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French
pay-TV major and technology supplier Canal Plus and the
News Corp owned subscription and conditional access hotshot
NDS are locked in an eyeball-to-eyeball confrontation. The
former is taking the latter to court and is likely to claim
damages running into a billion dollars.
The
Canal Plus accusation: NDS - the maker of smartcards - assisted
viewers in pirating its software by extracting the software
on Canal Plus cards. NDS published it on websites and then
counterfeiters used it to produce thousands of illegal smartcards,
Canal Plus has alleged. This, it claims allowed viewers
access to the channels without paying up.
Canal
Plus claims that its smartcard technology allows encryption
of signals by broadcasters. So the process of revenue collection
from subscribers is smooth. It claims that security measures
were running fine until March 1999 when its software code
was copied and published on the website DR7.com.
It
claims to have spent more than $US35 million on the technology.
It has accused NDS of getting its smartcards and sending
them to an NDS laboratory in Israel for analysis. Canal
Plus has alleged NDS' activity has led to a loss of over
$US1 billion as a result, which reports say it will seek
to recover from its rival.
In
its official statement the French company said: "NDS engaged
in a conspiracy to harm Canal Plus' competitive position
in the digital television market."
On its part NDS in an official statement retaliated by describing
the lawsuit as outrageous and baseless. NDS claims unwavering
commitment to eradicating piracy from the conditional access
industry.
NDS President and CEO Dr Abe Peled said that his company
was in no way connected with the piracy problem that has
been the bane of Canal Plus since 1999. He said: "That problem
is due solely to the inferior nature of Canal Plus' conditional
access technology, the failure of its business plan to contain
measures to protect against piracy and its failure to deal
with piracy once it began."
The statement also mentions that apparently Canal Plus approached
NDS in December 2001 to merge the two companies as its technology
was not good enough. NDS sees the allegations as an attempt
by the French major to gain leverage in the negotiations.
In the statement NDS also says that Canal Plus acknowledged
that it had reversed engineered its competitors' cards.
NDS has also accused Canal Plus of trying to hire away the
NDS employee they claim gave their code to DR7. Canal Plus'
own lawyer has been involved in this poaching process it
is alleged.
NDS
has also accused Canal Plus of trying to divert attention
from criticism directed at the French company's new generation
card, which is not believed to be state of the art, and
of trying to shift blame for losses which have been accumulating.
The
ensuing war could have implications as far as India is concerned.
NDS has a development center in Bangalore. NDS India focusses
on developing interactive TV applications and broadband
technologies in conjunction with NDS R&D centers in Israel,
China and the UK. MD NDS India is Lalit Ahuja who used to
be CEO of Star India.
Meanwhile
Rupert Murdoch's Star Networks rival Zee is a customer of
Canal Plus. In 2000, Phillips supplied DSX6071/94 DVB-compliant
set top boxes to Zee Telefilms for its direct-to-operator
digital TV channel bouquet project. The boxes were installed
with Mediaguard and Mediahighway software supplied by Canal
Plus Technologies. This allowed the Zee network to encrypt
its channels, which were in the free to air mode then.
The provision of the set-top box's marked the start of Zee's
Director-to-Operator plan which was designed to bring increased
channel service to the consumer and subscription revenues
for the network.
The
year before it had been reported that Zee formed an alliance
with Canal Plus for a proposed DTH platform.
Additionally,
the year 2000 saw the announcement of the deployment of
NDS' Open VideoGuard digital conditional access system for
Doordarshan's next generation of digital entertainment and
interactive TV services.
The
NDS Open VideoGuard conditional access system is integrated
at Doordarshan's broadcast center in New Delhi, The broadcast
signal is delivered to authorized set-top boxes located
in cable headends all across the country.
Reports
indicate that the controversy is likely to impact the UK
pay-TV industry. This is because ITV Digital, which also
has a piracy problem, uses the same smart card technology
as Canal Plus. Canal Plus claims a base of 6.1 million digital
customers across 11 European countries. It also says that
12.5 million set-top boxes use its software through its
subsidiary, Canal Plus Technologies.
NDS has announced that it plans launching a counterclaim
once it fully studies the lawsuit.
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