Technology

Globe Trotter

12/12/2010 12:01 AM Eastern

If it’s Tuesday, this must be Belgium.

Actually, for Balan Nair — the chief technology officer of
Liberty Global — the itinerary for the week after Thanksgiving
this year looked like this: Monday, Cologne; Tuesday,
Zurich; Wednesday, Paris; Thursday, Amsterdam; and
Friday, back in Denver.

All in a week’s work for Nair, who oversees the network
and technology operations for the largest MSO outside the
U.S., with 17.7 million customers. Liberty Global’s diverse
operating divisions span Europe, Australia, Chile and
Puerto Rico, with networks passing 31.2 million homes.

The job demands an unusual command of numerous
details. Each geographic area has different market dynamics,
cultures, programming partners and regulatory
nuances. There’s not typically a one-size-fits-all solution.

“Something that might work in one country might not
work in another,” Nair said.

BLAZING TRAILS

At the same time Nair, 44, has steered Liberty Global into
leadership positions on several fronts. The company is developing
a next-generation home gateway set to debut in
Europe in the second half of 2011 that promises to let subscribers access any TV
show or Web video they want on any device in the home.

Nair and Liberty Global’s regional teams have been aggressively
rolling out DOCSIS 3.0 in key markets, on pace
to offer ultra-high-speed broadband services to more than
80% of the MSO’s European footprint by year-end.

Liberty Global's Balan NairGiven his ability to meet these unique challenges, Nair
is Multichannel News’ inaugural CTO of the Year, recognized
as the top technology executive in cable and telecommunications
who has demonstrated leadership and
operational excellence in support of his or her company’s
business objectives.

Before he joined Liberty Global in July 2007, Nair was AOL’s
chief technology strategist for about a year. Prior to that, he
was Qwest Communications International’s CTO and chief
information officer. So he’s seen both sides of the aisle.

“Balan is a tremendous engineer and solid executive,”
Comcast chief technical officer Tony Werner, who preceded
Nair as Liberty Global’s chief technology
officer, said. “He is both a
creative and positive force in technology
and we are lucky to have
him in our industry — finally.”

One of the biggest projects consuming
Nair’s time is an all-Internet-
protocol home gateway,
destined for several of Liberty
Global’s European markets. It will
pull together live TV, on-demand
video, Internet content, interactive
TV widgets and phone service.

Liberty Global CEO Mike Fries,
in announcing the project this
May, extolled the gateway as a
“revolutionary platform” that
will provide “a seamless, intuitive
way for people to access their
live, time-shifted, on-demand and
Web-based content on the television.”

Nair led discussions on the project
starting in late 2009, as the potential
threat of over-the-top video
began to come to the fore.

“We’d been thinking about all
the disruptions that would happen in our industry and we decided we needed to do something
to stay ahead of the curve,” he said.

Liberty Global targeted sometime in 2011 as the horizon
for when it would need an advanced IP gateway to
compete with alternative distribution models. “The day
my boss says, ‘Go,’ it’s about 18 months before [a product]
is ready,” Nair said.

Nair and his team are engaged with several vendors on
the IP home gateway, which is being considered initially
for rollout in the Netherlands, Switzerland and
Germany.

Samsung Electronics is supplying the hardware, which
will be powered by Intel’s Atom CE Media Processor. The
middleware and user interface will be provided by NDS,
which is handling the overall systems integration, with
Nagravision providing the conditional-access solution and
Celeno Communications providing a long-range, high-capacity
Wi-Fi chip.

The gateway will have six MPEG transport stream tuners,
plus a DOCISS 3.0 modem with eight downstream
and four upstream channels — capable of delivering more
than 300 Megabits per second of bandwidth downstream.

At this stage, Liberty Global has about 250 of the Linux-based
IP gateways in its labs for testing and in parallel is
developing the user interface.

‘WOW’ FACTOR

Nair won’t reveal much about the look and feel of the interface,
which is based on NDS’s Snowflake framework,
except to say it must impress customers.

