Brainstorming Session on indigenous product design and …€¦ · V - BIS Standard – Digital Set Top Box – Cable 35 VI - BIS Standard – Digital Set Top Box – DTH 43 VII –

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Brainstorming Session on indigenous product design and development of Digital Set Top Boxes

May 9, 2012

Organisers

Office of the Principal Scientific Adviser to the

Government of India

Knowledge Partner

Cyber Media Research Ltd.

Workshop Deliberations and

Recommendations Report

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Contents Chapters Page

1 About the Workshop 6

2 Mission Statements 8

3 Overview of India Set Top Box Sector 9

4 Workshop Deliberations 11

5 Recommendations 15 Glossary 22

Annexures 23

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Annexures

Page 23

I - CMR Background Presentation 24

II - Components and Sourcing Grid 31 III - Letter to Ministry of Finance seeking support for addressing disability issues w.r.t taxes and duties 32

IV - City-wise DAS implementation programme 34

V - BIS Standard – Digital Set Top Box – Cable 35

VI - BIS Standard – Digital Set Top Box – DTH 43

VII – List of workshop dignitaries & delegates 53

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1About the Workshop

� The Core Advisory Group for Research and Development (R&D) in the Electronics Hardware (CAREL), the empowered group formed under the auspices of the Office of the Principal Scientific Adviser to the Government of India, is mandated with promoting high-end scientific research in the country to lay foundation of India designed, developed and manufactured electronics hardware products.

� CAREL, after extensive deliberations and discussions have identified six (6) products in different segments that should be looked into, with more depth aiming at complete or near complete indigenisation. The matrix of six products identified under different segments are given below:-

Segment Product

Consumer Electronics

Set Top Boxes

Energy Smart Energy Meters

Telecom Smart Phones

Education Electronic products for Education/E-Governance/Service delivery

Identification Smart Cards

Financial Services Micro ATMs

� As part of the implementation of the above decision, the Office of the Principal Scientific Adviser (PSA) to the Government of India along with India Semiconductor Association (on behalf of the electronics industry associations) organised first in series one day brainstorming session / workshop to deliberate among key stakeholders the roadmap towards indigenous development of the digital set top box.

� The workshop held on Wednesday, May 9, 2012 at India Habitat Centre, New Delhi was attended by around 50 key officials and executives from Government, specialised Government technical institutions, product companies, manufacturers, broadcasters and members of various industry associations.

� The workshop started with inaugural addresses by dignitaries including:

o Mr. Ajai Chowdhry, Chairman HCL Infosystems and Co-Chairman, CAREL

o Dr. S. V. Raghavan, Scientific Secretary, Office of PSA, Government of India

o Dr. Ajay Kumar, IAS, Joint Secretary, Deptt of Electronics & Infirmation Technology, (DeitY), MCIT, Government of India

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o Mr. Neeraj Sinha, Scientist 'F', Senior Director and Member Secretary, CAREL, Office of PSA, Government of India

o Mr. P. V. G. Menon, President, India Semiconductor Association

� The dignitaries briefly touched upon the purpose of the workshop, its significance, and the role CAREL and DeitY is playing towards making India self reliant by facilitating scientific research and development to lay the foundation for ‘Made in India’ products

� CyberMedia Research, knowledge partners for the workshop presented an overview of the set top box industry in India and highlighted some significant points for discussion. Mr. Prasanto K. Roy, President, CyberMedia Group delivered the presentation..

� In the followng session, Prof Rajat Moona, Director General, CDAC (under DeitY, MCIT, GoI) emphasised the need to promote indigenous product development and the role of CDAC in this initiative. Senior officials from the Ministry of Information & Broadcasting, Government of India : Mr Yoginder Pal, Adviser, Mr Y.K.Sharma, Adviser, BECIL and Mr S.N.Singh, DDG-Engineering, Doordarshan highlighted the India opportunity in the set top box sector as a result of the digitisation programme announced recently by the Ministry of Information & Broadcasting, and the role of Doordarshan as the public broadcaster of the country, which is also involved in the digitisation in satellite medium and has embarked on digitisation process in Terrestrial domain.

