Small HK servers face bleak future as America Online logs on

Internet service providers (ISPs) in Hong Kong may disagree but when world leader America Online (AOL) announced it intended to co-launch a Hong Kong service with China Internet Corp (CIC) next year, shock and fear reverberated throughout the sector.

Close to 100 companies provide Internet services in Hong Kong to about 200,000 users.

However, about 90 per cent of those subscribe to one of the top five ISPs - Star Internet, Asia Online, Hongkong Supernet, HKNet and market-leading Netvigator, a subsidiary of Hongkong Telecom. The rest dial up through an eclectic group of ISPs set up by enthusiastic amateurs.

This group exists today because they were in the right place at the right time. The first ISP started providing services in 1993 at a time when the Government was working to deregulate Hongkong Telecom's monopoly.

The Office of the Telecommunications Authority was eager to promote free competition in this emerging telecoms sector. As a result, they created what in retrospect seem to be rather light restrictions on firms wishing to enter the Internet market.

There were few financial barriers to entry either. Firms wishing to provide Internet services only need a few computers, a bunch of telephone lines, some modems to send and receive the digital data, and a bit of pluck.