H.K. players vying for vid-on-demand licenses

HONG KONG — In a bid to become the territory’s first commercial video-on-demand providers, four Hong Kong companies have submitted applications for the two available VOD licenses. The government plans to issue the licenses by the end of the year.

Though the government has not released the names of the applicants, one definite is Hongkong Telecom, the city’s predominant telephone company. Over the past couple of years it has been building the infrastructure for its own extensive VOD network. Telecom’s interactive media unit has said that it plans to launch its service in October and government officials have indicated that it’s a shoo-in for a license.

One name not on the list of applicants, however, is Wharf Interactive Network (WIN), the sister company of Wharf Cable, which operates the sole cable network. In a statement, the company said, “The Wharf Group will, however, continue to develop new home entertainment and interactive services.”

Several prominent local companies that had expressed interest in applying have joined Wharf on the sidelines. Among them are telephone companies New World and Hutchison and movie distributor Mei Ah, which had formed a consortium earlier this year to look into a license bid.

According to reports in local newspapers, the other applicants are Star Telecom Intl., Elmsdale Ltd. and Future TV. The South China Morning Post said Elmsdale may be a company created to make a bid and Future TV is a Hong Kong-based company run by a British entrepreneur.

And though some companies have taken themselves out of the race, new alliances are already forming. Star Telecom is said to have approached Mei Ah about providing videos for its service and New World will reportedly assist Future TV.

Bill Earl, WIN’s project director, said the fees demanded of service providers to access Telecom’s VOD network would make it impossible for Wharf and others to compete.

“In the end,” he said, “we came to the same conclusion that a number of major potential applicants and other industry observers did.”

A government regulatory body has given Telecom the right to charge its rivals about HK$500 ($65) per subscriber per month for access to its new fiber-optic network. Since Telecom’s interactive media unit plans to charge its own VOD customers between HK$100 and HK$200 per month, critics such as Earl believe the phone company will be unfairly subsiding the service.

Telecom’s VOD service plans to begin commercial operations in October, offering subscribers pay-per-view movies, videos and shopping through their televisions, a set-top box and a telephone line. The company expects to add banking early next year.

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