� The floor was opened for discussion that was moderated by Mr. George Paul, Executive Vice President, HCL Infosystems and Mr. Ankan Biswas, Chairman, Digital Broadcast Council, CEAMA.

� Both the moderators raised some of the key technical, business and policy issues and involved members from all the stakeholder communities to elicit their viewpoints. Stakeholders were also encouraged to raise points that had direct linkage with the theme of the workshop.

� In the post lunch session, the moderators engaged participants in the discussion seeking action-oriented interventions required in both the short- and the long-term.

� The concluding session was chaired by Mr. Ajai Chowdhry in the presence of Dr. R. Chidambaram, Principal Adviser to the Government of India. Mr. Chowdhry and Dr Chidambaram expressed satisfaction at the overwhelming and constructive participation of all the delegates.

� The workshop concluded with a vote of thanks by Mr. Rajiv Jain, Associate Director, India Semiconductor Association, who thanked all the participants at individual and organisational levels for participating and providing valuable suggestions that would go a long way in strengthening the recommendations of CAREL to the Government of India.

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2Mission Statements

The industry champions and experts made some mission statements that clearly voice louder for a pressing need to have India STB with maximum value created in the country. Some of the statements made are:-

� Electronics Systems Design & Manufacturing (ESDM) is what we should be doing in this country.

� We should all stop wearing the hats of our companies and associations and think about how we can do something commendable as Indians for the electronics industry

� India should look at a multi-purpose STB Mr Ajai Chowdhry, Founder & Chairman, HCL Infosystems and Co-Chairman,

CAREL

� STB is a huge opportunity. Even if Rs 10 are made on each device, one would

cross 10 billion mark in a year. � STB is not related to TV only. It can get into any device and serve anywhere.

The notion of linking STB with TV only should be dispelled. Dr S Raghavan, Scientific Secretary, Office of the Principal Scientific Adviser to

Government of India

� STB is probably the single largest opportunity that stands before us today. � STB is a fit case where we can demonstrate that we can do it. � We might have apprehensions about the volumes and quality. But, my answer is

that yes we can do it. Dr Ajay Kumar, IAS, Joint Secretary, Department of Electronics & Information

Technology (DeitY), Ministry of Communications & IT, Government of India

� STB is a high volume product and suitably fits into the CAREL’s aim of conducting

R&D of select products to indigenise them. Mr Neeraj Sinha, Scientist ‘G’ & Senior Director, Office of the Principal Scientific

Adviser to Government of India, & Member-Secretary, CAREL

� ISA mission is Innovation led design and design led manufacturing.

Mr P V G Menon, President, India Semiconductor Association.

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3Overview of India Set Top Box Sector

Figure 1: Top-level architecture of Digital Broadcast

Satellite

Dish Farm (Downlink)

MSO / ISP / Triple Play Operator (Headend)

DTH Receiver (Dish)

DTH

CABLE

IPTV

Television

STB

Market

� India is the third largest TV market after USA and China with 148 million

subscriber households.

� India is a huge heterogeneous market. There will be a vast opportunity for entry to medium level STBs and equally a fair market opportunity for high-end STBs. India will have to develop capabilities in both the segments.

� The Ministry of Information and Broadcasting, Government of India has also initiated digitisation of terrestrial TV network operated by Doordarshan. This is planned to be achieved by the end of 2017, resulting in shift of millions of customers on a digital network. This opens up another opportunity area for STBs based on DVB-T or higher standards.

� The Government of India (GoI) is rolling out the National Optic Fiber Network and National Knowledge Network. Cumulatively, these two initiatives entail an investment of INR 32,000 crores and will be used for various content delivery and interactivity by Ministry of Human Resources Development, other Ministries and Departments for education, edutainment, adult education, health services and other such large reach programmes. These national networks will be using STBs for secure delivery of digital content and interactivity.

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� The market is predominantly cable based with 94 million subscriber households while DTH is the fastest growing medium, having grown at a CAGR of 58% (2009-2011).

� With television signals being primarily analogue based, the Government of India accepted the recommendations of the Telecom Regulatory Authority of India (TRAI) and amended the Cable Television Networks (Regulation) Act in October 2011 to announce implementation of phase-wise digitisation programme of pay TV services throughout the country.

