Vietnam to Commercialize 5G: What Should Investors Expect
- Vietnam is among the first countries to adopt the newest network technology – 5G with a plan for commercialization in 2022.
- 5G is expected to revolutionize key industries such as agriculture, manufacturing, and logistics with its faster speed, connectivity, and lower latency.
- While 5G indicates numerous opportunities, it takes time and proper methods to leverage its capabilities.
Vietnam plans to license 5th generation (5G) commercialization in 2022 and expand 5G coverage in urban areas and high-tech industrial zones. This involves increasing the number of digital enterprises from 58,000 to 100,000 by 2025 as part of the National Digital Transformation Plan, aiming to build a digital government and economy, and eventually a digital society.
This widescale deployment will make use of around 70 percent of the existing 4G infrastructure, following several small-scaled commercial trials in 2020-2021.
The digital economy plays a pivotal role in facilitating Vietnam’s socio-economic development strategy, expected to contribute 7 percent of GDP in 2025 and 7.5 percent by 2030. Contributing to this, 5G is projected to create US$13.1 trillion and two million new jobs by 2035.
What is 5G and how it works
5G, the latest mobile internet technology, is believed to be the future of mobile networks. Compared to the latest generations namely 4G, 3G, and 2G, 5G offers largely improved data throughput, low-power networks to support the Internet of Things (IoT), and much lower latency, the delay between sending and receiving signals, to enable clever remote-control scenarios.
In addition, 5G is estimated to use 10 times less energy than 4G by 2025, contributing to a more sustainable and energy-efficient digital landscape.
Widely known for its advantages in speed, connectivity, and security, 5G allows enterprises to process and analyze a greater volume of data with optimal costs. Reportedly, its data transmission speed is 10-20 times faster than the current speed with the capacity to handle up to a million devices per square kilometer.
Additionally, 5G’s latency is only one-fifth of 4G, resulting in shorter delay times and higher productivity.
Moreover, the 5G landscape is more complex and multifaceted than its counterparts. This is proven more effective in tackling problems with dropped connections and low accessibility to a large number of devices. While the previous generations connected billions of people, 5G is expected to connect trillions of devices, transforming the telecommunication network into an interrelated virtual world.
5G deployment in Vietnam
Vietnam is considered one of the frontrunners on 5G development alongside the US, China, and Japan, having licensed various trials during 2020-2021. Currently, three carriers including Viettel, Mobifone, and VNPT have been licensed by the Ministry of Information and Communications (MIC) to trial in 16 cities and provinces nationwide.
While Viettel targeted Hanoi with 140 base stations, Mobifone conducted trials in Ho Chi Minh City with 50 stations. Viettel is the pioneer in providing 5G services in Vietnam, following its 4G coverage of up to 97 percent of the Vietnamese population.
In December 2021, Viettel cooperated with global technology giant Samsung to launch a 5G commercial trial in Da Nang, the largest city in Central Vietnam and 11th city to get Viettel’s 5G coverage among cities such as Hanoi, Bac Ninh, and Ho Chi Minh City.
During the trial, Viettel used Samsung’s advanced 5G solutions to power its commercial network, which enabled users in Da Nang to experience the full benefits of 5G services. This marks the country’s rising efforts in ensuring the best network infrastructure for digital government development while supporting businesses and growth in developing areas.
The country also plans to reduce the number of 2G subscribers from 24 million to 5-7 million by 2022, to free up more bandwidth for 3G, 4G, and the 5G networks. By 2024, the MIC will stop extending the licenses for 2G/3G technologies, aiming to remove old technologies and stimulate market demand for 5G technology and devices.
This is part of the country’s accelerated adoption of the Industry 4.0 vision highlighted in the National Strategy towards 2030 on technology and innovation. The objectives by 2025 include broadband network infrastructure covering over 80 percent of households and across all villages, and popularizing 4G/5G mobile network service, and smartphones.
