Fiber-optic cable updates Vietnam

Fiber-optic cable updates Vietnam


Vietnam has a major telecommunications development plan underway as part of the country`s Doi Moi, or renovation, a policy of economic restructuring. Installation of an extensive fiber network plays an integral part in these Doi Moi plans (see Lightwave, July 1995, page 8).

Two years ago, there were only 200,000 telephones in all of Vietnam. This translates to a telephone penetration rate of three telephones per 1000 people--one of the lowest telephone densities in the region, perhaps the world. By contrast, Malaysia and Thailand report telephony densities of 20 to 30 times more.

Before the 1993 reorganization, Vietnam`s telecommunications infrastructure was in a primitive state. The network`s few switches were based on old-style analog switching technologies, such as crossbar and step by step, which were manufactured by Vietnam`s former Soviet bloc trading partners. Similarly, transmission facilities, including international links of the pre-reform period, included open-wire and high-frequency radio connections.

In 1993, Vietnam`s governmental infrastructure for telecommunications was moved from the Ministry of Transports and Communications into two organizations--the Directorate General of Posts and Telecommunications, or DGPT, and Vietnam Posts and Telecommunications, or VNPT. The first group has ministerial status and serves as the regulatory and policy-making organization; the latter group operates the national telecommunications network. Smaller subsidiary operating companies were also created for each of Vietnam`s 53 provinces. Another license may be forthcoming for two additional network operators--the Army Telecommunications Co. and another for an entity in Ho Chi Minh City. Reports on these operators receiving networking licenses, however, appear premature.

By the end of 1995, if all goes as planned, the telephone density in Vietnam is expected to increase by a factor of three, to one telephone per 100 people. According to national plans, this should increase to 5 telephones per 100 people by the end of the decade. So far, the role of fiber optics in these plans has been to provide national and international infrastructure backbone networks.

Undersea links

In March 1994, a memorandum of understanding was signed for the construction of an undersea fiber-optic cable that is expected to link Vietnam with Thailand and Hong Kong. The cable link, known as V-T-H, is scheduled to be completed by late 1995 and put into service in early 1996. Cable terminal landing points are targeted at Si Racha, Thailand, on the northeast shore of the Gulf of Siam, and Deepwater Bay in Hong Kong. For the Vietnamese terminal, the cable landing point is expected to be in the coastal province of Vung Tau, near Ho Chi Minh City.

The V-T-H cable is anticipated to be operated jointly by the Communications Authority of Thailand, Hong Kong Telecom, the VNPT and the Australian company, Telstra. In fact, with the initiation of this project, Telstra became the first foreign telecommunications company to receive a license from the Vietnamese government`s State Committee for Cooperation and Investment to enter into a business cooperation contract with the VNPT.

The 10-year project is expected to have a capitalization of $287 million. Roughly two-thirds of this investment is coming from Telstra, with the rest in the form of facilities and future equipment installation from the Vietnamese partner. Of almost 12 foreign partners operating in the Vietnamese telecommunications sector, Telstra`s commitment of nearly $200 million is one of the largest investments for this undersea infrastructure project.

The undersea cable is expected to comprise two line pairs with a reported aggregate capacity of 7000 calls each way, or 565 megabits per second. Fujitsu and Alcatel Submarcon plan to install the cable and use the more conventional plesiosynchronous digital hierarchy protocol.

Fiber backbone

In 1994, the first terrestrial optical fiber backbone cable was installed in Vietnam between Hanoi and Ho Chi Minh City. Da Nang serves as the intermediate hub for this North/South fiber cable and is also the site of Vietnam`s third international telecommunications exchange. The 1800-km North/South fiber cable was first installed to supplement to the recently installed 140-Mbit/sec microwave backbone and originally operated at 34 Mbits/sec.

According to recent plans, this initial fiber-optic link will be upgraded to 565 Mbits/sec and will replace the 140-Mbit/sec microwave backbone. In addition, a second fiber-optic cable is to be installed along the same route in the near future.

Besides the North/South fiber backbone, smaller-capacity tributary fiber links are being installed to connect provincial telephone networks with the national telecommunications backbone. Hanoi and Ho Chi Minh City serve as hubs for the northern and southern provinces, respectively. These cables are slated for operation at 4, 8 and 34 Mbits/sec.

Vietnam has two joint-venture projects underway to set up factories to manufacture optical fiber cable. In the first project, VNPT has partnered with German telecommunications company Siemens AG, which is investing $8.7 million to create an optical fiber plant near Ho Chi Minh City. The joint venture is expected to be known as Fiber Optic Cable and Accessories Ltd., or FOCAL. Production is slated to begin before the end of this year. The plant plans to produce 80,000 km of fiber-optic cable per year.

The second project is a joint venture with VNPT and the South Korean company, Goldstar Cable. The agreement calls for a 20-year joint venture, an optical-fiber manufacturing facility and a capitalization level of $8.1 million.

Although the Vietnamese government is encouraging foreign investment and the formation of joint-venture partnerships, VNPT remains the only organization in Vietnam for telecommunications business ventures. Furthermore, foreign entities will probably not play a direct role in Vietnamese telecommunications for the foreseeable future, because the government considers this sector to be strategically important.

To date, the reform process in Vietnam--at least in telecommunications--is moving toward liberalization, but competitive markets are not being discussed at this time. So far, two forms of business relationships--joint ventures and business cooperation contracts--have been made possible. Although joint ventures are possible for manufacturing, the "strategic" nature of the telecommunications sector means that only business cooperation contracts are being allowed for foreign companies to participate directly in new infrastructure projects. These contracts are risky for foreign companies, because they allow the Vietnamese government to pull out at any time, potentially abandoning the foreign investor. Given the lack of contract guarantees, no American companies have participated in Vietnam`s telecommunications boom. q

Gene Mesher writes from Tucson, AZ.

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