"Shanghai has more than 1 million Internet subscribers, nearly one-third of them are connected to the Web through broadband," said Ma Yongping, general manager of Shanghai Information Industry Co. Ltd., the online content arm of Shanghai Telecom Corp.

Shanghai Telecom expects to have 280,000 broadband users by the end of this year, an impressive jump over the 60,000 users it had at the end of last year.

Another leading local broadband access provider, Shanghai Cable Network Co. Ltd., says 70 percent of its 78,000 broadband users signed up for the service over the first 10 months of this year.

"Lower installation prices have helped to increase the popularity of broadband connections," said An Minghao, a marketing executive with Cable Network. This year, the company cut its broadband installation fee from 2,000 yuan (US$240) to 580 yuan.

The executive expects the number of local broadband users to continue growing at a triple-digit rate annually for the next several years, as the city's average income level continues to rise.

Gartner, the world's leading information technology consulting firm, said in its October Asia- Pacific broadband report that price is still the key driver of broadband adoption. The markets where broadband growth is strongest are those where the price is lowest. South Korea is leading the whole region with 19 percent of its popu-lation having broadband access by the year-end, while only 0.09 percent of China's population use broadband.

Shanghai Telecom is trying to push growth even higher by investing heavily in online content for broadband users.

The company has set up 10 channels for users to watch movies online, or downloading a movie to hard disks by paying 1 yuan for two days' playing per-mission. Most of the movies are very old Hong Kong and Hollywood films.

To support the paid services, Shanghai Telecom has spent more than 30 million yuan to set up a content distribution network across the city.

From its four centers, users can get high quality video and audio streams from content providers, most of whom are subsidiaries of official media with online broadcasting licenses.

Shanghai Telecom helps the content suppliers to distribute data through the network, and charges users with its fixed telephone billing system, sharing the revenue with content creators.

"The distribution network will provide reliable quality so users are willing to pay, while our billing system can help new broadband start-ups to collect revenue," said Rong Guoqiang, vice general manager of Shanghai Information Industry.

He doesn't expect old movies to win many people away from pirated DVDs, but suggests online games, educational services and financial information will attract people to broadband.

(eastday.com December 2, 2002)