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This Is The Face Of Broadband TV


Janice Lee landed her first job out of college in the early 1990s with Star TV, a satellite network that was trying to beam programming across Asia. David Manion, her boss at the time, was quickly impressed and sent the 22-year-old off to India. The mission: to build up Star TV's fledgling operation in the country. "I got all the senior executives telling me off for sending this poor little girl down the river," Manion says.

Lee more than held her own. With cricket-mad Indians gearing up for a big test between the home team and England, she quickly figured out a way to make a splash. She set up a Star TV showroom in a Bombay storefront, with several TV screens facing the street. So many Indians gathered to watch Star's coverage that the police had to come and disperse the crowd. India went on to become one of Star's most important markets. "It was a roaring success," says Manion.

And an auspicious start for Lee, now 35. Since then, she has been in the thick of cutting-edge technology experiments in telecom and media. Four years ago she joined the Hong Kong telecom operator PCCW Ltd. (PCW) to work with Chairman Richard Li, the second son of billionaire Li Ka-shing. A senior vice-president, she has helped build PCCW's NOW Broadband into the leading provider of television service using Internet technology anywhere. NOW Broadband boasts more than 500,000 subscribers, one-third of the total worldwide.

Lee has done it with a combination of marketing savvy and simplicity. The service, delivered over broadband phone lines, offers nearly 100 channels. Customers can pick channels one by one rather than buy broad packages, as with rival services. And she has been adding interactive features, giving viewers the chance to vote in polls or reserve movie tickets via TV. The goal is to keep kids from losing interest in the staid old boob tube. "Young people are moving to the Internet, and we have to respond," she says.

That has put Lee and PCCW at the forefront of what promises to be a revolution in TV. The technology they're using is known as IPTV, for Internet Protocol television. It's a technology that telecom operators worldwide are embracing as they try to diversify beyond their declining voice businesses and into television. In the U.S., both Verizon Communications Inc. (VZ) and AT&T (T) plan to begin IPTV services this year. PCCW is using its technology expertise to partner with other telecom companies and move into new markets, beginning with mainland China. "We are lucky to have 100 channels coming up," says Li, "but we are not lucky that we only have 7 million people" living in Hong Kong. Her company may even begin selling its technology in competition with the likes of Microsoft Corp. (MSFT) and Siemens (SI).

"EXPERIENCE THAT IS UNIQUE"

Lee's success is attracting the attention of big-time investors. On Jan. 26, Newbridge Capital LLC, a private equity firm owned by San Francisco-based Texas Pacific Group, announced a bid to pay $125 million for a 6% stake in PCCW, largely because of its Internet television business. PCCW's accomplishments so far with NOW Broadband are "really remarkable," says Timothy D. Dattels, managing director of Newbridge. "What they have done is definitely something they can leverage in other markets. They have gained experience that is unique."

For a media pioneer, Lee didn't spend much time watching TV as a child. When she was growing up, the pampered middle child of a well-off dentist and his wife, Hong Kong had just two networks, each operating one channel in English and one in Cantonese. She remembers watching locally made Chinese serials, with an occasional program such as Charlie's Angels or Gilligan's Island thrown in.

Lee learned independence early on. Her parents sent her and her two siblings off to live in suburban Sydney as teenagers, a common way for Hong Kong residents to secure foreign passports following the 1984 agreement between Beijing and London to return the Crown Colony to Chinese rule. Lee's father stayed behind in Hong Kong, and her mother was often there, too. "In Hong Kong, people guide you along," her brother Eric remembers. "All of a sudden, we were in this big house." It took a while to adjust: At one point, their front lawn was so overgrown that some neighbors came and mowed the lawn themselves. But soon the three children got used to shopping for groceries, fixing dinner, and washing the car without adult supervision.

As much as she grew to enjoy the relaxed Aussie lifestyle, she missed what she calls the "vibe and the buzz" of Hong Kong. So after graduating from the University of Sydney with a degree in economics, commercial law, and accounting, Lee returned home. "It didn't even cross my mind, not coming back to Hong Kong," says Lee. Wanting stability and security for his daughter, her father expected Lee to become an accountant -- and even used some connections to arrange a job for her. But Lee opted for a job in television instead. "He wanted her to be a professional," says Pauline Chu, a childhood friend of Lee's and godmother of her 4-year-old daughter. "But she was very outgoing and ambitious. I never thought she would be a bean counter."

Still, Lee learned a lot from her father. The dentist showered special attention on his patients to keep them coming back, including giving away umbrellas during the rainy season. Lee also credits her years in Australia with helping her communicate across cultures, something that has come in handy as she deals with Western programming partners.

One big reason for the success of NOW to date has been the exclusive deals that Lee has negotiated with U.S. companies. In the past, media giants like Walt Disney Co. (DIS) wouldn't allow their shows to be distributed in Hong Kong for fear of piracy. Lee helped convince many that IPTV's security was strong enough that there would be no breaches. The result: PCCW is the only company in Hong Kong that carries ESPN (DIS), HBO (TWX), and the Disney Channel.

Lee is moving slowly with interactive features, though. That's because her success with NOW Broadband comes after several failures. In the late 1990s, after Star, Lee headed marketing at iTV, a first-of-its-kind service owned by Hong Kong Telecom. The service offered home shopping, horse-racing highlights, and hundreds of movies available on demand.

Impressive, sure. But consumers found iTV and all its choices too confusing. In 2000, shortly after PCCW acquired Hong Kong Telecom, Li closed it. "It was wonderful technology, very ahead of its time," says Lee, who after iTV's closure left for a job at Citigroup (C). "But we were asking too much of consumers."

She says she has learned her lesson from the iTV days. More than two years after NOW Broadband's launch, Lee is just starting to market video on demand, and with limited choices to begin with. "This time around, we want to train them," says Lee. "Give them enough to chew on, but not too much."

PCCW debuted some on-demand adult programming in the fall and is now expanding that to include regular Chinese-language movies. "We're not even branding it as video on demand," says Lee, who instead is calling the service NOW Select. The goal is to get people accustomed not just to watching TV but also to interacting with it. "It's all about training them to use the remote quite differently," she says, pointing to the yellow, red, blue, and green buttons on the NOW remote control. "All they need to know is the four color buttons and the 'enter' button." For now, this ease of use is available only from Lee and PCCW. But it may point the way to the future of television.

By Bruce Einhorn


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