Figure 2: India TV Networks Digitisation Timeline

Aug 2010

Oct 2011

TRAI

recommends DAS

Government

amends Cable TV act to implement

DAS

Phase I (4

metros)

Jun 2012

Mar 2013

Phase II (38

major cities)

Phase III (All

urban areas)

Sep 2014

Dec 2014

Phase IV

(Rest of India)

� It is estimated that US$ 2 billion worth of STBs will be installed in the country during the four phases of digitisation programme launched.

� With a product life span of 5-7 years, we should be seeing a huge replacement market in 2-4 years from now for around 45 million STBs that are already installed throughout homes in India for various digital platforms.

� There will be huge opportunity for export of set top boxes, as other countries take up the digitisation of cable TV. India can leverage this opportunity to be a dominant player in supply of set top boxes to these countries.

Product Design and Development

� Specifications for indigenous as well as imported STBs for Cable, DTH and IPTV

platforms are already laid down by the Bureau of Indian Standards (BIS) that set the norms for threshold technology standards. However, this does not prevent any manufacturer to go for higher technologies.

Manufacturing

� For the financial year 2011-12, domestic production catered to roughly 30% of

the total 12 million STBs installed. The import component of these STBs is around 55%..

� India has the capabilities in both development and manufacturing of digital STBs. However, in the present scenario, the dependence on acquired technologies / imported components is high, resulting in a sizable import bill as well as depriving local vendors of addressing a big market opportunity.

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4Workshop Deliberations

Summary

All the stakeholders of the industry agreed in one voice that India needs to have its indigenized set top box. Research and development activities are critical to the manufacturing of a set top box and efforts should be speeded up to drive maximisation of the indigenous content of set top boxes.

At the same time, policy interventions would be necessary for the up-scaling of existing manufacturing capacities and promotion of growth of indigenously developed and manufactured STBs.

Stakeholders’ Voices

Government

Government is all up with its support in every respect to facilitate indigenization of the set top box. Be it in the sphere of R&D, manufacturing policy, capacity building, fiscal incentives or any other support expected from the Government, representatives from organizations and departments like Office of Principal Scientific Adviser (PSA), Government of India, Department of Electronics and Information Technology (DeitY) and Ministry of Information Broadcasting expressed their willingness to support indigenous development. All the representatives from concerned Ministries, Departments and organisations showed desire to support the industry.

Office of Principal Scientific Adviser to the Government of India

The recent GoI initiatives in terms of National Policy on Electronics, National Manufacturing Policy, etc. have set the mood of the country in the right direction. We are now looking at taking the country to the next level. STB is a huge opportunity. It can even find its place in a device like smart meter and and a number of such other devices. It no longer remains tied to a television only. This opens enormous opportunities for product developers and manufacturers.

The Office of PSA is also facilitating in creating a SoC along with a well verified kernel that can be used as a secure OS on top of the SoC. Though such pioneering initiatives will consume time; it will help the industry in the long run and should be taken up as a challenge by a group of Government entities to support the industry to set the building blocks and shorten the product development life-cycle.

Department of Electronics and Information Technology

Development of indigenous CAS is one of the ways before us to increase the value of domestic contribution,. To develop indigenous CAS, the GoI will partly fund it through Multiplier Grant Scheme under which the CAS developed would be offered on subsidised

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rates to the broacasters, which will make the the final price for indigenously developed set top boxes, which also includes royalty for CAS, cheaper.

C-DAC is spearheading the initiative of defining the technical parameters of India CAS that will enable selection of the industry partner(s) for developing it. The RFP is expected to be floated in next couple of months and looking at the development cycle of 6-9 months, we hope to have India CAS available in early 2013.

We do have the potential and capabilities to scale up the capacity and develop products of international quality that will not only serve the local demand but also open up export opportunities for us.

Fiscal support under the Electronic Manufacturing Cluster Park scheme and Modified SIPs, the key policy initiatives of the DeitY and under active consideration of the GoI, would facilitate in promoting domestic manufacturing, both these initiatives could be relevant to the STB sector as well.

