It's just after 12:30 in the morning in Malaysia, but Buno Pati, co-founder and CEO of Sezmi, is ready to talk about the share of a deal his company announced Monday: a piece--albeit a small one--of a $1.5 billion program headed by Malaysian utility YTL to bring a converged 4G network to Malaysia, wirelessly delivering consumer entertainment and communications to homes and mobile devices.
Sezmi, for its part, will build out a hybrid HD broadcast and broadband television service, similar to the model it offers in three dozen markets in the U.S., but in Malaysia it'll be deployed across WiMAX instead of DSL. (See related story.)
"It's a huge project," Pati says, "this is an opportunity to do it right and do it from scratch; they don't have a legacy telecom business, so they're not worried about preserving any part of that business. They're doing voice and data, all mobile devices, all on IP... it's a full IP. This is a place without legacy and you can build things like a wireless quad-play from scratch and you can do it right."
Pati says Sezmi, which combines over-the-air, cable, and web video content into a single integrated TV service, with its YTL deal could be launching its product on a global scale, one that could eventually overshadow its efforts in the U.S. It's a big bet on Sezmi's part, but a bet that already has shown enough promise to help it last month raise $17.3 million in venture capital to allow it to help it assemble a team and initiative focused on international business development. The company so far has been able to collect $93 million in funding.
Forrester analyst James McQuivey said the deal could send Sezmi in a new direction.
"This may not be where the Sezmi founders thought they were headed originally, but it turns out to be an ideal use of their hybrid TV technology," he said. "While it may be a bit difficult going from country to country selling this solution, the fact that it doesn’t require laying fiber or even copper across the whole country will be very appealing to countries that are on the verge of a digital upgrade to their infrastructure. I can’t see another company capable of delivering this complete package at the cost Sezmi is likely able to charge, so it's a good source of growth for the company.
Pati said the legacy structure that exists in the U.S. can make it hard to do business. "In the U.S., what we find ourselves doing is weaving in and out of the legacy structure that exists; you try to fit yourself into that legacy system and business model," he said. The deal in Malaysia, and in many less-developed areas of the world, fits Sezmi's play perfectly, allowing it to really show what it's capable of doing.
Forrester's McQuivey agreed: "In more mature markets, of course... no one will be willing to scrap the existing infrastructure of wires and towers to start over. So the long-term question of Sezmi’s role in more developed markets is probably still up in the air, though I’m sure the company will insist on maintaining that commitment. But if things go well in the newly-industrializing world, you might wonder if it’s even worth it to keep plugging away in the hard-to-penetrate developed world."
Pati, meanwhile, says the company is getting interest from "from all of those places that have very little cable or wire infrastructure, that have constrained broadband capacity, that have large television viewership," like Latin America, Africa, Asia and Eastern Europe.
"If you combine these three factors and you want to deploy a TV service, the cheapest and fastest way to get in the market with a full-blown television service is a hybrid service," he said. "And Sezmi has the only--literally, the only--end-to-end operational hybrid TV platform in the world. This isn't just about Malaysia, or the region around Malaysia, but this is a global play in every sense of the word."
The Malaysian network already is being built out, he said, and Sezmi expects to launch a service that's loaded with local and ethnic programming--as well as content from some of Sezmi's current U.S. partners, once contracts can be negotiated--by the end of 2011.
The Malaysia model, he says, is a model of future growth across the globe, and it's radically different than the climate in the U.S.
"It's pretty clear that U.S. companies haven't figured out that they have to let go of something in order to advance," he said. "To layer on new businesses and new services alongside new technologies is not a model that's going to scale very well in the future."-Jim