Last year, Connie Lam accepted an offer from Hong Kong's biggest telephone company to try its television service, delivered over the same line as the phone and high-speed Internet services she gets. After three weeks, she canceled because neither she nor her five-year-old son liked any of the channels then available.

She signed back up in January after the company, PCCW Ltd., added movie channels then such as HBO and children's cannels like Disney Channel and Nickelodeon. Ms. Lam canceled her cable-TV subscription, which cost nearly $100 a month. Instead, she pays about $26 for a mix of channels that she chose. "It's quite a big difference," she says.

• North America
  U.S.: SBC is upgrading its network to offer video services, with help from Microsoft. It may launch IPTV in 2006
  
  Canada: Bell Canada is working with Microsoft to develop an IPTV system



• Asia
  Hong Kong: PCCW as 441,000 subsribers to its Now Broadband TV service, launced 2 years ago
  
  Japan: Four telecom service providers are offering fledging IPTV services, through programming is limited due to copyright and other restrictions.
  
  South Korea: KT launched a trial of IPTV service in 200 homes in Seoul in April. Hanaro Telecom is expected to launch IPTV in Seoul in late 2005 or early 2006.



• Europe
  Austria: Telekom Austria launched IPTV nationally in June.
  
  Belgium: Belgacom launched IPTV nationally in June.
  
  France: France Telecom last year launched IPTV service in Lyon and Paris. It as 116,000 subscribers at end of June.
  
  Germany: Deutsche Telekom is testing a system but hasn't set a launch date.
  
  Spain: Telefonica launched IPTV serviced late last year, now available to about 25% of its coverage area.
  
  Switzerland: Delayed IPTV launch until 2006.
  
  U.K.: A handful of small companies offer IPTV in London and its suburbs. BT Group is testing a system, with launch expected in late 2006.




PCCW began marketing television service two years ago by touting its big difference with cable TV- customers pay for just what they want to watch. Although light on offerings at the beginning, as PCCW added subscribers it added channels, attracting more and more customers.

The incremental growth strategy appears to be working. While using Internet technology to send television programming over higher-speed telephone lines is still a novelty in much of the world, PCCW has signed up nearly half a million customers for its Now Broadband TV service. It is the largest so-called Internet Protocol TV, or IPTV, system in the world at the moment, and a serious competitor to Hong Kong's lone cable-TV system, which has about 620,000 subscribers.

With its TV service, PCCW became one of the first phone companies in the world to offer a combination of voice, data, and TV, something known as "triple-play" in the industry. The company recently acquired control of a cellular system and will add another service to its one-stop shop for consumers.

PCCW earned HK$954 million (US$123 million) in the six months ended June 30, up from HK$766 million a year earlier, while revenue rose to HK$11.7 billion from HK$10.8 billion.

In the US, the three largest phone companies- SBC Communications Inc., Verizon Communications Inc. and Bell South Corp.- all are developing IPTV services, though most will take the rest of the decade to broadly deploy. Four companies in Japan provide IPTV service, and a new service is expected to launch in South Korea this year.

Triple play is "talked about in North America, but it's happening in Asia," says Julie Kuntsler, founder of Portview Communications Partners LP, a U.S.-Israeli venture-capital firm that specializes in telecommunications investments.

While PCCW's a la carte television offerings would seem to limit channel surfing, it built its system so that every channel's programs are always visible to subscribers. A channel that a subscriber isn't paying for, after a minute or so, turns into a subscription screen that explains the cost to continue watching. As PCCW has added subscribers, it has offered more sophisticated pricing, via bundles of channels that cost less when purchased together than they would have cost separately.

Hong Kong's density gave PCCW an early advantage that may not transfer to spread-out suburban areas in the U.S. and elsewhere. Most of the city's residents live in high-rise buildings, and the company's network doesn't require nearly as many miles of wiring as might be required in a more widespread city with far fewer than the 7 million people who live in Hong Kong.

PCCW owes its head start in IPTV in part to missteps from an earlier foray into video. The company tried to build an interactive TV system in Hong Kong in the 1990s, but it was unprofitable when trying to develop its own programs and offer too many complex services. "We trusted too much when the technology was embryonic and the customer base was unaccustomed to such interactivity," says Alex Arena, the company's chief operating officer.

Because video signals require more bandwidth than do voice or other data, the experiment drove PCCW to upgrade the capacity of its network and put it on solid footing when residential demand for broadband data took off. Today, most homes in Hong Kong have at least two choices for broadband service at speeds of six megabits per second, or more than four times as much as the typical speed of similar service in the U.S. and much of Europe.

In 2002, PCCW engineers realized the company could deliver video at, or near, DVD level quality sing about 4.5 megabits of each household's datastream. The remaining capacity would be sufficient for computer broadband.

But they needed a set-top box to decode the TV signal in the customer's home. The company reviewed boxes used by cable systems, but found them too expensive and complex. They believed they could get something less expensive because the additional access technology- the part of the system that verifies that a customer can watch HBO, for instance- would reside in PCCW's network rather than the set-top box.

When an engineer pointed out that such a signal would use the same technology standard, called MPEG-2, that a DVD does, the company turned to a low-cost manufacturer of DVD players in China for help. They asked the company to add a broadband connection to the back of a DVD player and take out the disc playing mechanism. The existing chip set, which cost just a few dollars, is powerful enough to decode MPEG-2 signals and run the onscreen programming guide and a handful of interactive features, such as selecting views from traffic cameras around the city or detail about weather in other cities.

"The whole premise is to keep the set-top box as dumb as possible," says Paul Berriman, head of strategic market development for PCCW. Eventually, the company expects that major consumer-electronics makers will add the decoding of broadband video as a feature to other devices that connect to a TV.

Cost played a role too, Mr. Arena says. "If we had a market of 100 million people and we had coffers that were overflowing with cash, then maybe we would have been tempted to go for an all-singing, all-dancing box," he says. "But we were a smaller market, fiercely competitive, and we were very conscious about spending our financial resources."

When a PCCW broadband subscriber wants the TV service, the technician brings a set-top box to his or her home and connects it between the broadband modem and the TV. Of the channels offered, a customer chooses which ones to subscribe to by scrolling though the onscreen guide and using a personal password to verify each selection.

News channels such as Fox News and BBC World cost about 80 cents per month, while movie channels such as HBO cost about $6. The company does offer some topical "bundles," such as a group of six movie channels along with E! entertainment news channel for about $15 a month. Some channels, including a local 24-hour news station, are available without charge with the service.

The company started the service with 23 channels in October 2003. Today, PCCW offers 85.

The popularity of the TV service helped boost PCCW's broadband service in a city where high-speed access is ubiquitous, and competition among providers is fierce. And in July, for the first time since Hong Kong's residential phone market opened to competition 10 years ago, PCCW gained customers for its voice service. The former monopoly now has about 67% of the local voice market.

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