Besides, Government has in-principle decided to have ITIR (Information Technology Investment Region) in Bangalore and similar proposals are in advanced stage of approval of ITIRs in the states of Andhra Pradesh, Orissa and Tamil Nadu .These regions would are expected to attract large investment in electronics and IT and would be useful for developing and manufacturing electronic products including STBs.

Ministry of Information and Broadcasting The Government of India has already announced digitisation implementation plan. This is the right time to discuss on a device like STB. India has more than 800 TV channels; about 60000 local cable operators (LCOs) and 5000 multi service operators (MSOs). The industry is projected to grow at about 15% for the next 5 years. Revenue is estimated to grow from INR 300 billion to INR 600 billion in next 3 years time. Cable TV, which dominates the broadcasting space, is presently delivered through analog mode mostly.

Analog mode has limitations in terms of channel choice and the network is also not transparent. The Government does not have presently the exact number of subscribers being reported, which affects the subscription revenue and entertainment tax. The digitisation has to be completed by December 2014.

Even the terrestrial system is also going to be digital, which offers yet another stream of STB opportunity. The radio signals are going to be digital, which will push the demand for digital radios. We do receive radio stations through DTH and this opens another opportunity area for a STB only for radio de-linking it with the TV STB.

Considering digitisation of Cable TV growth of DTH and digitisation of Terrestrial TV, the Government is looking at huge numbers of set top boxes in the range of 150 to 200 million. This opportunity has to be taken up as a challenge to increase the production of indigenous STBs in the country; else, this requirement will be primarily met through imports.

Government Agencies Research and technical institutes, C-DAC and BECIL are supportive of working towards indigenisation of the set top box. While C-DAC is part of the committee to design and develop CAS for India, BECIL is entrusted by TRAI to certify the head-end equipments used by MSOs for broadcasting.

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Both organisations are ready to provide technical support the industry needs so that the digital STB contains higher proportion of Made in India components.

Public Broadcaster - Doordarshan

Doordarshan is tasked with the responsibility of disseminating news and information to every citizen of India. Besides, it is also the only source of entertainment to millions of viewers who receive TV signals via its terrestrial analog network. While delivering its duty as the public broadcaster, it is also working on upgrading its infrastructure by migrating to a digital terrestrial network by the end of 2017. Doordarshan will build its digital network using DVB-T2 technology, which means opening up of another opportunity for the industry, as even to receive signals from such a terrestrial network, set top boxes will be required at subscriber premises.

Doordarshan, like other key stakeholders, is willing to help as much as possible towards indigenisation of set top boxes and might consider buying set top boxes from vendors to distribute them free to viewers.

Private Broadcasters

Private broadcasters are essentially business entities. Nevertheless, they are no different in their views compared to any of the other stakeholders, that an indigenous India digital set top box is the need of the times. These broadcasters currently buy STBs from international vendors, but are of the opinion that as long as set top boxes produced in India are of a high quality, offer features and functions that will help broadcasters deliver competitive value propositions to their subscribers and are also price competitive, they will have no hesitation in procuring supplies from domestic manufacturers.

In fact, broadcasters would be happy to promote domestic manufacturing on account of the fact they would be able to get better technical support and also sense a higher level of accountability from a vendor who is directly present in India.

Set Top Box Manufacturers Against the large market potential, the India set top box manufacturing community is a small but striding industry. Presently, manufacturers have to import around 55% of set top box components including SoC (System on Chip) that exposes their businesses to the volatile foreign exchange fluctuations risk. If they are able to get more components locally that also include low end ingredients like discrete semiconductors, cables, and other items like motherboards. as well as the high end SoC and CAS, it will reduce their dependence on foreign suppliers and lead to higher rates of indigenisation of their existing products.

However, at the same time, manufacturers want some policy interventions with respect to enforcement of standards and certifications, favourable tax and duty structure to promote local manufacturing that will help them to scale up the production capacities.

Industry Associations

While industry associations are for promoting and strengthening the industry base in the country, they are equally enthusiastic about indigenisation of the entire value chain. Industry associations would like the domestic companies to have increasing proportion of BOM components / being sourced from the local manufacturers.. There is an opportunity in the immediate time period to increase the proportion of indigenous passive components to be used in India manufactured STBs that will be procured in the next 24

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months. These components need to be identified and the challenge / opportunity thrown open to India component vendors. Representatives from industry associations across the value chain of the digital set top box want to pursue the cause of indigenisation collectively.

