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Unleashing 4G and 5G Potential in Vietnam

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The Ministry of Information and Communication (MIC) has said it will ask the government to amend the relevant regulations on frequency auctions. The preparations are nearly complete to put the 700 MHz frequency for 4G and 5G technology development up for auction soon. The anticipated outcomes from the new regulations include addressing challenges in the process of frequency auctions, speeding up 4G development and the commercialisation of 5G.

Before that, in February this year, MIC officially announced its intention to conduct an auction for the right to use the 2300MHz band. Four telecom carriers that submitted dossiers, VNPT, Viettel, MobiFone, and Vietnamobile, received MIC’s certificates to be eligible to attend the auction.

In accordance with Decree 88/2021, only firms that are certified by MIC as fulfilling the requirements for auctions can submit dossiers to partake in the auctions. On 15 May, 25 May, and 2 June 2023, the MIC organised auctions for the 2300MHz frequency spectrum, encompassing three frequency band blocks: A1 (2300-2330 MHz), A2 (2330-2360 MHz), and A3 (2360-2390 MHz).

However, there were no companies that submitted a dossier or deposit in advance to register to participate in the auction. As a result, the auctions slated for the A1, A2, and A3 frequency block allocations were unsuccessful.

In the past, state management bodies were responsible for granting frequency licenses to telecommunications carriers. Subsequently, these carriers had to undergo assessments to secure access to specific frequency bands. In essence, frequencies were allocated to carriers without charge, and their only financial obligation was to pay frequency fees annually as per the Ministry of Finance’s regulations.

However, with the enactment of the Law on Radio Frequency, a shift occurred and mobile network operators, aiming to offer superior services to their customers by utilising favorable frequency bands, now must obtain wavebands through auctions.

As per the Authority of Radio Frequency Management (ARFM), the starting price set for the auction of the 2300-2400 MHz frequencies for three waveband blocks stands at VND 17.394 trillion (US$ 72.8 million).

For A1, A2, and A3, the starting price is VND 5.798 trillion and the authorised usage duration spans 15 years. This implies that, in theory, telecom carriers would have to pay VND 386 billion a year in fees, a relatively high figure for all mobile networks. To be able to provide services, they will have to spend more money on infrastructure and business models.

As per data from MIC, Vietnam currently has a mobile subscriber count of 126 million and the market is progressively reaching a state of saturation. According to a report, 800,000 fresh subscribers enter the market every year. In a proactive measure, the MIC has granted telecommunication companies the opportunity to pilot 5G technology in 40 cities or provinces.

The telecommunication landscape in Vietnam is changing. Carriers have realised benefits from reducing ownership over passive telecommunication infrastructure such as antenna masts or internet fibre optic lines. Since 2019, numerous telecom carriers in Vietnam have entered into cooperation agreements to share infrastructure, and this trend is expected to further intensify with the widespread implementation of 5G technology.

As per a representative from one of the top mobile network operators in the country, the company has engaged in infrastructure sharing by utilising around 4,000 base transceiver stations (BTS) from various telecommunications companies and an additional 13,400 BTS established by other investors.

The mobile network operator has implemented infrastructure sharing across all 63 cities and provinces in Vietnam, with the highest concentration of shared items found in Hanoi, Ho Chi Minh City (HCMC), and Dong Nai.

 

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