HK broadband uptake hits 40 percent

Home broadband penetration has reached 40.2 percent of all Hong Kong Internet users, or about 800,000 users, according to Internet-usage measurement company Internet Audience Measurement Asia Ltd. (Iamasia). The market research company also expects that percentage to surpass the 50 percent mark by the third quarter of 2001, according to recent company findings.

"The broadband marketplace within the last 12 months has become incredibly competitive," said Steve Yap, marketing and communications director at Iamasia, who explained that when broadband first arrived in Hong Kong there was only one service provider, Cable & Wireless HKT Ltd., which was not then aggressive in marketing the service.

Yap attributed the growth in broadband penetration to market liberalization that came late last year. Since that time, a large variety of different providers have emerged, some of whom are resellers of HKT's service. "The consequence of (the liberalization) is that all these players have been aggressively trying to build up a customer base. Prices have dropped for the end user (who is) in general a lot more aware of the availability and advantages of broadband," Yap said.

"I think the providers are going to have a hard time (sustaining growth)," Yap said. "There's just too much competition in the market. Providers that have invested a lot of money are probably not going to see the kinds of returns in the short term that they had hoped for."

Yap said he believed more services providers would still enter the market, perhaps vying for lower-income households, which he identified as a potential growth area. He also said that some of the bigger players might acquire the smaller providers in an effort to buy ready-made customer bases. "The major four or five players have a little more than 5 percent of the market each ... potentially, one driver of consolidation could be the larger (providers) looking to acquire customer base by buying a smaller player."

Overall, the outlook for consumers remains very positive. Yap said if subscription prices fall even further, more subscribers would be tempted to sign up for broadband, especially as the price difference between narrowband and broadband services is getting smaller.

Hong Kong Computer Society President Daniel Lai agreed that Internet penetration has got room to grow, especially in the lower-income-level market, where consumers have not yet been able to afford to go online. However, even with falling prices the gap between those who can afford technology and those who cannot will continue to increase, in his opinion.

"I think the gap between those who can access information via the Internet and reap its benefits and those who cannot, will get bigger and bigger in the next 15 to 20 years," Lai said.

Home PC penetration, according to Lai, is still under 80 percent, with the majority of the households with lower income still without PC access, let alone Internet access. He said that approximately 20 percent of the local population is currently inhibited from joining the information age due to entry costs.

Lai also added that those in their middle or old age, who have not had the opportunity to work with computers in the past, will fail to benefit from PC technology "unless the government spends a lot of effort and a lot of money in bringing up (awareness)."

Nevertheless, the robust uptake in broadband adoption is an encouraging sign. Yap noted that with greater broadband connections the delivery of goods and services online and increased Internet usage will be better facilitated.

"We are not going to see the impact for a while yet," Yap said. "When the majority of people are on broadband, then (the capabilities of broadband services) will give Internet companies, advertising companies, and e-commerce companies, a lot more opportunity to deliver their services and products."

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