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5Recommendations

India has to have its own indigenously developed and manufactured set top box ;this is the key recommendation all the stakeholders came out with unequivocally, which can only be achieved with the collective efforts of all the stakeholders.

We have a large domestic market opportunity for the set top boxes. We should capitalise it to have the maximum value add coming from domestic companies. Besides the need for the stakeholders to work in tandem, some policy interventions are also required to promote indigenous product development and manufacturing.

The recommendations made are short term as well as long term implying the timescales required and benefits derived from adopting of such measures. However, all the interventions need to be started now and simultaneously.

The goal of these recommendations is that over the passage of time we should have maximum of India technology and components residing inside a STB.

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Figure 3: Goals Time Horizon

Period Time Horizon Objective

Short Term

Immediate Increase domestic production to 70% of total annual demand.

Medium Term

0-3 years

Increase indigenisation of STB to 70% by adding more of ‘Made in India’ components.

Long Term

3 – 5 years An indigenous STB

Figure 4: Workshop recommendations

Strengthen and widen manufacturing capacity to source from indigenous manufacturers; leverage the maximum of immediate opportunity arising out of announced phase-wise digitisation rollout.

To develop an India IP for STB to increase the indigenised quantum. ; R&D and manufacture of the main as well as peripheral components of a digital set top box.

Short Term Long Term

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Short -term recommendations

With the objective of achieving a goal of majority of the 150 million demand for set top boxes in the next 24 months to be manufactured out of India, the following short term measures were recommended. The overall policy framework does enable achievement of indigenisation of electronics product development and manufacturing, but there needs to be a few additional interventions and support that would specifically address the opportunity the set top box industry has provided arising out of the Government’s announced phase-wise digitisation.

The major recommendations put forth during the brainstorming session are summarised here:

Hardware related

� The domestic production met 30% of the 12 million set top box installations

during the FY 2011-12. It is recommended that the local production should cater to 70% of the total set top box requirements under the digitisation programme announced recently by the Government of India. While there exists, enough domestic production capacity, requisite support is sought by the industry from the Government of India to help in its higher utilisation. Fiscal support from the Government in terms of proper duty and tax structure which promotes domestic manufacturing, and, easy availability of funding support backed by lower interest rates, will facilitate in domestic manufacturers offering the set top box at competitive prices. The various recommendations under ‘fiscal support’ are also listed below.

� The import component of the domestically manufactured set top box, which stands at 55% presently, should be lowered to about 4% in the next 2 years. This would be possible through the indigenous production of the various active and passive components and their use in the set top box manufactured in India and the use of India developed CAS.

� Certification of all the set top boxes including imports by an independent agency will check the supply of sub-standard products; in this regard, it will be important to update the existing specifications.

� Govt mandates the use of the above “India STB’s” in Indian deployment of CAS

system.

CAS-related

� CAS, an important and integral part of the overall STB system, is dominated by

large foreign vendors. These CAS vendors define what STB is to be used. CAS solutions developed by Indian companies are available and these solutions should be promoted. Open standards based CAS to be attempted. Certification of the available Indian developed CAS & open standards CAS is immediately required.

� The initiative taken by DeitY to develop an indigenous CAS is greatly appreciated. DeitY is requested to pursue it at a faster pace to achieve the desired objective.

� As integration of CAS is the main stumbling block of STB manufacturing, C-DAC can explore the possibility of acquiring existing CAS integrated set top box solutions developed within India. C-DAC can further test and validate these

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solutions to meet the specifications, which can further be licensed to broadcasters and MSOs, and, would eliminate ambiguity & uncertainty in their minds about using a locally / indigenously developed solution.

Product design (other than CAS)

� C-DAC can explore the possibility of acquiring available product design solutions

for STB developed within India. C-DAC can further test and validate these solutions to meet the specifications, which can further be licensed to set top box manufacturers, and help in enhancing the availability of indigenously manufactured set top boxes.

