HONG KONG-Paging subscriber numbers continue to fall in Hong Kong, while the popularity of cellular keeps rising as stiff competition among the six cellular carriers drives down tariffs close to those of paging. Handsets, now in all shapes as well as prices, also are enticing customers with unprecedented choices.
According to Hong Kong’s Office of Telecommunications Authority (OFTA), there were only 459,837 paging subscribers left as of the end of April, compared with 1.35 million at the paging industry’s peak in 1994.
Most paging operators have moved their operations to mainland China or Macau, where wage, rent and other costs are much lower than in Hong Kong. Others have sold their businesses.
Two debt-ridden paging firms, Sky Telecom and BB Telecom, went bankrupt in late June. The two carriers have a combined total of just 10,000 customers.
Last year, local telecom giant Cable & Wireless HKT, previously known as Hongkong Telecom, sold its paging arm to CM Telecom International Ltd. (CM Telecom).
Although it is the most proactive company in the industry, CM Telecom is in no way optimistic about the future of the local paging scene.
The firm’s Chairman Tony Hau said, “We are [repositioning] paging service by offering free value-added service through the Internet. I hope all we have done will slow down the falling trend of the industry, but I can’t guarantee we will be successful.”
CM Telecom launched e-mail notification service and Web paging recently, enabling customers to be notified via pagers when there are new incoming e-mails, and allowing anyone who has Internet access to page CM Telecom’s customers on the company’s Web page.
The carrier is by no means the first to launch such value-added services in Hong Kong. The paging arm of ABC Communications, acquired by CM Telecom earlier this year, rolled out the same services two years ago. CM Telecom is testing other Internet-related value-added services and expects to launch additional commercial services in the future.
Hau believes spiraling costs during the past few years help explain the paging industry’s hardships today.
“The cost of running a paging network kept rising rapidly in the past couple of years as Hong Kong’s economy was going well,” he said. “We charged a higher tariff instead of controlling the cost to keep our business profitable as customers at that time were willing to pay a higher price for service.
“The cost, however, failed to come down after the Asian economic crisis hit in late 1997. Paging was then losing its price advantage as the gap between (the) paging tariff and that of cellular service greatly narrowed.”
To reduce costs, CM Telecom since late last year has acquired paging businesses from four companies: Cable & Wireless HKT, New World Telephone, Star Telecom and ABC Communications.
“By buying other companies, we are able to expand our subscriber base and thus [reduce] the cost per customer,” Hau noted.
Offering free Internet-related value-added services has not raised the company’s operational costs because it provides Internet service to corporate customers using its own infrastructure.
CM Telecom has chopped its tariff by more than 50 percent as a result of the cost reduction.
The company offers standard paging service at around HK$78 (US$10) per month and roaming service from HK$100 (US$12.90) to HK$200 (US$25.80), varying with destinations.
CM Telecom, sticking to the rule of cost control, revamped its customer service centers and relaunched them in June 1998 as retail outlets under the name CM Concept.
“CM Concept [became] an independent retail business, making an operating profit of HK$8.118 million (US$1.05 million) for the year ended 31 March 1999,” Hau said.
There are now 48 CM Concept stores throughout Hong Kong.
A spokesman for CM Telecom said each store costs HK$500,000 (US$64,500) to build and will break even within a year of operation.
In addition to implementing cost-control practices, CM Telecom has extensive resources inside China to keep its paging arm going. Hau said the Hong Kong paging network can share the resources of Shenzhen Motion Telecom, a business partner of CM Telecom in mainland China.
Hau claimed CM Telecom’s market share has gone up 30 percent since the acquisitions. He declined to be specific about the company’s subscriber count, but a 30-percent share would likely mean its customer base is more than 150,000.
Hutchison Telecom, one of the largest paging operators, said in late July it is now serving 160,000 paging customers in Hong Kong.
Hau believes the current paging market can only support three to four operators.
“I am satisfied with the market share CM Telecom has now,” he said. “I don’t want to have 100 percent of the market as that would only mean nobody except us still wants to compete in the paging playing field.”
