I-Cable looks to broadband price increases despite risk

PUBLISHED : Tuesday, 30 December, 2003, 12:00am
UPDATED : Tuesday, 30 December, 2003, 12:00am

The city's No2 provider of broadband services says a firmer market has given it room to raise prices, but analysts contend any increase in subscription fees will force customers into the arms of rivals.

I-Cable Communications yesterday said its average revenue per user (arpu) would rise next year, helped by possible fee increases and the growing popularity of data services.

'There is room for a rise,' executive director of multimedia services Benjamin Tong Wai-sun said. 'The market has stabilised, as you found no [internet service providers] starting a price war this year.'

The company said it would offer internet connections starting at $123 a month for new customers in Ocean Shores, Tseng Kwan O, if they signed 19-month contracts.

I-Cable, however, had no plan to extend the discount to other districts or existing customers.

The company prices its internet services at $248 a month, compared with $198 at PCCW and $96 at Hong Kong Broadband Network.

In its interim results released in August, i-Cable said arpu from its internet and multimedia unit plunged 41 per cent year on year to $125, while internet operations recorded a loss of $47.66 million.

In September, i-Cable said it had 260,000 subscribers, up from 247,000 in June and 220,000 at the end of last year.

But while the company believes customers can afford a price increase, analysts said i-Cable was being too aggressive.

'The market is over-penetrated,' Core Pacific-Yamaichi analyst Mona Chung said. 'The $248 price is comparatively high in the market. Any increase in subscription fees will push existing customers to its rivals.'

Meanwhile, i-Cable launched a new online news service yesterday. The service allows web surfers to access video content produced by Hong Kong Cable Television.

The firm said it had 210,000 customers for its year-old data services offered over portal i-Cable.com. Monthly revenue was $4 million.