The gap between rural and urban areas in access to the Internet, especially broadband Internet service is quite large. Broadband in Vietnam is considered saturated but in reality, saturation occurs only in the cities and major centers. Vietnam has about 89 million people including 72% living in rural areas and the market of potential customers has not been fully exploited. This is a huge gap in the development of telecommunication services including broadband Internet. Vietnam has adopted various polices in an effort to minimize the broadband divide between urban and rural areas.

From now until 2015 and further to 2020, Vietnam will give priority to the development of broadband in rural areas, especially to bring broadband to rural districts and poor communes. In addition to the general policy priorities for rural broadband development, the government also has special offers to help people in poor regions have access to technology and help develop production and improve quality of life. Broadband can contribute to poverty reduction, maintain social order and national security, raise education levels and create conditions for accelerating the modernization of agriculture and rural areas. Besides priority policies of broadband development for poor rural regions, the government is encouraging investment in broadband for schools and public hospitals in rural areas aimed at uniformly developing and narrowing the digital gap between regions.

4.1 Delta and midland rural areas

Due to relative geographical and socio-economic advantages, such as proximity to cities, economic centers and industrial parks, Internet in the delta and midland area has developed rapidly. The broadband network basically connects to the district level, towns and some communes. Specific results as follows:

• Most communes have an access point providing telecommunications and Internet services for the community.

• The broadband transmission network has come to more than 84% of communes nationwide, in which:

• Number of communes using fiber optic transmission accounts for over 56%.

• Number of communes using microwave transmission accounts more than 25%.

• Number of communes using satellite transmission (VSAT DAMA, VSAT IP) accounts 3%.

The development of broadband services in the delta and midland areas compared to municipalities is shown in the statistical table below.

The rural telecommunications market promises great potential and there should be significant competition because broadband has developed close to saturation levels in urban areas while rural markets are in the initial development period. On the other hand, rural areas are now developing towards urbanization and there are many new industrial zones recently built.

Although it achieved some initial results, rural Internet network infrastructure and quality of service still significantly lags urban areas—Hanoi and Ho Chi Minh City account for 65% of total broadband subscribers—and faces several challenges:

• Network capacity is still weak and there is not a common master plan for network and technology. Except for the mobile sector, most telecommunications services and particularly broadband Internet in rural areas are being developed based on extended city and town networks.
• Low income and awareness inhibits broadband affordability and capability.

4.2 Extreme poverty rural communes

Communes in remote, border and island areas and the 62 poorest districts and communes under “Program 135” are referred to as “extreme poverty communes”. The extreme poverty communes have common characteristics:

• Tough geographical conditions and harsh weather;
• Difficult transportation;
• Underdeveloped infrastructure and economic and social conditions;
• Construction and maintenance of telecommunications infrastructure is costly and slow capital recovery and low profitability discourages enterprises from investing in these areas.

To develop infrastructure and universalize telecommunications and Internet services for extreme poverty communes, the State has been supporting supply and use of services for inhabitants and enterprises through two special programs: developing communal access points and providing universal telecommunication services.

4.2.1 Communal P&T and Cultural Points

VNPT had a program to develop so-called Communal P&T and Cultural Points (CPCP)* The English term used by VNPT but also referred to as Cultural Post Offices, Communal Post Culture Points and Village Post and Cultural Points. during the period 1998 – 2007. The objectives of the program were to provide telecommunications service at the commune level; to narrow the digital divide between rural and urban areas, and to promote socio-economic development.

Up to 2007, VNPT built and put into use some 8,000 CPCPs serving 76% of the rural population, in which 1,535 were located in extreme poverty communes (out a total of 1,644 extreme poverty communes). In addition to postal and culture services such as books and magazines, the CPCPs have played an important role in providing telephone, Internet and information technology services for rural and especially for extreme poverty areas. The CPCPs also played an important part in completing the task of bringing telephones to 100% of communes nationwide in 2005. In 2003, VNPT started supplying mainly dial-up Internet access to around 3,000 CPCPs at a cost of 35 billion VND (US$2.3 million).* The Asia Foundation. 2009. Training Needs Assessment Report: Public Library Institutions and Communal Cultural Post Offices. http://asiafoundation.org/publications/pdf/563.

After 10 years of operating, besides the notable achievements, the CPCPs also faced obstacles that limited effectiveness:

• Cost of operating, repairing and upgrading has risen due to age of the system.
• Turnover in some points is too low and does not cover operating costs. Broadband Internet has not been set up in a large number of CPCPs so quality of services is low, content is poor and hence it is more difficult to attract people.
• Some CPCPs are built in places that are located far from residential areas and inconvenient for people, whereas some others are built near urban areas or developed socio-economic region where there is less demand due to other options.
• Remuneration for the manager of the CPCP is often low. The general educational qualification and expertise of the majority of managers is limited and they sometimes do not receive adequate training.

