Mobile operators face the heat
Mobile operators face the heat
Mobile operators in Viet Nam are in danger of losing millions of dollars each year due to the increasing use of "over the top" phone services through smartphone apps and others, analysts have warned.
Consumers can access OTT content through any internet-connected device.
A recent report in The Economist about how OTT services are hitting mobile operators is also true of the unfolding situation in Viet Nam.
The UK-based magazine said: "Smartphones have … opened the door to disruptive newcomers. Suppliers of OTT services have been pinching the network operators' customers by offering messaging and voice-over-internet-protocol (VOIP) calls via Smartphone applications.
"OTT services can take many forms, but voice and message applications have been the mobile network operators' biggest headache.
"Rather than pay for an SMS message or a phone call, people may use Skype (bought by Microsoft last year), WhatsApp (brainchild of two alumni of Yahoo!), Rebtel (a Swedish start-up), Viber, Voxer or some other upstart to send messages and videos or make VOIP calls for nothing. They may still incur data charges but with Wi-Fi access may avoid even those."
The turnover of Viet Nam's three big mobile network operators is already taking a beating as more and more people wanted to use OTT services instead of their networks, the analysts said.
Nguyen Manh Hung, deputy general director of Viettel telecom giant, agreed, revealing that if all his company's 40 million subscribers use OTT services, its turnover would take a 40-50 per cent hit. In the first half of last year only a million customers used Viber, but his company's revenues fell by VND1.5 trillion (US$71.4 million), Hung told Dau Tu (Viet Nam Investment Review).
The analysts in turn concurred with Hung's forecast about numbers, saying operators would lose nearly VND50 trillion (US$2.4 billion) annually if their subscribers switched to free OTT services to send messages and videos and make calls.
Some 80 per cent of their estimated VND100 trillion (US$4.80 billion) annual revenues now comes from basic telecom services like calls and messages.
A source from MobiFone telecom company, who asked not to be named, said free voice and message applications via the internet globally caused providers of traditional services like SMS loss over US$13 billion a year, or 9 per cent of total turnover.
In Viet Nam, 280,000 phone calls are made and 8.7 million messages sent using Viber annually, causing a loss of over VND1 trillion ($47.6 million), the source said.
With the exponential growth in smartphone use in the country, distributors of OTT services like Zalo, Kakao Talk, and Line have grabbed the opportunity.
To attract users, they have been introducing Vietnamese versions of their applications and developing social media features.
Vuong Quang Khai, deputy general director of VNG — the owner of Zalo — said with the use of internet mobile services just starting in Viet Nam, there is room to develop many kinds of OTT products.
Besides improving communication features like free messaging and calling, Zalo would invest in developing social features in ways that would not only make usage convenient but also stand out, he said.
Viber founder and CEO Talmon Marco said during his visit to Viet Nam in April that Viber has introduced a Vietnamese Version and hopes to attract dozens of millions of users this year.
VTC Online, which is developing Kakao Talk along with Kakao Corp, said it plans to introduce utility services that better serve users.
All these efforts are paying off: The number of Zalo users is expected to rise to 5 million, while Kakao Talk and Viber are looking at 7 million and 10 million by year-end.
Do Vu Anh, head of VNPT Group's Telecommunications Department, said OTT is a new technology trend that mobile operators cannot fight.
Instead, they should work with OTT providers to in ways that could benefit both of them as well as mobile users, he said.
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