3G service fees has been submitted to the Ministry of Information and Communication, while analysts believe the fee increases are inevitable. What will happen? In fact, mobile network operators raised the service fee quietly by 25 percent in April already. And the move then raised the strong opposition from clients. On IT forums, mobile network operators became the aiming points of the heavy criticism. 3G subscribers said the service providers had had to consulted with clients on the fee increase, because the subscribers registered the service with the agreement that the service package was worth VND40,000 a month only. The subscribers also said it is unreasonable to compare the 3G service fees in Vietnam, where the income per capita and the living standards are low, with the ones in Europe. They also warned that the majority of the 3G users are students, who don’t have high monthly incomes, which means that the 3G service fee increases may lead to the sharp fall in the number of subscribers. Le Duc Anh, a client in Cau Giay district in Hanoi said the 3G quality in Vietnam is bad; therefore, it is unreasonable to compare the service fee in Vietnam with the world. According to Anh, mobile network operators have been following a very wise business strategy: they offer low prices to attract more and more clients, and then raise the prices spontaneously. A survey conducted in late 2012 by Nielsen and Buu Dien newspaper showed that while the number of 3G subscribers in Vietnam increased sharply by five times in 2012 in comparison with 2011, the number of users satisfactory with the service has been decreasing significantly. The satisfaction index has dropped from 71 points in 2011 to 64 in 2012. The survey also showed that while clients are satisfied with the large coverage (84 points), but are not satisfied with the transmission speed (55 points). ANTD

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