Beyond IPTV and valued-added content

05 May 2008

Best Broadband Carrier
2. Telstra Corp., Australia
3. Chunghwa Telecom, Taiwan
Last year's winner: PCCW

Owner: Pacific Century Group Holdings

Business scope: Retail voice and broadband, IPTV, mobile, Wi-Fi, domestic and international wholesale, enterprise services

Financial (2007): Core revenue: HK$20.6 ($2.64b), up 12%. Profit attributable to equity holders: HK$1.5b ($192.5m), up 20%

PCCW's broadband access side of the business has been constantly evolving, and as of last November went from DSL to FTTx with its FiberDirect service, which offers 100-Mbps and 1-Gbps connections to around two-thirds of Hong Kong as of April 2008.

That includes the high-definition version of its NOW Broadband TV service and - more interestingly - its Netvigator Anywhere service, which unites its HSDPA coverage and 4,000+ Wi-Fi hotspots via a dual-mode USB dongle.

'The idea is to combine our strengths and offer best of all worlds, so that our customers can pay a reasonable price and have flexible access choices,' said Katherine Kwan, VP of product development & management.

The centerpiece of the strategy, however, is its content service portfolio, from NOW Broadband TV and the various interactive services on offer, such as buying movie tickets and CDs, to streaming music service Moov and hosted photo service Snaap!, among others.

All of the services are accessible by broadband, set-top box, 3G, Wi-Fi, and even PCCW's 'Eye' phone - a fixed-line phone with a color screen.

Ensuring customers can access content on multiple platforms increases loyalty and stickiness, says Kwan. 'Interesting content and VAS has contributed to our customer base a lot.'

Financial breakdowns and subscriber take-up of newer services haven't been made public, but PCCW credited its 12% increase in core revenues last year in part to a 70% surge in TV and content revenue.

The telco has 1.23 million broadband subscribers; as of the end of 2007, 882,000 of them were NOW TV subscribers.

Some critics have alleged that PCCW's content push has been costly, particularly in pursuing exclusive pay-TV content deals such as its three-year contract with English Premier League.
Kwan dismisses such criticism. 'Of course we did our evaluation and cost benefit analysis before we invested,' she says, adding that the content deals have paid off in terms of customer growth, revenues and ARPUs.

PCCW is also helping facilitate free Wi-Fi services as well. It's already powering Wi-Fi on the ferries running between Hong Kong Island and Lantau Island, as well as free access at universities and, as of April, public housing estates. It's also providing the backhaul and security support for the government's GovWiFi program.

Kwan says PCCW isn't worried about cannibalizing its own hotspot business by supporting GovWiFi, which is limited to government-owned venues. 'We cover chain stores, coffee shops, restaurants, universities, and with HSDPA we can connect customers outside of the hotspots, so we are offering a much richer service,' she says.

Judges' citation

'PCCW added connections and grew market share in one of the world's most penetrated broadband markets. It has been a global leader in IPTV for several years and is breaking new ground with its quad-play strategy.'

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