Certification

� At present, there is no proper enforcement framework for checking the quality

standards of imported STBs. This results in ‘self certified’ cheap imports. There is need to strengthen the enforcement mechanism to ensure that the influx of inferior quality set top boxes does not take place as the digitisation programme picks up. Enforcement mechanism of standard must be clearly documented and mandated.

� The specifications of the STB presently available from the BIS are relatively old. These specifications must be continuously updated. A Committee should be constituted that will look deeper into various aspects of standardisation and certification of STBs.

� TRAI has been entrusted with the responsibility of defining the standard guidelines for Digital Video Broadcasting & BIS for their release. Industry requests for clarity with respect to the roles played by TRAI and BIS.

� Industry seeks the support of Ministry of I&B / DeitY, GoI to develop a certification facility for STBs, CAS and other individual components like SMS (similar to ERTL certification for computers) so that MSOs can implement these solutions. Industry further requests DeitY and Ministry of I&B to mandate that all MSOs use only the certified STBs and CAS systems.

� There are certain tests for which Indian STB manufactures have to go abroad. STB test lab facilities should be developed within the country. Existing test laboratories like ERTL must be equipped with STB testing facility and their personnel upgraded with required skills.

Fiscal support

� Several WTO signatory countries have taken measures to promote domestic

market and restrict imports. For instance, China has banned import of STBs, Brazil has an import tariff of 60% and Europe has a import tariff of 16%. Government is requested to revisit the present import tariff to encourage local manufacturing. A re-look is requested into the duty and taxation structure to improve price competitiveness of domestic manufacturers of set top boxes vis-à-vis their imports. The disability factors w.r.t the taxation structure facing the indigenous STB manufacturers is also highlighted in the letter dated April 12, 2012 sent to MoF (copy of letter is enclosed at Annexure III).

� Except for a few large MSOs, Tier II and Tier III MSOs have a large customer base. These MSOs are inadequately funded for carrying out digitisation and depend on large STB vendors & System Integrators (SIs) for financial support to

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invest in the equipment required for digitisation. This situation is unduly taken advantage of by the large STB vendors and SIs. Accordingly, suitable financial support may be extended to the Tier II and Tier III MSOs to enable them to invest in the equipment required for digitisation.

� Financing of EMS companies and small domestic STB vendors should be made available at competitive interest rates. Present financing schemes make it difficult for them to secure funding and if they are able to secure, they have to pay high interest rates. Availability of funds at competitive interest rates will facilitate in the smaller STB companies to place orders on EMS companies for their requirements.

Market Access

� It is recommended that procurement of STBs may also be considered under

Preferential Market Access (PMA) scheme to promote indigenous manufacturing and help domestic companies scale up manufacturing capacities

� As the other countries also go in for digitisation of the cable TV, the domestic manufacturers can then leverage this opportunity to export the set top boxes.

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Long-term Interventions

Long-term initiatives are required to bring India on par with a select set of countries that possess the capability to develop and manufacture their own advanced digital set top boxes, and create the related technology design and components ecosystem. These interventions should not limit the vision for India TV broadcast networks digitisation only to certain opportunities that may be visible at present, but also be able to address the requirements of the future that are bound to emerge as the penetration of technology increases in our daily lives.

It was unanimously felt and agreed that research and development programmes are essential to achieving indigenisation of technology components that form the building blocks of a set top box. The main recommendations proposed by the participants of the workshop are:

Product Design and Development

� India should develop its own IP for the overall STB solution, which will help

realise in maximum value creation for the STB stakeholders

� Research and development programme should be devised for the development of an indigenous SoC for digital set top boxes. SoC is the main component for which Indian manufacturers have to rely on acquired technology and its indigenisation will significantly add to higher proportion of the BoM being sourced from domestic companies.

� India should explore designing a multi standard / multi protocol ‘All in One’ STB

� The Committee(s) may be constituted to define the roadmap and its implementation approach for the above mentioned R&D programmes. This roadmap should recommend the concerned stakeholders to be involved, and, the funding support and mechanism required for the above initiatives, which could be taken up in Public Private Partnership (PPP) mode.

Manufacturing

� The major challenge for the domestic manufactures is meeting the production

cost comparable to the STBs being offered from other countries / sources. Electronic Manufacturing Cluster Park scheme (EMCPs) and Modified SIPs will support in promoting domestic production and exports of .electronic products and components including STBs. STB focussed cluster can also be explored.

