Fiber infrastructure modernizes Vietnam telecommunications

Fiber infrastructure modernizes Vietnam telecommunications


Nippon Telegraph and Telephone International Corp. in Tokyo has entered into a joint project with Vietnam Posts and Telecommunications to construct a telephone network in Hanoi City, the capital of the Socialist Republic of Vietnam. For a contract worth $25 million, the Japanese company has agreed to design, provide equipment for and supervise all work in the fiber-based project.

This new infrastructure project is contributing to resurging economic growth in Vietnam, which has been stagnating for decades. To help in this growth, the government is emphasizing an economic plan to upgrade telecommunications circuits in the country. Vietnam has become a hot-spot for investment money from Southeast Asia and Pacific countries, most notably from Australia. But until now, Japan`s risk-adverse companies have held back from involvement in the country. So, it was a surprise in Tokyo when NTTI`s proposal won the favor of the Vietnamese government.

The scope of the contract covers projects in three areas in the east and north of Hanoi where 25,000 subscriber lines will be installed within one and a half years. The three areas are Gia Lam in the eastern part of the city, and Soc Son and Dong Anh in the north. These areas, which cover 700 square kilometers and have a population of 760,000, are high priorities in the development plans of the Hanoi city authority. They will become sites for an airport expansion project, an industrial estate and an export processing zone.

Besides installing 135 km of optical-fiber cable, NTTI will install a digital exchange system, comprising two main switch units and five remote line units. The company will install central and remote terminals for the optical-fiber access system. According to Keijiro Osaki, marketing section of the company`s business development department, the optical-fiber transmission system will have 155- and 34-megabit-per-second configurations.

Nippon`s mission

Osaki says Nippon`s mission is to provide consulting and engineering services in the design, construction, operation and maintenance of telecommunications systems worldwide. NTTI is the international arm of Nippon Telegraph and Telephone Corp., Japan`s leading telecommunications service. The former is taking advantage of the Ministry of Posts and Telecommunications recent liberalization of laws that have restricted NTT from entering into projects abroad. He notes that NTTI is poised to begin optical-fiber projects in Africa and Latin America.

NTTI`s move into Vietnam was aided by Sumitomo Corp., which has monitored and followed key moves to liberalize Vietnam`s telecommunications with the recent dismantling of the nation`s telecommunications monopoly. In 1993, the Vietnamese government separated the regulatory and operational arms of the communications ministry into a policy body run by Secretary General of the Directorate General of Posts and Telecommunications, and Vietnam Posts and Telecommunications. Last year, a letter from the office of Vietnamese Prime Minister Vo Van Kiet to Vietnam`s Directorate General of Posts and Telecommunications said the government had no objection to the establishment of one new telecommunications carrier by the Ministry of Defense.

The government has yet to place limits on the areas in which the defense ministry will be able to compete with the Directorate General of Posts and Telecommunications. Whether the market will develop into a duopoly or other players will be allowed remains unclear.

The defense ministry does not have a network in place; therefore, it may have to begin services by leasing lines from the Directorate General. The entry of the defense ministry indicates the strength of the country`s military establishment and its desire to take a share of the lucrative communications revenues that had been enjoyed exclusively by the Directorate General of Posts and Telecommunications.

Telecommunications laws

The Prime Minister`s office has also expressed a desire to rapidly introduce new, modern and comprehensive posts and telecommunications laws. Some analysts predict that during 1995, more suppliers of services and infrastructure will enter the market and that the Vietnam Posts and Telecommunications will be partially or fully liberalized. The Vietnam Posts may even be listed on the stock market: The Hanoi stock exchange is slated to commence operation this year.

Vietnam, like most countries in the former Indochina, has the potential for telecommunications growth. According to current statistics, teledensity in Vietnam stands at 0.45% (number of telephones in relation to the population) and is expected to increase to 1%, or 740,000 main exchange lines, by the end of 1995 and to 3%, or 2.4 million lines, by the year 2000. Fiber will play a major role in the nation`s telecommunications infrastructure--with the help of countries such as Japan and Australia.

By the year 2000, the Vietnam Posts and Telecommunications plans to expand the capacity of its digital microwave and optical-fiber trunk routes to 140 and 565 Mbits/sec, respectively.

Vietnam will also benefit from a major infrastructure project that will link Vietnam to Thailand and Hong Kong. The first undersea optical cable to link the three countries will be installed by Fujitsu Network Transmission Systems Inc. and Alcatel Network Systems Inc. Last year, the two companies submitted a $125 million bid, winning over AT&T, STC in the United Kingdom, and NEC Corp. in Tokyo. q

Paul Mortensen writes from Tokyo

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