Conax sells trust to TV operators

On the ninth floor of Kongensgate 8 in central Oslo, there is a machine that personalises the smart cards that enable over 40 million people around the world to watch TV. This smart card personalisation machine belongs to Conax, a subsidiary of the Telenor Group. CEO Berit Svendsen describes Conax as a company that “sells trust” to its customers, in the form of encryption on smart cards that secure digital TV content.

“Today’s digital TV signals require a set-top box or a decoder. In this decoder there is a card slot, where you can insert the card produced by Conax. If you don’t have this card, you are not able to watch pay TV, so essentially we are enabling the end-users to watch TV and we are ensuring that the operators are paid for their pay TV offerings,” explains Berit Svendsen.

Conax conceived within Telenor R&D in the late 1980s

Conax was conceived in Telenor’s R&D department in the late 1980s. In the beginning, TV2 and the forerunner to Canal Digital, Cee TV, were the only customers. Conax delivered content security solutions mainly to Canal Digital until 2000, when the company made the decision to go international. Over the next decade, Conax expanded to serve 80 countries and 300 operators, reaching more than 40 million end-users. Today, 90 percent of its revenues come from outside Telenor. Svendsen believes that Conax just may have the most international reach of any unit within the Telenor Group.

Helping operators increase revenue

Svendsen credits much of Conax’s successful global expansion to the high quality of the company’s security product. One glance at the corporate Web site reveals that by using Conax security solutions an operator is able to its increase revenue.

“Operator’s today are fearful that they will lose out on the revenues for the sporting events and television series that they have paid dearly for, as there are hackers who illegally copy the smartcards and spread the content. And if an operator is getting hacked, he is losing revenue,” says Svendsen. “Conax is constantly in a race to outrun the hackers. We must remain one step ahead at all times.”

Conax has staked its claim as the third largest content security provider in the world, and its product is regarded by security analysts as one of the most secure technologies in the industry. Its largest customer, an Indian operator and Asia’s largest satellite TV-operator, serves more than 9 million subscribers alone. Conax also delivers to Com Hem, Sweden’s largest cable TV operator and KPN, the largest digital terrestrial television (DTT) operator in Europe.

Conax’s unique distribution strategy

What makes Conax unique is its distribution strategy. Since its inception, Conax has licensed its technology to the set-top box manufacturers and technology partners free of charge. This means that when an operator in India, for example, is exploring its set-top box options from the manufacturer, chances are that the box they are testing will already have a Conax security solution incorporated.

“By remaining the preferred partner of many of the technology providers and manufacturers, through our free and open licensing offer and high quality product, we have a distinct advantage in reaching the operators,” says Svendsen.

Conax is ready to tackle new technologies

With huge growth in TV digitalization around the world, a highly renowned product and a clever distribution strategy all in place, Conax is ready to tackle new technologies and expand to even more markets than before.

“In the time to come we will concentrate on four more countries in Asia: Philippines, Indonesia, Vietnam and Thailand. In these four countries, there are 90 million analogue households that should be digitalized. That’s enormous potential,” says Svendsen.

Svendsen also sees growth potential in Africa and South American, where Conax has set up regional sales offices to reach the local operators.

Huge growth potential in areas where digitalization is still low

“In South America, the digitization rate is only around 30-40 percent, meaning there’s opportunity for growth. There are millions of subscribers who are switching to digital signals every year, and South America and Africa are where our focus should be.”

Opportunity for new products in the mature markets

In Europe and the U.S., the challenges for Conax are a bit different. The rate of digitization is getting closer to 100 percent in Western Europe, so the potential for pure growth isn’t as great as Asia, South America and Africa. However, Svendsen believes there is opportunity for new products and expansion into new areas of service.

“In the U.S. and Europe, TV is meeting Internet, and we are able to provide products for that merger. We also see potential when it comes to the growing trend of integrated TVs, where you can put our technology directly into the television and take the set-top box out of the equation,” explains Svendsen.

Norwegian technology achieves international success

Berit Svendsen is a passionate advocate of her product, and she is proud of the international success achieved by this Norwegian-produced technology. The fact that a card personalised on the ninth floor of a non-descript building in Oslo reaches a household TV decoder box in the far reaches of Africa is an exciting reality for Svendsen.

“I have been with Conax for 2.5 years and I feel that I still have a lot to do. I am in the midst of a changing industry that’s both challenging and inspiring,” said Svendsen. “We are doing well because we are selling trust to the operators. This is the way we run our business.”