An in-depth look at 3G in Vietnam
Vietnam is a fascinating country in terms of digital, with very limited fixed line infrastructure and government censorship of Facebook. It has the potential to be one of the most mobile-based digital landscapes in Asia – a continent that is singled out for its use of mobile over fixed-line.
With that in mind, Nielsen Research has published two insightful reports into the development of 3G in Vietnam since it was launched last year.
The first report – ‘A Year of 3G in Vietnam’ – opens with a chart that shows that while mobile penetration (i.e. the number of users subscribed to a 3G tariff or services) is just 11 percent, the figure compares favourably with countries that have had 3G far longer.
After just one year, 11 percent is favourable particularly given that Indonesia, a country renowned for social networking and mobile social networking, stands at just 14 percent penetration despite its 3G launch four years ago. However Nielsen does comment that:
Given the strong overall penetration of mobile phones in Vietnam, however, one might have expected a faster rate of adoption
So what and how can Vietnam increase its use of 3G given that it could be higher?
Nielsen points to its sizeable youth generation and its interest in mobile and mobile services:
The real key to boosting 3G service in Vietnam is nurturing the young generation, who typically adopt new technology more quickly than their elders.
In Vietnam, people under age 24 represent more than half (54%) of the population. Narrowing the scope of our investigation to people age 15-24 (who comprise 20% of the Vietnamese population), half (48%) are subscribed to mobile services.
Initially given phones by their parents as a way to keep in touch, youth gain more control over usage and handset selection as they mature. They occasionally use their devices to make calls, but prefer to use them for texts/SMS. They are much higher than average data users, which would seem to make 3G networks and smartphones natural fits for them.
But to date, the majority of young Vietnamese know very little about 3G and/or don’t see a need for it. By the time they are young adults, they have very definite preferences when it comes to how they use service and selecting devices.
Before jumping into Nielsen’s recommendations on how to attract the Vietnamese youth generation to 3G services, it is worth turning to its second report – ‘Age Matters: mobile youth in Vietnam’ – which goes into further detail on the country’s youth and its usage of mobile.
The chart below puts the population into segments based on age (the dark blue pie is presumably supposed to read 15-24 years old), indicating that 35 percent of the age grow are prospective users, which could have a sizeable impact on the country’s overall mobile penetration and heralds much potential for 3G service which, as established in the previous report, are adopted quicker by younger generations.
What is fascinating about early adoption in youth in Vietnam and their mobile habits is just how much further advanced this young 15-24 generation is as the chart below outlines:
While comparison of the figures between the young generation and average other ages is nothing more than expected in 2009, the growth in mobile internet and multimedia in the young generation in 2010 is prolific, and precisely the type of growth necessary to advance 3G services – although the data does not distinguish between 3G and 2G subscribers.
One consideration about grouping together 15-24 year olds is that there is a huge difference in behaviour, financial levels and independence, level of education, employment etc. As such Nielsen provides the following which is an interesting insight into some of the (roughly) key differences between the two.
The parents of Vietnamese teenagers tend to be responsible for paying for their kids’ mobile services. They tend to spend 100,000 vnd once or twice a month and pay to top-up their kids’ phones as needed. Promotions do not seem to affect the top-up behavior of teens.
But promotions are very important to young adults ages 18-24. They will actually wait for the right promotion to top up, or top up even if they don’t need the minutes just to take advantage of a promotion. Their increased price-sensitivity is due to the fact that they are now paying for their own mobile service. They tend to spend half as much as the parents of teenagers (50,000 vnd) each time, but top up more frequently, perhaps two or three times a month.
Moving back to addressing the country’s 3G market as a whole, Nielsen’s summary comment is:
Whether it is attracting more adults or the young generation, mobile telephone service providers have a number of tools at their disposal to accelerate adoption of 3G in Vietnam. Adults can clearly benefit from the features enabled by 3G, but converting the young generation to 3G will pay dividends in the long run. Once they have access to and become familiar with services such as mobile video viewing and Internet access, real-time instant messaging, they are more likely to adopt service upgrades and enhancements in the future.
While Nielsen uses the examples of Indonesia and Singapore as barometers for Vietnamese growth, I would argue that neither market is ideal for comparison.
Singapore is quite unique in Asia given that social networks are more popular than Google, while its population is, on average, greatly more affluent than neighbouring countries. It has economic, social and digital factors unmatched by any in Southeast Asia, Vietnam included.
Indonesia, on the other hand, doesn’t boast such economic strength but does have a huge population (over 230 million) who are the world’s biggest social media addicts. Indonesia developed its position as a social media champion from launching 3G early with plenty of incentivised tariffs and handsets to get consumers on board. The initial captive audience was already somewhat established before Twitter and Facebook become popular in the country and Asia, so arguably it enjoyed timing which Vietnam cannot have given that social networks are already established, or at least know about by operators and consumers alike.
Thailand is, in my opinion, the example which Vietnam should look to. Though it does not have 3G, the country has just posted hugely impressive mobile internet usage growth figures as revealed by the Bangkok Post:
According to the National Electronics and Computer Technology Centre (NECTEC), as of Aug 18, 2010, there were 21.14 million internet users in Thailand, 15. 52% more than at the same time last year (about 18.3 million).
That figure is roughly around one third of the population, impressive given the much-publicised 3G issues.
While in social media terms, Facebook is flying having passed 10 percent penetration in the country as I posted last week, the same Bangkok Post article makes a year on year compairson, which shows growth has been greater than mobile internet growth itself:
As of Nov 29, Thailand had 6.57 million of Facebook users, as compared to 1.96 million in November 2009.
Given that Vietnam actually has 3G services to promote, it could look at the way Thailand has used social networks, smartphone and feature-rich devices, variable tariffs (particularly for pre-pay users who dominate both markets and Asia in general).
What’s for sure is that Vietnam has the potential to become recognised in Southeast Asia and further for its high use of mobile, many of the necessary factors are already and place and further growth seems likely.
Note: on the subject of internet and social media in Vietnam, SE Asia-based journalist Simon Roughneen has this interesting media shift article looking at the very topic.
It is worth reading in full, touching on the ease in which the government’s Facebook blockade can be circumvented:
The (internet cafe) manager’s answer (to the question of how he accesses Facebook) came with with an air of incredulity, and a good measure of self-satisfaction. “We just change the DNS,” he said.
And discussed the impact/non-impact of the government’s own Facebook-clone social network – go.vn. – which it launched back in October, as Asia Society reported.
I asked the gaming room manager what he thought of go.vn. Nose and brow furrowed, he asked, “What is that?” I asked around the shop, and all but two of the nineteen gamers said much the same.
If you’re interested in social media in Asia, give the article a read, Vietnam is showing signs of developing into another fast-growing Facebook market in SE Asia, as the doubling of membership over the last six months indicates.