Nair (Image source: Liberty Global)
with Balan Nair, Chief Technology Officer, Liberty Global
As chief technology officer of Liberty Global (Nasdaq: LBTYA), Balan Nair is tasked with developing and introducing advanced technology that positions his company above other service providers in a competitive market while, at the same time, doing it economically enough that investors get a good reward on their dollars. It's a daunting task but it's a challenge he welcomes, as he explained during a talk with Fierce editor Jim Barthold during the recent GENBAND Perspectives13 conference.
FierceCable: You just expanded yet again in Europe by acquiring Virgin Media and creating the world's biggest broadband company. Is Liberty trying to rule the world, or just Europe?
Nair: We're looking to build great products for our customers and being a great business for investors to invest in. My boss, [President and CEO] Mike Fries, will tell you we're not about building empires; we're not about trying to make ourselves bigger than the next guy. We do believe in scale and we do believe scale benefits our investors and we do believe scale enables us to be more innovative to deploy great products, but that is very different than trying to just grow and conquer and all that. We don't even discuss that.
FierceCable: Why are you still using your cable infrastructure in Europe even though you've developed a high-end, IP-capable Horizon set-top box?
Balan Nair: Part of the reason we're still using our existing QAM Channels and MPEG transport streams instead of pure IP is that a lot of devices already tune to those protocols. The transition to just being everything over an IP transport without QAM tuners is long and expensive. To be honest, there's also no tangible benefit yet to the end consumer. The end consumers don't care if it's IP or QAM--nor should they care.
FierceCable: Isn't IP the more efficient delivery method, considering all the IP-connected devices and TV Everywhere services?
Nair: Inside the home everything is going to be IP. Everything will be re-encapsulated with an IP address header on it and shipped to a specific MAC address, be it an IP client for video services or iPad or iPod or Xbox or any device that has an IP address.
FierceCable: Doesn't that add an unnecessary step--or two or three--to the process?
Nair: It's a long transition to all-IP, and that's why the Horizon box supports both traditional QAM and IP. You can stream up to 400 megabits to that box today. As I get more of those boxes out there--we call them a hybrid gateway--the transition becomes a lot easier.
FierceCable: Are there any plans to introduce that Horizon gateway into the United States as part of Liberty's investment in Charter Communications (Nasdaq: CHTR)?
Nair: Charter is a passive investment by Liberty Media (Nasdaq: LMCA). While Liberty Media and Liberty Global are closely associated with each other, we're not going to be involved in the day-to-day operations there.
FierceCable: Any active plans for more U.S. cable involvement?
Nair: I think the U.S. cable market is vibrant and a great business. Right now Mike Fries is very focused on Europe.
FierceCable: If not the United States, how about Asia? That's a market that would seem to be ripe for Liberty Global.
Nair: We were in Japan. We used to own the largest cable company in Japan [Jupiter Telecommunications]. We used to own the satellite company that's the largest pay TV company in Australia [Austar United Communications] and we also exited that because there was a buyer. As [Chairman] John Malone would say, everything in the store is always for sale.
FierceCable: You've said that your goal is to reward both your customers and your investors. That's a tricky job. How's do you do it?
Nair: We build companies for investors and for our customers, but our investors are very important to us. So all the decisions we make, we make for the benefit of our investors. When you reward your subscribers in a smart way you also reward your investors. Our investors love what we're doing in our product development with the Horizon project and what we're doing with broadband.
FierceCable: Intel, Cisco (Nasdaq: CSCO) and Samsung all put pieces into the Horizon box. Did that make it too complex to meet your initial launch plan?
Nair: It was a tough job. This was the first time the chip we used from Intel was ever used like this. It's complicated to integrate between a brand new chip and ask software developers to build the drivers inside of a chip, UI developers take advantage of the new processing power, and a box manufacturer to put it all together as a hybrid so you can stream IP and stream QAM. It's not a trivial task. We were disciplined. We would not put it out until we got it right, despite the [announced] timeline. We pushed it out nine months past when we thought when we could launch it because it took a lot longer than that.
FierceCable: Is it enough anymore to have just a set-top box or gateway when connected game consoles, Blu-ray players and smart TVs are increasingly being used to access IP content?
Nair: You have to build a product that integrates a lot of things. You want it to be a seamless experience--VOD, linear, DVR. You want everything to be contextualized. You want recommendations. You want to be able to watch on your iPad, pause it and then watch it on your TV. You want it to work together seamlessly. It's not an easy job to solve. A Blu-ray player can't solve that; an Xbox can't solve that; a smart TV can't solve that.
FierceCable: U.S. cable operators are mostly adopting Wi-Fi hotspots as their mobile plays rather competing with existing mobile wireless players. You said during your keynote presentation at Perspectives13 that Liberty Global would pursue wireless but would rent, rather than buy and build infrastructure for that service. Again, that seems a bit onerous. Is wireless that important?
Nair: First off, wireless is an important part of our story and it's a positive part of our revenue story. It's a lower margin product, for sure, but it's a necessary part of what our customers want. Customers have many decision-making points: buy broadband; buy a video service; make a decision on voice; make a decision on a handset. At every point in their decision making process we want our name to be in front of them. That's how we look at it.
FierceCable: In the United States, wireless carriers are counting on 4G as a way to do some rich bandwidth services over wireless while cable operators, again, are depending on Wi-Fi. How will Liberty Global handle high bandwidth content?
Nair: When we do wireless for heavy services it will be over Wi-Fi.