Time for small mobile networks to “soul-search”

Afflicted by the charge-slashing campaigns of the three “giants”, MobiFone, Viettel and VinaPhone, small mobile networks are now being forced to look at their business modes and shortcomings.

The charge-slashing campaigns in early June of Viettel, MobiFone and VinaPhone pushed smaller mobile networks against the wall. Vietnamobile had to “join” this trend after a short time, then EVNTelecom. Meanwhile, S-Fone has made no definitive move.

However, S-Fone’s executive director Ho Hong Son revealed in some unofficial talks that this network may reduce charges on some service packages.

Son said that in this difficult situation, cutting charges is not the priority of S-Fone. Actually, after six years, S-Fone has only four million subscribers.

Vietnamobile, which was recently “regenerated” from HT Mobile three months ago, has not made any impression in the market.

Both S-Fone and Vietnamobile are doing business in the form of BCC (Business Cooperation Contract), which is said to be no longer suitable.

Vietnamese-American professor of economics Augustine Ha Ton Vinh, chairman and CEO of Stell Management education and training group, affirmed: “The BCC between SK Telecom and Saigon Postel of Vietnam is considered by the foreign partner as a problem which needs to be solved. Especially, while the foreign partner’s capital is increasing, all legal decisions are made by the local partner. When they don’t have legal rights, foreign partners don’t want to invest more to develop a network.”

That’s why the BCC between Saigon Postel and SK Telecom (the operators of S-Fone) has come to a standstill.

The failure of HT Mobile, the forerunner of Vietnamobile (a joint venture between Hutchison and Hanoi Telecom), is said to have happened because of the tardiness of partners in the BCC in making decisions, besides the failure of technology.

The outdated BCC mode not only causes difficulties for network operators themselves but also service users.

Though S-Fone applies advanced CDMA technology, because of hindrances from the BCC mode, S-Fone’s customers have not enjoyed modern benefits from this technology. Apart from some services like video on demand, music on demand, Live TV and mobile Internet, which have been around since 2006, S-Fone has not introduced any new service.

A shortage of investment capital, according to an S-Fone senior official, is one of the main reasons for this network’s failure to get a 3G licence. Its Korean partner was not eager to pour more money in this network because of the BCC mode.

Among the current seven mobile networks, only subscribers of S-Fone will not be able to enjoy 3G services.

For HT Mobile, its change of technology from CDMA to GSM caused a lot of problems for its subscribers. They had to decide whether they would continue using Vietnamobile’s services or move to S-Fone.

According to professor Ha Ton Vinh, it is time to replace BCC with a more suitable mode of business. He said the joint venture mode in telecom is better than BCC. Under this mode, the interests and responsibilities of partners are very clear and partners can develop together because they are protected under the Enterprise Law.

“We have been negotiating with our Vietnamese partner Saigon Postel since 2006 about a change of business mode. With the joint venture mode, we could directly provide services for customers,” said Do Hoon, a senior representative of SK Telecom in Vietnam.

According to Do Hoon, the joint venture mode is very convenient for developing some value-added services to uphold the preeminent aspects of CDMA technology.

“As of now (June 6, 2009), we still have not found a common voice,” Do Hoon said about the negotiations. “SK Telecom will try to change from BCC to joint venture in 2009,” he affirmed.

An official of Vietnamobile also admitted to a plan to change the business mode of the network from BCC to joint venture.

GTel, a joint venture between Russian Vimpelcom group and the Ministry of Defence, has announced it will launch a network named Beeline in early July 2009.

But will this new joint-venture network be able to differentiate itself from its BCC brethren?

Bich Ngoc