HTMT group director and CTO (chief technology officer) KV Seshasayee is the man in the centre of action. He is the man who will spearhead the efforts to ensure that HTMT subsidiary company INCableNet's conditional access system (CAS) becomes a success. During the last few months, he has utilised every bit of his 25 years plus experience in the automotive, IT and communication industries towards this end.

Seshasayee is also the director-in charge for the new economy and telecom ventures within the Hinduja Group. He is also the chairman of Fascel Ltd.; the Gujarat cellular company that claims to be the most successful and profitable of cellular company in India; and having the largest subscriber base in any circle outside of Mumbai and Delhi. Seshasayee is an active member of CII's National Telecom Committee, and is a present member of CII National Council. Also associated with various Industry associations like COAI.

Since, the last few months, Seshasayee hasn't found much time to indulge in his passions that include cooking and listening to music (right from jazz to Hindustani Carnatic). Indiantelevision.com's Ashwin Kotian spoke to him on the same day when the government announced duty reductions on set top boxes and KVS (as he is popularly known) was all smiles.

KVS started off his discussions by saying that they have received an internal memo that the entire CAS project team will have to work on Sundays too - well what's new? he added, while dismissing it as one of the rigours of corporate life! Excerpts of the discussions:

Is the Indian market ready for CAS?
The streamlining of the hitherto disorganised nature of the cable business in India was an eventuality. We had realised it long back. It is worthwhile mentioning that we have been looking for set top boxes (STBs) since the past five years. At that point of time, we realised that it wasn't feasible to get subsidised boxes without government backing. This backing was essential because the revenues were small and there is no way we (the multi-system operator - MSO) could subsidise them.

Two years back, along with Intel, we developed the prototype of Interactive Internet Boxes for cable networks. At that point of time, we undertook studies to qualify the nature of our networks. The results were very encouraging and the networks could imbibe the new technology with minimal resistance or changes. We have successfully offered cable Internet services to our subscribers with minimal failure levels and this itself is proof of our capabilities to deliver.

The Indian cable TV industry is poised for a quantum leap from an unstructured system to a modernistic one.

Gives us the background information on how your team zeroed down on the final list of Incablenet's CAS partners and systems integrators?
As far as the group companies are concerned, we commenced the process of screening in June 2002 during the Communication Seminar in Singapore. Since we were initiating a major process of moving from an unstructured system up to an efficient kind of a structure, we wanted serious partners who would stick with us for a long time.

We shortlisted 34 box companies; 12 vendors of SMS and billing systems; and six CAS companies. By August, formal requests were sent for information and by October, we had sent the request for proposals. In December 2002, we asked for quotations based on volumes. By February 2003, we narrowed down the list to two companies and finally chose Nagravision.

We started negotiating with Nagravision for a long-term partnership. In fact, Nagravision agreed to become a vendor as well as took a stake of $20 million. Another reason why we chose Nagravision is due to the fact that their systems have been the least hacked ones in Europe and other countries.

As far as the box companies were concerned, we shortlisted four of them. Again, the aim was to target those companies that would shift quickly into indigenisation and localisation (in terms of manufacturing). We also wanted partners who were committed and had a long-term interest in the Indian markets. We stayed away from those Asian or European companies that didn't fulfil these criteria - despite the fact that some of them assured us of huge volumes.

We chose Magnaquest as our SMS partner since they had already integrated with Nagravision. The company was an Indian company with international expertise and experience. They have undertaken a large number of installations in the Middle East and worked with Asianet and Spectranet in India.

We also effected some internal changes in order to make our networks compatible to the new order. We already had a headend from BARCO and we roped in Tandberg for a digital headend.

What kind of internal restructuring was undertaken?
We already have an inhouse IT team (Hinduja TMT) including a qualified team of networking professionals. We created project management teams to handle this challenging task. At present, a team of 60 people is working on a 24/7 basis on the project.

We were already utilising the services of SAP for ERP (Enterprise Resource Planning). Siemens Information Systems was implementing the same. The challenge was to create modern infrastructure and integrate it. Satyam Infoway is involved with the VPN (voice protocol network) and our in-house team provides additional inputs.

We have already set up a call centre in Mumbai and another satellite centre will come up in Delhi soon. We have taken care of the logistics and have taken warehousing facilities in Mumbai and Delhi. The next step was to fill in the slots for the various links of the distribution chain.

What about training the affiliates and testing the networks?
We undertook multiple training sessions at every level - distributors, LMOs, headend and the line people. Our efforts also sent out the proper message that we are serious about CAS and also would include the operators as part of the new order.

Internally, we educated our own people so that they were empowered to inform and educate the franchisees. We have completed one training video and are on the verge of completing another video. The training material will be shared with all the 1,000 operators in Mumbai - as well as those in other cities.

As I have said earlier, a lot of tests have been successfully conducted on our networks. For simulation purposes, we have even taken the worst-case scenario - the worst possible networks too. It is pertinent to mention that we have completed fibre optic cable work in Bangalore and Mumbai; will be completing the same in Delhi soon. We have ensured that true fibre reaches till the nodes.