“The interface has got to be a ‘wow’ interface,” Nair said.
“Really, the thing you want to consider is, where do customers
get the content? The guy with the best interface will win.”

The Snowflake model provides content navigation based
on an overlaid and “full-screen” TV experience. Portuguese
cable operator ZON Multimedia has deployed a UI
based on Snowflake, and the product won the 2010 Janus
award from France’s l’Institut Français du Design.

“Clearly, Balan shares the vision with NDS as far as
where the market is going,” Yves Padrines, NDS vice president
of sales for Europe and general manager, said.

“You have convergence of devices and people are not
only going to look at their video content on the TV screen,
but also on companion devices,” Padrines added. “There
are a lot of threats coming. For pay TV operators, how to react
is to make sure they have the best user experience and
here, we share exactly the same vision with Balan of what
the user experience should be.”

The design philosophy of simplicity extends to a seven-button
remote that will come with the IP gateway.

“We are even more convinced that we made the right
decision,” Nair said. “And we’re closer than if we had to react
now to, for example, Google TV,” referring to the Internet
giant’s initiative to meld the Web with traditional TV.

Since Nair came on board in mid-2007, Liberty Global’s
overall makeup has changed, which has required some
adjustments in how the company operates.

Earlier this year, Liberty Global, under chairman John Malone, completed the $5.2 billion acquisition of Unitymedia,
the second-largest cable operator in Germany with
4.6 million customers. That came after LGI sold its stake in
Japanese MSO Jupiter Communications in late 2009.

Just last week, the company reached an agreement to
acquire Aster, a Polish cable operator with 368,000 basic
video, 177,000 internet and 70,000 fixed-telephony subscribers
for $292
million (net of $513
million in debt).

Even with the geographically
clustered
operations of UPC
Broadband, which
serves 10 countries
in Europe, there
are differences that
must be accommodated.

“Europe is not
monolithic,” Nair
said. “We operate in
many countries in
Europe, and there
are dissimilarities
between these countries on everything from consumer
behavior, to pricing, to the kinds of content they want.”

His facility with local vagaries isn’t lost on industry
partners: “I’m impressed he can focus on different markets
in terms of their needs,” Padrines said. “He can really
go into details and understand the technical issues.”

Nair credits Liberty Global’s local teams for keeping
him in touch with the changing dynamics: “Without
them, my job would be 20 times harder.”

One of the particularly complicated issues for Liberty
Global is that content-distribution rights can be different
in each country. Sometimes, a rights owner in the Netherlands,
for instance, doesn’t have the rights to distribute
the same piece of content in Switzerland.

“As CTO, I spend as much time with the contract folks
as with the technology folks,” Nair said.

Meanwhile, Liberty Global is
widely deploying
DOCSIS 3.0 across
Europe because
the economics are
attractive in terms
of the expanded
bandwidth it offers.
Nair estimates
it costs $10 to $15
per home passed
to go from DOCSIS
2.0 to 3.0, which
provides a jump
on speeds from 30
Mbps to up to 150
Mbps or more.

Specifically, the company has marketed DOCSIS
3.0-based services with up to 120 Mbps downstream in
Holland and 128 Mbps in Germany. Overall, Liberty Global has launched DOCSIS 3.0 in nine European markets across a footprint of more than 15 million homes.

“We are actually rolling
out products and pricing [them] so people will subscribe,”
Nair said.

But, in another example of the differences among geographies,
D3 hasn’t come to Ireland yet: “In Ireland, we’re
still investing in rebuilding the networks, and the telcos there have not been aggressive [on broadband],” Nair explained.

Liberty Global will probably be offering a 1 Gigabit-per-second
downstream product by 2014, Nair said.

“However, it will be a few years later than that before it
becomes mainstream,” he said. “Applications will always
trail us. We’ll be leading the way on speeds.”

ECONOMIES OF SCALE

Perhaps a less sexy part of Nair’s job, but one that’s important
to the company, has been an initiative to consolidate
the number of suppliers Liberty Global uses for various
equipment in order to get better pricing and service.

