 |
ISP Businesses Boom as Access Charges Drop
Contrary to the unsatisfactory performance of Internet content providers (ICPs) on the New York stock market, domestic Internet service providers (ISPs) are showing a hint of booming growth thanks to a slashing of Internet access fees, analysts said.
Starting from late November, domestic ISPs have plunged into a price war on Internet access fees. Battling firms include 263.net, ReadChina.com, A-1.net and East.net.
Internet access fees have dropped by different margins to 2.4 yuan (28 US cents) per hour, 1 yuan (12 US cents) per hour and 0.83 yuan (10 US cents) per hour.
For example, ReadChina.com started slashing its Internet access fees this month from 4 yuan (48 US cents) per hour to 1 yuan (12 US cents) per hour. The move attracted 5,000 users in the first week after the change.
"We are expecting more new users in the following months," said Li Hang, chief executive officer of ReadChina.
Slashing prices is part of a new strategy to benefit users instead of pouring money into advertising, Li said.
Recent surveys from the China National Network Information Centre (CNNIC) indicated that lack of sufficient Internet content, slow surfing speed and high access fees have long been major hurdles for the country's Internet industry.
Mao Wei, director of CNNIC, said lowering the access fees would contribute substantially to encouraging more individuals to surf the Internet.
CNNIC figures showed that by the end of June, online users had aggregated to 16.9 million. And the number is expected to reach more than 20 million by the end of this year.
"We still need to cultivate the Internet-based consumption market with more individuals participated in the cyberworld," Mao said.
ICPpromotion when roadshowing their way to the US stock market has also contributed to exploring more market potentials for ISPs by popularizing Internet concepts, he said.
Industry experts said the possible decline of access fees could be attributed to the government's continuous efforts to lower telecom services fees.
Late last month, Liu Cai, director of Policy and Regulation Department of the Ministry of Information Industry, reiterated that a telecom price adjustment would soon be announced and most service charges would drop by several fold.
The step is widely believed to be a move to make the telecom and the Internet market more open to individuals and to introduce more competitors in view of the impending World Trade Organization (WTO) entry.
Qu Ning, general manager of 263.net Group (Beijing Branch), said his company's move on Internet access fees was based on two factors -- operation costs and market.
"We believe that our move will ensure profits as it is the bedrock for us to survive the market competition," Qu said.
The company launched a special service number "95963" in November to help users access the Internet and slashed its access fees from 9 yuan (US$1.08) per hour to 2.4 yuan (28 US cents) per hour.
The move has been widely regarded by local media as the fuse for the ongoing price war among ISPs.
Nevertheless, some ISPs such as Century Network said they would rather take a wait-and-see attitude instead of jumping on the bandwagon.
But Century Network admitted that it would not rule out the possibility of cutting its fees in the near future.
"It depends on the market and we believe that ensuring high quality services to our users is key for us to outshine our counterparts," the company said.
However, both 263.net, ReadChina.com and A-1.net, said declining Internet access fees is an inevitable trend.
As a result, expanding business models instead of merely centreing on Internet access is a must for all firms to survive the market, they said.
With WTO entry expected soon, building a sound developing environment is of paramount importance for all Internet-based service providers, said Xie Xiaoxia, researcher with the Chinese Academy of Social Sciences.
Xie also warned the road of the domestic Internet market remains long, especially for ISPs.
Competition between ISPs should remain standardized, as price wars would lead to another nightmare, he said.
Only with more individuals venturing into cyberspace, can the Internet-based business really take off, Mao said.
Source: China Daily
In This Section
|