Evolution, Blankom Scrum Over Conax
Evolution Broadband LLC and Blankom USA LLC are in a scrape over whether Blankom's domestic division has the rights to use the Conax AS conditional access (CA) system in integrated digital systems that it's pitching to small- and mid-sized U.S. cable operators. (See Blankom Plays US Digital Video Card .)
Evolution and Norwegian firm Conax announced a deal yesterday that gives Evolution exclusive North American cable rights to integrate Conax's CA technology into a range of entry-level digital terminal adapters as well as more advanced digital set-tops. (See Evolution, Conax Sign Exclusive Deal.)
Evolution, which is also targeting small- and mid-sized operators with an integrated platform that enables them to upgrade to digital and better compete with satellite TV foes, is also trying to win CableLabs qualification for a CableCARD that carries the Evolution label and uses the Conax CA. (See Evolution Thinks Small .)
That CableCARD, which aims to ensure that Evolution's cable MSO partners are compliant with the Federal Communications Commission (FCC) ban on integrated set-top security, will be used in a conjunction with a new range of tru2way -based boxes that feature MPEG-4, high-definition, and digital video recording (DVR) capabilities. Evolution expects those to become available in the first quarter of 2009.
Evolution claims its exclusive tie to Conax for the North American cable market prevents Blankom from using the conditional access system in the region without proper authorization. Blankom counters that its German-based parent, Blankom Antennentechnik GmbH, has a historical relationship with Conax and that the domestic unit can obtain CA systems directly from Conax's headquarters in Oslo, Norway.
John Egan, Evolution's chairman, says Blankom must do a deal with his company if Blankom has any intention of pitching integrated systems to U.S. cable operators based on the Conax CA. He says his company was also taken aback to learn of Blankom's competing strategy centered on the Conax CA only days after the two companies had met at Evolution's Centennial, Colo., headquarters last week.
Egan says Evolution showed off its lab and equipment under the impression that Blankom was interested in integrating its headends with Evolution's platform for U.S. cable operators. "They never mentioned that they were looking to be in the set-top business" using Conax's CA system, Egan says.
He argues that any claim by Blankom that it can use Conax with U.S. cable operators is "bogus." At the same time, he says he's willing to look past recent history if Blankom is interested in working with Evolution. "If we can deal with principals who have full knowledge of what's going on we'll look at it," Egan says of any potential deals with Blankom.
For now, Blankom has no intention of striking a deal with Evolution for the Conax CA.
"Do they [Evolution] have an exclusive? Yes, but it doesn’t affect us. We're buying direct from the [Conax] corporate headquarters," claims Steven Messino, vice president of sales and marketing for Blankom's U.S. division. "My concern about Evolution is that they are a direct, head-on competitor."
If the two are in fact at an impasse, it follows that Conax should be able to break the deadlock and clarify which side of this battle is correct. Geir Bjørndal, the COO and director of sales and marketing at Conax, is listed as the contact on the Evolution press release. As of Friday morning, he has not responded to an email inquiry from Cable Digital News.
Where does this leave TVS?
Transparent Video Systems Inc. (TVS) , another company that's pitching a Conax-based system to North American cable operators, believes it's insulated from Evolution's exclusive deal with the CA vendor. (See TVS Makes All-Digital Pitch .)
"We have had an agreement with Conax that pre-dated the deal with Evolution," TVS founder and CEO Norman Gillaspie tells Cable Digital News via email. "We have not been notified of any changes in this relationship or the desire to change that relationship with Conax."
He did add that TVS has also signed a deal with another vendor that involves the development of an "enhanced" CA system that can accommodate Smart Cards as well as SD and MicroSD cards that are used in PCs, laptops, and cellphones. As envisioned, those cards will be accessed using a USB port and an adapter. That so-called "Challenger II" system will provide removable security across all consumer platforms, and will cost less than CableCARD-based technology, Gillaspie claims.
"This will provide not only conditional access or entitlement messages to these consumer devices, but also storage of programs with DRM [digital rights management] capabilities," he adds, noting that some TVS video service partners want TiVo Inc. (Nasdaq: TIVO) to adopt it so they can sell and use TiVo boxes alongside their own.
— Jeff Baumgartner, Site Editor, Cable Digital News