With cable modems, Liberty Global’s operating divisions
previously sourced from as many as six different
vendors. Recently, the company decided to standardize
on two cable-modem manufacturers. (Nair declined to
identify them.) Nair said it will do the same thing in other
categories, such as coaxial cable, fiber and passive elements.

“Our procurement team has generated good capex savings,”
he said.

The need to drive down costs is paramount for Liberty
Global, as it typically generates less than half the average revenue
per unit, or ARPU, of its North American peers. “As a percentage
of revenue, my capex looks higher than them.”

The challenge in carrying out technology-vendor consolidation
is that the engineering teams in each operations
division must agree to do it in the same way. Then,
“once you have decided this is the best for everybody, you
have to figure out what is the operational cost to adopt a
common architecture — because somebody somewhere
has to change out a lot of things,” Nair said.

The lowest price isn’t the sole criterion in vendor selection.
Suppliers must have a track record to support Liberty
Global operationally and must show the ability to innovate
and improve their cost structure.

“You can’t come in with the low-cost product today and
expect to be here five years later without innovating,” Nair
said.

As part of Nair’s vendor-relations effort, Liberty Global
named three winners for its 2010 vendor awards in
September, attended by executives from 50 of its biggest
suppliers: Samsung as “Best Innovation/Breakthrough
Supplier”; Juniper Networks for “Best Product & Service
Quality”; and Accenture for “Best Support & After Sales.”

GAUGING NEXT TRENDS

Besides bigger bandwidth and the rise of IP video — as
embodied in the Liberty Global home-gateway project
— what does Nair see as the next big technology trend?

It may or may not be 3D. While Nair acknowledges its
success in theaters, “in the home, I can’t say it’s a slam
dunk yet.”

Cable operators will need to support 3DTV, either way.
At first, Liberty Global expects to begin offering 3D content
via VOD, as it becomes more mainstream. “There are
more questions than there are answers at this point,” Nair
said.

As for fiber-to-the-home, for Nair, the economic case
today is very dubious. There may come a point when it
becomes more affordable, and then at that point it will actually
be easier for cable to pull fiber to the home than telcos,
because MSOs already have fiber-fed nodes.

“It’s much more efficient for cable to expand peak
speeds in the last mile than telcos,” Nair said.

AT A GLANCE: Liberty Global

Description: Largest non-U.S. cable company, with operations in 14 countries.

Customers: 17.7 million customer relationships (27.5 million video, voice and Internet
subscriptions)

Employees: 20,000 worldwide

Headquarters: Englewood, Colo.

Annual revenue: $9 billion*

Operating divisions: UPC Broadband (10 European countries); Unitymedia (Germany, part of
UPC); Telent (Belgium, 50% ownership); Austar (Australia, 54% ownership); VTR (Chile, 80%
ownership); Liberty Cablevision (Puerto Rico); Chellomedia (European programming subsidiary)

* On an annualized basis for the three months ended Sept. 30, 2010.

SOURCE: Company reports

BIO SHEET: BALAN NAIR

Age: 44

Current position: Liberty Global senior vice president and chief technology
officer; he’s an executive officer and sits on the company’s Executive
Management Committee.

Web stint: Served as AOL’s chief technology strategist for about a year,
overseeing the company’s network operations and back-office systems.

Telecom background: Spent 12 years at Qwest Communications International,
most recently as chief information officer and before that as CTO. As CIO, he
was responsible for supporting Qwest’s internal and external applications,
legacy systems including maintenance, internal network operations, data
centers, and help desk and desktop-support functions.

Board memberships: On the boards of Austar United Communications,
Liberty Global’s Australian subsidiary, and telecommunications-equipment
vendor Adtran.

Education: Holds a master of business administration and a bachelor of
science in electrical engineering, both from Iowa State University. He holds
a patent in systems development and is a Licensed Professional Engineer
in Colorado.

Hobbies/interests: Running, skiing, eating.

SOURCE: Multichannel News research

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