Randolph figures that Asia's many small businesses won't want to deal with multiple vendors to set up and run their data networks. We're going to build Asia Online as a brand that customers think of as the only place they need to call. But as networks expand and bandwidth becomes cheap, Asia's hundreds of independent sellers of plain or so-called vanilla access to the Internet face dwindling profit margins. In Hong Kong and Singapore, some competitors are even giving away limited Internet access, hoping to lure large audiences and make money by selling advertising. Those that attempt the latter, like Asia Online, are having to craft much more complicated business models and build staff with specialized skills.
Industry analysts say the ISPs have no choice.
They have to go up the value chain. The question is whether those subscribers can be persuaded to buy other services or products at the same time. Merrill Lynch's Internet analyst, Matei Mihalca, says he's more optimistic about the former approach. After all, most companies need help incorporating the Internet into their operations, while no one knows yet what Asian consumers will want to buy on the Internet. Instead of offering freebies, Pacific Internet is building up a portal with on-line banking, stock trading, auctions, travel bargains and classified ads.