Fixed-line firms step up IDD war

PUBLISHED : Wednesday, 20 April, 2005, 12:00am
UPDATED : Wednesday, 20 April, 2005, 12:00am

Packages offer unlimited international calling for less than $40 per month

The days of paying by the minute for international direct dialling (IDD) calls look numbered. Both Hutchison Global Communications (HGC) and Hong Kong Broadband Network (HKBN) yesterday offered a flat-rate, unlimited plan for less than $40 a month.

Against the influx of voice over internet protocol services such as Skype - which gives users free international calls and steals revenue from traditional IDD operators - analysts said flat-rate deals made sense for telecommunications carriers which could lock in fixed revenue.

Yesterday, HGC said it would offer its residential fixed-line customers a $38 monthly IDD plan for unlimited calls to fixed-line numbers in 23 countries.

It said it would also allow calls to mobile phones in the mainland, the United States, Canada and Singapore. HGC is also offering the same service to residential fixed-line customers served by rival operators, but at $68 per month.

Hours after HGC announced its plan, HKBN undercut it with a $36 package for its customers and a $66 deal for rivals' fixed-line customers.

Both operators said their offers were open until the end of next month.

Peter Wong King-fai, the chief executive of HGC, said: 'For high-usage customers, the unlimited fixed-rate plan would offer them savings of up to 80 per cent off the per-minute rate they had been paying.'

Meanwhile, PCCW said it would continue to give free IDD minutes for select destinations to its own residential fixed-line customers on 12-month and 15-month service contracts.

Wharf T&T, however, said it would not change its per-minute IDD charging model.

Jeffery Tan, a CSFB telecommunications analyst, said HKBN would be hit the hardest. 'This is because IDD revenue still accounted for half of City Telecom's total revenue base last year ... because of this, the company's management has been moving away from IDD, which used to be its bread and butter in the old days.'

City Telecom (Hong Kong), the parent company of HKBN, said the fall in IDD returns had hurt its bottom line. Its IDD revenue fell 28 per cent to $628 million in the past financial year, following price wars.

However, Gartner analyst Andrew Chetham said that given constantly declining IDD retail rates, operators might benefit by offering unlimited fixed IDD rates on selective, high-traffic routes.

'We expect that voice service, including IDD, as a stand-alone service will disappear in the next five to seven years,' he said.