About a year after its launch, Internet service provider iCare has more than 150,000 subscribers and is growing at more than 10 per cent per month, according to chief executive Sunny Lee Wai-kwong. The company's investors include Hong Kong Gas and Henderson Investment. It provides dial-up Internet access and electronic commerce through telephone lines to television set-top boxes and personal computers. Electronic commerce revenues over the service exceeded monthly subscription revenue by a small margin, Mr Lee said. Popular items have included mid-range personal computers from IBM. 'We basically cleared out their warehouse twice over six months,' he said. Promotion of items has been through gas-bill inserts, e-mail and iCare's home page, while delivery channels include customer pick-up at the gas company's service counters. Mr Lee called the results 'very encouraging' in the weak economic climate. New features would be added to iCare by the end of the year, Mr Lee said, though he declined to give details. 'One of the misconceptions is that iCare equals set-top box or TV. We are going to launch services that are not associated with television over the next few months,' he said. One reason for iCare's popularity is its low subscription fees. Unlimited access over PCs is HK$50 per month, while unlimited access over TV set-top boxes is HK$118 per month, including box rental. Overall, iCare had yet to break even, though a retail shop set up in Causeway Bay was profitable, Mr Lee said. According to the Office of the Telecommunications Authority (Ofta), Hong Kong's telecoms regulator, the total number of dial-up Internet accounts in Hong Kong peaked at 2.33 million last August, when iCare launched its service. As of July, according to Ofta, there were nearly two million dial-up accounts, while broadband subscriptions doubled in one year to 442,000. While iCare was considering options such as offering broadband service, Mr Lee said the wholesale rate for broadband services was too high. After factoring in customer service and promotion costs, he said 'there is not much left behind as far as profit is concerned'. Most of Hong Kong's broadband providers buy wholesale capacity from PCCW HKT, the largest retailer of broadband access. Prices have come down to about HK$200 per month for a 1.5 megabit per second line, or roughly the price of a wholesale connection. 'Behind all these people there is really only one wholesale provider, so in some cases I am seeing people already doing a money-losing business. The market is growing but I would like to see the cost side of that coming down so that the people are doing real business instead of just breaking even.' The company had not made a decision about entering the broadband market, Mr Lee said. Also under consideration are plans to seek a fixed-line telecoms licence and entering the digital TV market. Ofta recently released a consultation paper on opening up the local fixed-line market and said it would issue new licences early next year, with effective dates starting in 2003. Mobile phone provider SmarTone is among interested companies. For iCare, launching a local network might involve placing optical-fibre inside gas pipes, which has been done in the United States and New Zealand. To enter the digital broadcasting market, iCare would need to upgrade its set-top boxes to receive digital signals. Such boxes, with Internet and recording capability, were being manufactured, Mr Lee said. Prices were HK$3,000 to HK$5,000 per unit. 'Added on top of that is the broadband access and content. If people want to offer that as a one-stop type of subscription service, the customer may have to pay quite a bit of money. At this point in time, we have not decided,' Mr Lee said.