Hong Kong broadband subscribers will number more than half a million by the end of the year, fueled by high PC penetration and an ongoing price war for broadband services, according to new data from Gartner Inc.

At the end of last year, the total number of DSL (digital subscriber line), cable broadband and Ethernet subscribers in Hong Kong totaled 318,000, a figure that is expected to grow to 547,000 by the end of this year, according to Gartner.

Yet even with this projected growth, Hong Kong’s broadband market represents thin margins and tough competition for most providers, said Andrew Chetham, a senior ISP (Internet service provider) analyst with Gartner in Hong Kong.

As a result of intense competition, Hong Kong consumers now enjoy one of the lowest average broadband subscription rates in the world, around HK$200 (US$26) per month, Chetham noted.

While the price war continues, the potential for lucrative value-added pay services keeps providers in the game, Chetham said. Broadband providers could eventually triple the revenue brought in by each consumer through pay content and services offered in addition to monthly access fees, he added.

Thin margins, fat pipes

Local broadband service providers include infrastructure owner PCCW HKT; The Wharf (Holdings) Ltd.’s i-Cable, which delivers broadband services via its cable TV network; and a clutch of smaller providers – including HKNet Co. Ltd., Pacific Supernet Ltd. and Hutchison Whampoa Ltd.’s HutchCity – that buy bandwidth wholesale and then resell it to their own customer base.

Resellers are in a particularly tight bind, according to Chetham, especially those with services targeted at the domestic market.