Accordingly, a major focus is given to the three key economic regions, including the Northern, Central, and Southern regions, aiming to transform these areas into smart cities via 5G deployment.
Vietnam aims to initially deploy 5G in major urban areas and high growth industry zones, eventually bringing the benefits of digital transformation to key industries, such as manufacturing, logistics, and agriculture.
A revolution for three key industries
5G will help logistics businesses currently using IoT devices to develop to a new level. It tackles a common problem which is shipping delays and information delays when notification to customers is needed.
With low latency, logistics service providers will be able to constantly monitor and update shipment status, enhancing the prediction of arrival time and location information.
5G also allows greater communication between vehicles, improving navigation and monitoring of vehicles. This will result in better route planning, shorter delivery times, and lower incidents and errors for drivers.
Augmented reality systems, powered by 5G, can also be used to identify potential hazards, without diverting a driver’s attention away from the road. Moving forward, new technologies such as air and driverless delivery could become a reality with the support of 5G, promising a more feasible and advanced logistic connectivity.
Vietnam will focus on deploying 5G in the fields of high-tech agriculture. The industry has been active with digital innovations and hi-tech agricultural production models such as greenhouse technology with an automated watering system, a cooling system for stable temperature and humidity, or artificial insemination.
Throughout the years, many farmers have already installed sensors connected to 4G to remotely monitor field conditions and detect when crops need watering or fertilizing, saving time and increasing productivity.
However, 5G promises a greater transformation. With 10 times faster speed, the wireless sensors connected via 5G networks will increase the amount of real-time data and facilitate precision farming, enabling the implementation of large numbers of IoT devices.
For example, farmers can use health monitoring devices for livestock, gaining much more accurate and timely health data. This allows for significant reductions in the use of antibiotics, without risking the safety of food supply chains.
As the fastest and most reliable connectivity enabler, 5G is expected to increase factory capabilities and boost agility, minimizing the dependency on wire technologies in operation.
Currently, most manufacturing sites are based on legacy and wired connections. This might be costly and hard to manage. Therefore, a wireless environment helps make processes smarter and less faulty through the real-time transfer of large amounts of data in milliseconds on secure data streams.
Traditional quality control processes can also be streamlined via sensor technology and augmented intelligence (AI), helping technicians to remotely identify faults in production lines and troubleshoot them in a timely manner.
According to a report of KPMG, a factory utilizing wireless communication has the potential to reap a value equal to an extra US$1 per square meter on a daily basis. That means nearly US$4 million a year in added value for a floor of 10,000sq m (the smallest to support a factory).
With enhanced network speed and lower latency, 5G will bring about the concept of connected factories with time-saving and optimized routes, potentially fewer losses.
Opportunities and Challenges
Despite the first strong steps towards piloting 5G, there are still many challenges to optimizing its implementation in Vietnam. For example, network operators encounter problems such as investment costs, frequency licensing, and not having enough users to make a profit.
Besides the costly implementation, they might face the risk that 5G-enabled devices have not yet been widely popular with consumers which results in less demand for this technology, making it hard to balance costs and benefits.
To combat these, Vietnam is implementing solutions to accelerate 5G coverage by mobilizing network operators to share base stations. Specifically, in the early stages of 5G development, each carrier will cover 25 percent of the country’s area and perform roaming together to reduce investment costs. The MIC aims to have 25 percent of the population using 5G by 2025.
With the commercialization of 5G, Vietnam is gradually transforming its digital landscape. However, to fully leverage the capabilities of 5G, technology developers and service providers in Vietnam need to scale the new technologies with speed and agility.
This means the ecosystem needs to come together and find new ways to collaborate and co-create to help Vietnam implement digital transformation and achieve its Industry 4.0 vision with 5G.
Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Hanoi, Ho Chi Minh City, and Da Nang. Readers may write to firstname.lastname@example.org for more support on doing business in Vietnam.
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