Challenges abound in Vietnam’s quest for early 5G rollout

5G developers need to consider a few issues—infrastructure complexity, how to harness 5G’s advantages, and simply wooing consumers to make the switch.

Vietnam isn’t a country where the latest tech products are dropped first globally, but it is determined to be on the cutting edge for commercial 5G services. The country’s government has made it clear that it wants to have 5G ready for public use as early as 2021, supposedly only one year after the advanced tech hub Singapore has its network up and running.

The Vietnamese government has been keen on using 5G as a springboard for programs that align with its rhetoric about the fourth industrial revolution. News about Vietnam’s 5G trials are reportedly frequently, but most consumers are still unsure how 5G will benefit them directly aside from hoping that it will facilitate much faster connection speeds.

Last month, state-owned telecom giant Viettel and Nokia broadcasted the first end-to-end 5G network in Vietnam’s biggest metropolitan area, Ho Chi Minh City. According to some experts, this puts Vietnam in a good position to secure an early commercial 5G rollout.

That milestone did not involve Huawei, one of the biggest names in the game. And it’s likely that Huawei will be passed over in Vietnam as the country pursues its 5G ambitions in the foreseeable future.

No to Huawei

In 2018, Mobifone and Samsung signed an agreement to boost engineering and commercial cooperation to develop 4G and 5G networks in Vietnam. Vinaphone also inked a partnership with Nokia last year to cultivate 5G technology. Viettel, Vietnam’s largest telecommunication service provider in terms of both scale and profits, has explicitly said that it won’t use Huawei’s 5G technologies, even during the trials.

It’s likely that Huawei will be absent in Vietnam’s quest for early 5G rollout. Credit: DFIC.

For now, Vietnam appears to be the sole Southeast Asian country avoiding the Chinese tech giant due to continued maritime tensions, geopolitical concerns, and perceived cybersecurity threats. Other ASEAN nations like Cambodia, the Philippines, Thailand, and Malaysia have allowed Huawei to secure important partnerships within their borders for future 5G deployment.

“Choosing to use self-developed equipment or those from non-Chinese suppliers will be a safer option for Vietnam,” wrote Le Hong Hiep, a fellow at the Singapore-based research institution ISEAS-Yusof Ishak Institute, in a commentary published on the institute’s website. Hiep referenced recent cyber attacks, including those aimed at the systems of Vietnam’s Noi Bai and Tan Son That airports in July 2016. These attacks are frequently attributed to hacker groups in China.

Huawei is reportedly working on a 5G trial with a smaller carrier in Vietnam, suggesting that it has not given up on the market yet, but hurdles remain for the Chinese giant. In an interview with Nikkei Asian Review, Huawei’s local CEO in Vietnam said the company is still confident about supplying 5G network equipment in the country because the race is still wide open.

Scott Minehane, principal at Australia-based Windsor Place Consulting, has been advising stakeholders in Vietnam’s telecom sector for many years. He said the industry’s general consensus is that “you’ll have to pay more” for other suppliers’ 5G equipment. It’s up to Vietnamese mobile network operators to negotiate for “price competitive equipment and technical support” from vendors other than Huawei.

An article published recently by Foreign Policy, “Why Huawei isn’t so scary,” also points out that the risk of security breaches might outweigh the Chinese firm’s low-cost options for building 5G networks. Support from the Chinese government—and Huawei’s focus on capturing a larger market share in the global telecom industry—do not necessarily translate to superiority in 5G technologies. At the same time, other competitors—including those that Vietnamese carriers are partnering with, like Nokia and Samsung—are catching up to Huawei in terms of sealing deals in various countries and building end-to-end 5G systems.

The infrastructure complexity of a 5G rollout

To keep its telecommunications infrastructure at the forefront, stakeholders in Vietnam must make adjustments for the infrastructure complexity of a 5G network.

Minehane pointed out the need to free up the necessary spectrum, as 5G will be deployed across multiple bands: low band (700 MHz), mid-band (3.5 to 4.2 GHz), and high-band on mmWave spectrum (24 to 28 GHz).

“The mid-band is already used by satellite services in Vietnam, which would need to be cleared. And the high-band (mmWave) will not work well in heavy rainfall areas. It will be very expensive to deploy,” Minehane explained. He added that such deployment will need to be combined with low band spectrum to enable economically viable 5G coverage of suburban and rural areas, as well as improved in-building signal strength.

Vietnam will also have to switch off legacy 2G services in order to free up frequencies. The Ministry of Information and Communications will soon announce a roadmap for terminating 2G coverage by 2022. The move will potentially affect more than half of the 130 million subscribers who are still 2G users.

The capital required for rolling out 5G is also unquestionably massive. According to a recent report published by American management consulting firm A.T. Kearney, around USD 13.5 billion is needed for a non-standalone rollout—meaning coverage that involves both 4G and 5G—across ASEAN up to 2025. Viettel is reportedly spending millions of dollars to develop its own 5G chipset. At the moment, it’s unclear whether there is funding allocated for 5G development from the government or investment plans from other carriers.

If the option of using Huawei’s gear is off the table, local operators would need some additional support from the public sector. Nguyen Quang Dong, director of the Hanoi-based Institute for Policy Studies and Media Development, hopes that the Vietnamese government will implement effective policies in conjunction with other international organizations, such as the International Monetary Fund and the World Bank, to give operators access to additional capital.

“If we just leave this to the operators, it’s quite risky when it comes to security, because to cut costs, the carriers may have to resort to cheaper 5G technologies,” Nguyen said. “It’s best that we place security at the center of this development phase for 5G.”

Is Vietnam ready?

There’s a lot of hype around 5G, but it is definitely more than just a buzzword. Its potential is critical to any country’s competitiveness. The unprecedented speed and enhanced connectivity that it will bring form the backbone for governments’ and enterprises’ digital transformation, as well as any plans that involve big data and the Internet-of-Things.

According to a draft project on national digital transformation prepared by the Ministry of Information and Communications, Vietnam aims to become one of the leading ASEAN countries in the global innovation index by 2030, with the digital economy accounting for over 20% of its GDP by 2025.

There may be a temporary obstacle. A.T. Kearney put Vietnam, Thailand, and the Philippines behind other Asian countries in 5G deployment. This means that for Vietnam, 5G will potentially be “just another technology layer” when “consumers and enterprises do not see the added value from a widespread deployment,” with operators choosing to “focus on recouping investments in the 4G cycle and only slowly and selectively deploy 5G in hotspot areas.”

Nguyen from the Institute for Policy Studies and Media Development also agreed that Vietnam must have a sustainable long-term plan that defines how the country will utilize 5G.

“5G is like the highway, and how that road can be used to increase the competitiveness of a country is entirely a different story. We need to have the ecosystems that can travel on that highway and bring in benefits to our economy and society,” he said, referring to the need to prepare local industries and a workforce that can harness the capabilities of 5G.

Vietnam only has about 51 million 3G and 4G subscribers out of its 130 million mobile subscribers. Experts also fear that if the price of 5G is not affordable, there’s no incentive for consumers to switch to 5G devices. The goal is to show consumers that 5G can have a positive impact on their lives beyond “watching YouTube or Netflix,” said Minehane.

At much faster speeds, 5G can give operators and app developers a lifeline to create breakthroughs in new mobile apps. But that does not come automatically once 5G is commercially available. This requires the government to have policies that can support content creation in the digital economy. In Vietnam, this sector alone is estimated to be worth USD 43 billion by 2025.

There are still many unknowns in Vietnam’s 5G future, but one thing is certain: fundamental shifts in Vietnam’s ICT infrastructure is about to change how people in the country use their personal communications devices.