Vietnam's armed forces are set to become the country's fifth largest internet service provider (ISP) in their latest move to take control of ever larger chunks of the country's civilian communications system.

The army already operates a cheap-rate international internet telephony service.

The online onslaught comes soon after the army's Electronic and Telecommunications Company, or Vietel, was given permission to enter the fixed line domestic telephone market from early next year.

Much of the military's mobile phone network should also be rolled out before spring 2003, though initially it will only cover the capital Hanoi, the central city of Danang and the commercial centre Ho Chi Minh City, the former Saigon.

The army is already a player in Vietnam's telecoms market with its cheap-rate international internet telephony service, which it launched in 2000.

Competition

The army is almost certainly going to expand its role given that Vietnam has the second fastest growing telecoms market in the world after China.

Its ISP will be launched on Vietnam's National Day, 2 September, when the country traditionally celebrates its independence from French colonial rule in 1945.

The ISP will compete with the state owned ISPs Vietnam Data and Communication, FPT, Saigon Net and Net Nam.

The army plans to offer sharp discounts to enter the market, though its pricing will eventually be similar to that of its competitors.

The ISP will only serve Hanoi and Ho Chi Minh City.

Growing market

Vietnam is one of the poorest countries in Asia.

The government is targeting telecoms development because it believes it will lead to economic growth.

In 2001, only 5.4% of the 79 million strong population had a telephone and this low rate is seen as a major obstacle to internet growth.

But during 2002, the number of registered internet users rose 30% to 175,000 and up to a million people have web access through internet cafes.

Vietnam's communist government has repeatedly intervened to stop surfers visiting sites it deems 'subversive'

There are 1.6 million mobile phone subscribers in Vietnam but this is expected to reach seven million by the end of 2005.

Beyond telecoms, the army is also involved in almost 200 businesses across the country, including transportation, construction and textiles.