Piracy is a plague that has an impact on pay-TV operators worldwide, and the problem has become even more acute in a distressed economic environment.
The Cable & Satellite Broadcasting Association of Asia (CASBAA) estimates that in 2008, piracy cost pay-TV operators in Asia nearly $2 billion in revenues and more than 34 million subscribers in 2008. Countries that have been hard hit include Thailand, the Philippines and Indonesia, “where there are substantial black market cable industries, featuring operators who take DTH signals from one source or another and distribute them to millions of homes across these three territories without any payment,” says John Medeiros, deputy CEO of CASBAA. While the piracy situation may have an impact on analog cable TV operators more, there are many cases of satellite pay-TV operators feeling the negative effects of piracy. “There are satellite systems in Asia which have been compromised. There have been massive numbers, hundreds of thousands, even millions, of cloned cards that have been distributed throughout Asia. The nature of the satellite business is that it doesn’t respect national borders, so one broken satellite system in one market can impact markets around it. It can indeed spill over. The technology situation is worse for cable than satellite in Asia. In general, the satellite systems are newer and have more effective conditional access controls. For cable systems — old analog systems — there are no effective conditional access mechanisms. Older cable systems are the weakest link in the piracy chain in Asia,” he adds.

Market Opportunity

With the problem is spread throughout multiple countries with large populations and many new pay-TV operators, Asia represents a potentially lucrative market for content security vendors. Verimatrix, best known in the IPTV world, recently signed its first pure satellite deal in Asia and sees strong opportunities as operators realize there are no short cuts to dealing with the piracy issue. “Operators that are transitioning from analog to digital are a very strong market in terms of growth,” says Bob Kulakowski, the company’s CTO. “What is interesting is that a few years ago when we were trying to enter into the market, price was really a driver. Now they want a partner with a long-term vision to protect their revenue, which is where we align with operators. The price points have improved from a few years ago. Operators understand the value of security. You have operators with cable, satellite and IP plans. They know how to monetize services. They do multiple network delivery and need to protect their investments,” he says.
Berit Svendsen, CEO of Conax, a Norwegian-based content security company, says, the company has established a foothold in India, where there is strong competition between five different satellite platforms. “There is a lot of price pressure in this market, and it is a very exciting TV market. They have a lot of content there for distribution. What we also think is exciting is that the cable TV operations there are starting to digitize. There will be an additional market for that when that starts to happen.”
NDS also has been successful in India, says CEO Abe Peled. “It is not a high-ARPU market. These operators have to be economical with their expenditure, but it has proved to be worthwhile. There is strong subscriber growth in these markets. In emerging markets, it goes just beyond security. We sell operator’s whole packages, so security, middleware, EPG, games, etc. For operators that really see a long-term business, we find solutions.”

Technology

What is key for pay-TV operators across the region is that the technology keeps progressing to curb illegal hacker activity. There have been subtle changes in the way content is now protected, with the traditional smart card approach no longer the only way to protect content. “On an analog cable network, it is very easy to tap into the lines on the poles,” says Kulakowski. “A pole can have 10 or more different [coaxial] lines, which are very easy to tap into. To combat this type of large-scale piracy in the digital world, we offer a layered security approach with technologies like renewable security, invisible watermarking and fingerprinting. Our technology roadmap includes a unique DRM per subscriber, so as subscribers are making hacks, they have to rehack the system to distribute their hacks, so for us, renewability is a key element.”
Kulakowski says the technology war is being driven by hackers, who have powerful tools at their disposal to crack into systems. “Things like Saber-Bindiff and IdaPro allow them to start hacking without a real set-top box. We know how they use those tools, and we know the ways to defeat them. For example, if a CAS company does not prepare their update properly, Saber-Bindiff will synchronize all of their hacking efforts with a new library in the matter of minutes. It is a cat-and-mouse game, so if you understand what your opponent is doing and what tools they have, you can frustrate them, which is really the best you can do with professional hackers,” he says.
Conax uses an open-standards policy to combat increasingly complex hacking methods. “We have around 250 set-top box providers which have Conax technology. We equip them to offer security-wise good boxes. The customer then has the ability to choose between many different set-top boxes. We have contributed to develop a very competitive set-top box market. We don’t take any royalty for licensing the technology. We give it away to the set-top box providers. Security wise, we have a very good track record. We have had systems compromised but fixed things so there have not been commercial problems for operators,” she says.

Andrew Wajs, CTO of Irdeto, says security no longer is just about the smart card. “We are finding now that we are able to manage all forms of piracy that go into those set-top boxes. … We also have the ability to do complete upgrades of the cards in the field, so that is extremely powerful in combating forms of piracy. In addition to that, we are making strong advances in software security. We are using hybrid solutions that give us an additional layer of adaptability.”

Different Screens

Content security vendors are transforming themselves from players who previously offered just content security to offering more diverse packages to pay-TV operators, which includes security across all platforms, middleware and interactive services. “We see the distribution of content in the home by IP combined with terrestrial,” says Peled. “Television is clearly becoming broadband-enabled. We have a relationship with Access Networks for a Net browser. We have Jungo which offers gateway software, so our vision is that broadband comes into the home, satellite comes into the home. Satellite will bring HD, the most popular channels, and then IP will bring catch-up channels, on-demand, network storage and the distribution from that point on will be on IP. Some will be to another set-top box. People don’t want just a single point of failure,” he says.
“What we see is the operator providing services via the set-top box, but that they also want to provide content to different screens,” Wajs says. “Our broadband network management system is able to control the content on different devices. We are actually able to create a domain of devices that belong to the user, which have different DRM technologies. We are able to enable the operator to manage the relationship between them and the subscriber across different devices. We are seeing more and more customers want security protection across these different devices.”
Conax hopes to add to its suite of services over the next year. “As a [conditional access] vendor, we do not provide security on the mobile phone. That being said, we are developing technology for the PC and broadband networks. We are developing solutions there. During 2010, we will have solutions available for PC and broadband networks. This will be a significant launch for us next year,” says Svendsen.

Changing Culture

Changing the culture of governments and regulators also will be a key in the battle against piracy. “Being aware of the evolutions of the piracy threats, we need to help governments about the importance of having up-to-date laws and enforcement. The fact is the regulatory paradigm has to shift. Unfortunately many regulators in the regions are still dealing with laws that are now outdated. There has been a culture of piracy in the past in certain countries and this is not easy to change either,” says François Moreau de Saint Martin, CEO of France’s Viaccess. â–