What kind of efforts have been made to ensure that your franchisees are bullish about CAS and subscribers buy boxes?
The last mile operators (LMOs) are a part and parcel of our distribution chain. We are not going to sever any relations with them. They will be our ambassadors. They will undertake customer service and will be our front end that will interface with the subscribers. We have adopted the same model as that of the cellular industry.

The government's decision to reduce duties has been a right move at the right time. As far as INCableNet is concerned, we have already announced the various schemes. There will be several types of schemes - rentals, deposits, credit card payments, outright payments, monthly subscriptions, ATMs, prepaid cards and payments through the Internet (web based payments).

We shall also develop something similar to a PDS (Public Distribution System) on the ground with field executives combing the length and breadth of the metros. Some of them will report to the LMOs. You will witness a lot of action on the direct marketing front. After all, LMOs will strive for 100 per cent declaration, as their revenues will depend on it.

This is an interesting analogy that you have drawn between the telecom industry and CAS roll out. Tell us more?
Essentially, there are some similarities between the rollout of CAS and the cellular revolution which took place two three years back. There was a great amount of network upgradation even in the case of the cellular industry. In fact, the process is still continuing.

The cellular industry placed a lot of emphasis on customer care. Building telecom brands became a norm and the order of the day. All these things will happen in the cable TV industry post-CAS. If you notice, there has been zero marketing in the cable TV industry. Now, concept marketing will come in. The LMOs will be needed to sell the concept; explain the various nuances to the customers; maximise revenues for the different links in the distribution chain.

After all, the more the number of channels taken by the subscriber, the better the revenues. It is important to note that the cable trade won't be able to thrust anything upon the subscribers - the intent will be to lure the subscriber. The same line of thinking prevails in the telecom industry.

So, what kind of learnings or insights did you take from the telecom experience while preparing for CAS?
Our experience at Fascel and Cellforce has given us a lot of insights. We have attained several milestones and created records of sorts in Gujarat. We have learnt a lot of lessons from the operations.

Consider the fact that cellular services were perceived as high priced services targeted at the elite. At present, that particular perception has changed and the penetration of cellular services has really increased and cut through demographics and psychographics. A similar situation exists currently in the case of CAS and STBs.

Going forward, our sole intent will be to sell the services to the common man by clarifying the value proposition. Just as in the case of the telecom sector, the value proposition will keep on increasing and the prices will continue to fall - but customer uptake will be higher. As volumes are ramped up, the prices will crash too.

There is one more important aspect that people are missing - India will become a very lucrative destination in the global scenario. A figure of 40 million plus boxes is huge and international manufacturers of digital STBs will be forced to bring down the prices due to the demand. Within a year or so, the prices of digital STBs will be at par with those of the analogue STBs even in the global markets.

Are there any perceptible differences in the way in which CAS rollout in India vis-a-vis developed countries?
Our team has visited several countries and studied the cable TV systems. In a country like Germany, there is a lot of uniformity and a single dominant player Dutch Telecom is calling the shots. The virus of "hacking" is not prevalent.

In other European countries such as Portugal, Italy and France the systems aren't as orderly as Germany - perhaps more similar to India. There are a lot of problems including hacking. Another issue relates to the billing systems. The billing systems in the developed countries are impeccable because they set the tone for customer service.

Also, in several countries, STBs are offered free of cost. However, the monthly cable subscriptions are very high - sometimes to the order of $40. In India, there is resistance to go below $5 (Rs 250) per month. However, Indian consumers must understand that there is a limit to what can be done with $5!

Indian consumers think that they can get everything for free. This kind of a mentality has to change and is already changing. So, the developed markets cannot really be compared to India in the real sense of the term.

What kind of value added services can we expect in the cable industry in the near future?
Remember, in the case of the cellular industry, everything started with "voice" and progressed to other value additions (VoIP, SMS, VMS, data) with time. Similarly, in the case of the Indian cable industry, the process of moving up the ladder will be a gradual one.

Most of the Indian cable TV networks aren't two-way and only 10 per cent can be termed as two-way. Several new features such as Interactive TV depend on "return path".

InCableNet will soon launch STBs with Internet capabilities - subscribers can access TVs and PCs on the same. Another really highend application includes STBs with built in personal video recorder and a TiVO box.

The key will be to ensure flexibility and scalability. Consumers have to be guided through the various stages and have to be given a chance to upgrade There are immense opportunities as long as the offerings are backed by proper service. However, value added services will depend on several aspects including the availability of the return path.

There were several possibilities - the "interactivity" services (gaming, high profile events) will take some time to become a reality. Other services such as pay per view (PPV) or video on demand (VoD) might be launched sooner.

In the near future, we shall provide boxes with telephone-related services such as return-calls, messages amongst others. Customers will also be able to interface with us through the Net through e-mails. The group already has several websites - portals and ISPs. We have the necessary expertise.