4.2.2 Universal telecommunication services program

Universal service and access goals are outlined in Decision No 74/2006/QD-TTg of the Prime Minister and called “Program 74”.* “Approving Program on provision of public-utility telecommunications service until 2010.” Available at: http://english.mic.gov.vn/vbqppl/Lists/Vn%20bn%20QPPL/DispForm.aspx?ID=6248 The public utility telecommunications area is announced annually by the Ministry of Information and Communication, including most communes of the 62 poorest districts, communes under Program 135, and communes in remote and island areas where teledensity is below 2.5 subscribers per 100 inhabitants.

The Program’s overall objective up to 2010 was to implement universalization of basic telecommunications services for extreme poverty rural residents including providing 70% of communes with a public Internet access point.

The Vietnam Public Utility Telecommunication Service Fund supports the implementation of State’s policies on provision of public utility telecommunication service throughout the whole country. Mechanisms include:

• Supporting development of telecommunications network infrastructure and public telecommunication services access points in the form of grant assistance and preferential loans.
• Supporting people to use telecommunications services in the form of reduced service charges and VAT exemption.

After more than four years of implementation, Program 74 has mobilized financial resources and technical capacity of telecommunications enterprises in Vietnam to develop network infrastructure and services for extreme poverty rural areas. Through Program 74, the State has made a balance between rights and obligations among telecommunications enterprises in universalization of public utility telecommunications services. While the Program of developing the CPCPs was taken care of only by the VNPT Group, Program 74 has the participation of major telecommunications companies such as the VNPT Group, Viettel, EVN Telecom and the Vietnam Maritime Communication and Electronics Company (VISHIPEL). VNPT, Viettel and EVN Telecom are ordered by the State to provide phone and Internet services and VISHIPEL is ordered to provide public utility telecommunications services for fishermen at sea.

Thus Program 74 not only provides an opportunity to access and use telecommunications services for more than 20 million people in rural areas for economic and social development, but this Program also supports and encourages enterprises to aggressively invest in infrastructure networks and service development in order to provision the rural market. Some specific results of Program 74 up to June 2010 are:

• Most people of 4,240 communes in the 62 poorest districts and communes under Program 135, in the remote, border and islands areas with about 22 million people (accounting for 26% of the national population) have received benefits from the public utility telecommunications support policy of the State.
• Support to develop more than 75,623 new Internet subscribers.
• Support to maintain the network for 275,307 Internet subscribers.
• Support for 4,054 public Internet access points.
• Internet subscription density in public utility regions rose from 0.018 (late 2004) to 0.32 subscribers per 100 inhabitants (late 2009).

The program has faced some difficulties and limitations:

• The development of infrastructure has not kept up with demand. There are many differences in infrastructure and subscriber density between extreme poverty rural and urban areas. At the end of 2009, Internet subscriber density in the public utility telecommunications region was only 0.3 subscribers per 100 inhabitants (although it is nearly 18 times higher than in 2004). Meanwhile Hanoi has 13.9 subscribers per 100 inhabitants, Da Nang has 8.8 subscribers per 100 inhabitants and Ho Chi Minh has 10.5 subscribers per 100 inhabitants.
• The development of infrastructure and types of services among public utility regions is unbalanced. Communes in Region 1 and Region 2 with favourable conditions have overheated development that exceeds plan targets, while communes in Region 3 far from the district centers have levels that do not meet targets. The development of Internet subscribers and public Internet access points have not met targets.
• Support in the form of preferential loans to build public telecommunication services access points is not realistic because these areas have difficult geographical and socio-economic conditions, low investment efficiency and are unlikely to recover capital so they do not encourage enterprises’ investment. Up to now there are 3,130 communes without public Internet access points, and Internet subscriber density is very low and does not meet the target.
• Regarding developing new individual and household Internet subscribers, and new public Internet access points, only VNPT has exceeded the plan while other enterprises focused investment in urban areas.

4.3 Future plans

Decision No. 119/QD-TTg on 18/01/2011 by the Prime Minister approving the project for rural communications during the period 2011 – 2020 identifies a number of goals relating to Internet and broadband access and services:

• 100% of communes are connected by broadband transmission lines.
• 100% of communes having People's Committee offices, schools and health centers are providing Internet broadband services.
• Internet subscriber density in rural areas reaches 30% to 40% national average density.
• The state agency from the district level, departments, sectors or equivalent or higher should have e-portals or websites providing all public online services to residents and enterprises in rural areas.
• The offices of the Party and government authority from the central to commune level to have their e-mail address for receiving and publicly responding to feedback of the people.
• The electronic information websites of the Party, State, political and social organizations in central and local levels have programs to receive and reply to comments of the people.