Telecom rings up 1st VOD license in H.K.

HONG KONG — The government Wednesday moved ahead with its plan to make Hong Kong the first major city to offer a commercial video-on-demand service by granting a license to Hongkong Telecom.

The company, which has already spent about HK$1 billion ($130 million) on its fiber-optic network, plans to launch the VOD, music-on-demand and home-shopping services by the end of the year. It also plans to spend $1.3 billion more to develop the network over the next few years.

The company has waved off any suggestion that there’s just too little demand for VOD in Hong Kong or anywhere. Supporters of the project have always pointed out that Hong Kong people are rabid movie fans, high-spending consumers of the latest electronic gadgetry, and shopaholics.

Chief executive Linus Cheung said the company plans to sign up 88,000 subscribers during the first year and up to 300,000 in three years.

“We aim to have access to 90% of (1.6 million) households in three years’ time,” he said.

Four groups had applied for the two available licenses and there was little doubt that Hongkong Telecom, the city’s dominant telephone company, would get one. Two other applicants were rejected and another has had its application deferred.

The government said it does want two VOD providers and has no intention of handing Hongkong Telecom a monopoly.

Subscribers will pay up to $50 to have a set-top box installed, a monthly fee of less than $25, and an average of $3 per movie and 35¢ per music video.

Managing director William Lo said the company has signed a five-year agreement with Golden Harvest and China Star, which together produce more than 75% of local movies, to provide content for the service.

The company also said it is working with Japan’s NEC and Sega so it can include electronic games in the service by next February.

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