Broadband TV gamble pays off, giving hope to embattled fixed-line carriers PCCW has provided a positive snapshot of revenues from its pay-television service, a ground-breaking venture that fixed-line operators around the world are following with intense interest due to its potential to reverse market share loss. The dominant operator for the first time revealed average user revenues for its NOW broadband television service, which apparently justify its set-top-box giveaway programme as more than half of its subscribers are paying for services. The figures show that 53 per cent of PCCW's 361,000 customers paid extra fees above basic internet connection charges - at an average of $105 per month - to view content. While still lagging pay-television market leader i-Cable, which has 702,000 users paying an average $225 a month, PCCW's performance appears to justify the investment in a service that offers only a limited number of channels priced cheaply on an individual basis. 'TV is the future for telecoms operators, not old local phone lines,' said PCCW chief financial officer Alex Arena, adding that 85 per cent of the company's new broadband customers were NOW subscribers. Telecommunications companies worldwide are looking for ways to protect their traditional fixed-line businesses from the impact of rival technologies such as voice-over internet protocol (VoIP). Mainland carriers China Netcom and China Telecom are aggressively developing their broadband television services to fend off the emerging challenge. While pay-television was instrumental in increasing the number of PCCW's broadband customers - up 13 per cent to 796,000 last year - it was unable to prevent earnings before interest, taxes, depreciation and amortisation (ebitda) at its core telecommunications business from dropping 19 per cent to $6.73 billion due to the decline in fixed-line and international call services. PCCW yesterday reported that operating profit dropped 6 per cent to $4.07 billion from $4.34 billion a year earlier, as its local telephony services revenue dipped 12 per cent to $5.3 billion. However, PCCW's full-year net profit of $1.63 billion still beat analysts' expectations of $1.58 billion, helped by $550 million in ebitda from its Cyberport luxury residential project, Bel-Air. This reversed a net loss of $6.1 billion in 2003 when PCCW took a $4.46 billion impairment loss largely due to writing down the value of its 50 per cent stake in undersea cable operator Reach to zero. This year, PCCW has been granted a new fixed-carrier licence giving it the freedom to price its fixed-line services in line with its rivals. It has already cut monthly tariffs to as low as $67 from $110. Yesterday, managing director Jack So Chak-kwong said the company would even offer free fixed-line service trials to win back customers. The company said a new service featuring a telephone with text messaging capability had slowed its rate of line loss to about 6,000 per month over the past three months, from more than 10,000 a month a year ago. Mr So said through its partnership with China Network Communications Group (Netcom) the company would take equity stakes of up to 49 per cent in Netcom's broadband unit, CNC Broadband Network, and roll out broadband services on the mainland.