So, will broadband operators be a threat to cable operators and MSOs?
I would say that if broadband operators could become a future threat to the cable industry; the vice versa could also become true. Remember, broadband and telecom services can be delivered in multiple ways and channels.

Some time back, Dishnet DSL was perceived to be a threat to cable modems. Current statistics indicate that Dishnet DSL is one tenth that of cable Internet. I feel that cable companies could become major players in the telecom arena subject to approvals and permissions.

Six years back, we did "voice" experiment on our cable networks and VoIP on cable Internet has become a reality today. We launched cable Internet services during the monsoons. Everyone warned us against it. We had a failure rate of five per cent and by these monsoons we shall have a failure rate of 0.5 per cent.

I firmly believe that telecom companies don't have the services capabilities that cable companies have. For instance, there are so many complaints of blind spots and lack of proper signals even in metropolitan cities. Despite the advances in technology, these problems haven't been sorted out as yet. The cable industry gets relatively fewer complaints and several of these problems have been sorted out too. The service standards are also better - one telephone call and the cable operator's team will attend to the same within a day a two.

As I said, we have the fibre-optic backbone and the capabilities. The last mile is co-axial but the overhead co-axial in our networks is solid. Unless someone deliberately tampers with it, it shouldn't give us any problems. The group has invested billions in high quality cable. The customer will get quality reception. Post implementation of CAS, we shall conduct periodic checks on the quality of the networks. Through our call centre, we shall seek customer feedback and this will help us to pinpoint gaffes, if any.

What kind of safeguards and disaster management systems have you adopted?
We have extremely rugged disaster backed systems that will have safeguards against any eventuality. We have back up systems in Mumbai as well as in Delhi. Even if the whole system in Mumbai collapses, we can run the networks from Delhi or vice versa. This is the advantage of centralising our entire IT system.

We have also obtained ancillary requisites such as 24/7 power, bandwidth, UPS, gensets - the entire gamut.

We have placed systems wherein the LMO can access the system through the web or through our internal V-SATs. We shall provide access through the fingertips. We have impeccable data collection systems - we can provide the data that government requires at any given time.

In our control rooms, we have round the clock surveillance systems and biometric systems. Hi-tech security systems are already in place.

What is your view on the HITS model which has been proposed by the Zee Group's cable arm SitiCable?
Every model has its own pros and cons. Everything has to be decided within the purview of the legal and administrative framework.

HITS for one's own internal needs is an acceptable solution; but if chosen as an ASP (Application Service Provider) tool, the model raises several questions:

For instance, if the MSO can download, re-upload signals - what is the MSO's legal status? Doesn't the MSO become a broadcaster and shouldn't the laws applicable to the MSO be applicable in this case? What happens if the MSO is not running it internally but giving it to independent smaller MSOs? What happens to the customer confidentiality-related issues in the case of the smaller MSOs?

HITS also requires a high level of IT at the main headend and the control rooms. It becomes imperative to build security or rather I would term it as Chinese walls at these ground levels. Consider an example wherein LMOs in Mumbai and Chennai have different permutations and combinations of FTA and pay TV channels. Sophisticated IT systems are required to unravel the complex multiple permutations and combinations for billings and SMS systems. Not many LMOs in the country are equipped to tackle these issues.

The positives for HITS include the fact that broadcasters save a lot of money on interconnectivity and at the headend level. HITS is also a good proposition for DTH (direct to home) services.

What about DTH?
A lot of research has to be conducted on DTH. The group companies had explored the feasibility of DTH services by entering into an alliance with GE.

I firmly believe that DTH doesn't directly compete with CAS for the following reasons:
* DTH is definitely costlier as consumers have to invest in a STB as well as a dish.
*In cities such as Mumbai and Delhi, DTH will get hit by space constraints.

How will the consumer locate free space for physically mounting the dish? Also, in areas that receive ample rainfall, bigger dishes will be required. If a society chooses to install a single dish, then all the participants will be bound by the same permutation or combination - there is no question of choice. In this case, they will have to invest in a headend and the costs will go up.

Also, expensive cable is required to connect the dish to the box. DTH operators will have to find solutions for these problems. Having said that, DTH will definitely be a boon in semi-urban or rural areas where cable TV signals are weaker.

What does the future hold for all of us?
In the near future, quality content will be the pivot that will drive the business. Our internal research conducted on a sample size of thousands of people in the city of Mumbai shows that viewers are willing to pay for being able to watch programmes of their choice. They didn't mind paying much more than $5. The best part is that this trend cuts across demographics and psychographics (right from Malabar Hill to Dharavi).

The onus is on content producers to deliver quality content that will induce or stimulate desirability. The cricket and soccer world cups will no longer be free. There will be a demand for premium content. There will be consumers who won't mind paying Rs 100 for watching the premiere of a blockbuster film like Devdas on the night of the release. Content pull will determine the success of CAS.

Choice will be the name of the game. The LMOs in Chennai will have different permutations and combinations even in the FTA tier. Every city has a non-native population of around 30 per cent and these people would exercise the right of their preferences. Consumers will demand and LMOs will have to listen.