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SCMP Reporter

City Telecom (CTI) chairman Ricky Wong Wai-kay said yesterday the company's launch of pay-television services was a direct challenge to Wharf's monopoly of the market.

The company is to offer digital TV programmes this year with up to 180 international channels, providing what it said would be surround-sound and DVD quality. The programmes would be broadcast over its subsidiary Hong Kong Broadband's Ethernet network, which covers 1.2 million homes.

'We never expected our pay-TV operation to make money within the first three years,' Mr Wong said. Rather, services were 'just a move to attack our rival and destroy its profit-making business,' he said, referring to i-Cable, 79.6 per cent owned by Wharf (Holdings).

CTI is competing head-to-head in broadband Internet and IDD services with i-Cable and Wharf New T&T, both of which come under Wharf's communications, media and entertainment unit.

CTI offers broadband services for as little as HK$38 per month for particular residential areas, against i-Cable's monthly charge of $278.

Wharf New T&T, meanwhile, introduced an IDD charge for as low as $0.33 per minute to compete with CTI's price-guard system, which guarantees the 'lowest price in town'.

Wharf's communications, media and entertainment businesses contributed HK$203 million to recurring earnings, up 109 per cent, over the six months ended June. It uses its pay-TV cash cow to fund its IDD business, offering the services at a loss-making price, according to Mr Wong.

'It is unhealthy for the entire telecoms market and hurts other players,' he said. 'If one can monopolise and make huge money, they can use this money to subsidise other telecom businesses [IDD] so they can cut price to enhance competitiveness . . . I don't see how anyone can stop Wharf's development . . . If I don't do it this way, the market will have a catastrophe.'

Separately yesterday, i-Cable said it hoped to boost average revenue per user (arpu) by offering online TV programmes to its broadband subscribers.

Its Walled Garden programme - launched on January 1 - broadcasts news, online games, movies, horse racing, sports, adult shows and stock information over its portal.



City Telecom attacks Wharf's pay-TV grip