As the SAR Internet heavyweight, Hongkong Telecom naturally was behind the biggest Internet news of the year - its proposed $245.5 million buyout of Hongkong Star Internet's ISP division. Already the market leader, its Netvigator would hold up to 70 per cent of the estimated 800,000 Hong Kong Internet subscribers after a merger with Star. Internet service providers (ISPs) are protesting, calling it a monopoly in a dangerous time, as they begin moving into fresh telecom markets opened through deregulation. The Telecommunications Authority chief, Anthony Wong, will rule on December 24. Meanwhile, Telecom's Interactive TV video-on-demand service officially launched in March. By September, it claimed 100,000 people had applied, with 30,000 still waiting to be hooked up. The service is bringing in about $14 million in revenue a month - not bad, until you consider iTV has invested $1.3 billion and expects to spend another $10 billion in the next decade. With that difficult task looming, as well as general belt-tightening, including a wage freeze at Telecom, it was not surprising that the man closely identified with iTV for the past three years, William Lo, moved on to head Citibank's retail banking operations in August. Allen Ma, who had headed Telecom's successful mobile-phone services, replaced him. Meanwhile, the other VOD licence holder, Star Internet, has yet to launch. Insiders say it may never do so, due to financial troubles in its parent company which prompted Star to sell off its Net access service. The Office of the Telecommunications Authority says there were 577,000 Internet accounts at mid-year - a 38 per cent increase since last December. At that rate, there will be about 800,000 dial-up accounts by the end of this month. That is still too few potential customers for the 100-plus ISPs in the market, which has been consolidating as a result, with smaller ISPs closing or being bought out. Leased-line specialist Linkage Online was bought by United States giant PSINet for a reported $155 million. In turn, it bought two small local ISPs, including Hongkong Internet & Gateway Services, the SAR's oldest ISP. HKNet, which claims to be third-largest ISP with 75,000 users, was bought out by mainland telecoms firm, CCTelecom. And, of course, there was Netvigator and Star. Multinational Web content providers targeted the SAR. CNet and Netscape both launched Web portal sites, while America Online announced it had awarded a licence to China Internet Corp (CIC) to launch an AOL Hong Kong service next year. Despite the dissolution of its PointCast Asia joint-venture, CIC still has a stable of well-known US brands, including Netscape, AltaVista and AOL, for which it is developing Web sites and selling advertising. Selling Web advertising remains a tough task, because only a few technology firms buy Web ads in big numbers. As a result, many ISPs have moved away from content towards opportunities in telecoms-type businesses resulting from deregulation. ISPs such as Linkage Online, HKNet, Asia Online, City Telecom and others have declared their intention to target their dial-up or e-mail users to customers of a whole new range of telecom-type services, including Internet-based telephony and Internet fax.