� Peripherals and component industry should also be promoted alongside STB manufacturing so that indigenisation can be attained at higher rates.

� Besides the above proposals, availability of fiscal support measures recommended earlier for a long term period will help in strengthening the domestic manufacturing and production of STBs at competitive prices.

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Skills Development

� Skills of the professionals and students likely to work for this industry should be paid attention to via a specific skill development programme in the area of STB embedded software and CAS. Skill development would also be required for the technical persons working with the MSOs and LCOs.

� R&D orientation must be inculcated among students and necessary revisions of the curriculum as well as pedagogy must be initiated.

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Glossary

BECIL Broadcast Engineering Consultants India Limited BIS Bureau of Indian Standards BOM Bill of Materials CAGR Compounded Annual Growth Rate

CAREL Core Advisory Group for Research and Development in Electronics Hardware

CAS Conditional Access System C-DAC Centre for Design and Advanced Computing

CEAMA Consumer Electronics and Appliances Manufacturers Association

DeitY Department of Electronics and Information Technology DTH Direct to Home DVB-T2 Digital Video Broadcast - Terrestrial 2 (Standard)

ELCINA Electronic Industries Association of India EMS Electronic Manufacturing Services ERTL Electronics Regional Test Laboratory HCL Hindustan Computers Limited

IAS Indian Administrative Service IP Intellectual Property IPTV Internet Protocol Television ISA India Semiconductor Association

ITIR Information Technology Information Region LCO Local Cable Operator MCIT Ministry of Communications and Information Technology MSO Multi System Operator

PMA Preferential Market Access PPP Public Private Partnership PSA Principal Scientific Adviser R&D Research and Development

SEZ Special Economic Zone SI System Integrator SoC System on Chip STB Set top box

TRAI Telecom Regulatory Authority of India WTO World Trade Organisation

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Annexures

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Annexure I - CMR Background Presentation at the workshop

Office of Principal Scientific Advisor, Government of India

Organized by

Knowledge Partner

Brainstorming Session/Workshop on Indigenous Product Design and Development of

Set Top Boxes

Background information on set top box sector

May 9, 2012 @ New Delhi

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May 2012

Digital Broadcast Architecture

Uplink Earth Station

Satellite

Dish Farm (Downlink)

MSO / ISP / Triple Play Operator (Headend)

DTH Receiver (Dish)

DTH

CABLE

IPTV

STB

Television

Digitization Across the World

DIGITIZED

USA

Japan

Germany

France

Sweden

Norway

IN PROGRESS

Canada

Russia

China

Brazil

Australia

India

Singapore

PLANNED

Indonesia

Malaysia

Ukraine

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� India third largest TV market [after USA, China]; 148 mn households

� ARPU Rs 160 p.m.

Growth

Sector Overview

Data Source: TRAI

94

44

0.15

0

20

40

60

80

100

Household Subscribers in

Millions

Cable TV DTH IPTV

India Pay TV Household Subscription

Medium CAGR (2009..2011)

Pay TV 35%

Cable 6%

DTH 58%

IPTV NA

Aug 2010

Oct 2011

TRAI recommends

DAS

Government amends Cable TV

act to implement

DAS

Phase I (4 metros)

Jun 2012

Mar 2013

Phase II (38 major cities)

Phase III (All urban areas)

Sep 2014

Dec 2014

Phase IV (Rest of

India)

Market Potential

DTH (and IPTV), at 44 million subscribers, are already digital; post-completion of phase I, about 84 million cable TV subscribers “available for migration”:

� Market requirements largely met by imports; based on the large domestic market potential, there is a strong case to promote indigenous product development and local manufacturing

� Deployment of indigenous STBs and CAS in subsequent digitization phases can help in reduce import bill.

� With Government committed to using tech in reaching masses in sectors like education, healthcare or skill development, Digital Addressable Systems can enable an interactive Government-Citizen link.

Data Source: *TRAI, ^CMR Estimates

Total Cable TV Subscribers 94 million

Migrated in Phase I (June 30th, 2012) 10 million

Remaining subscribers (up to 2014) 84 million

Estimated SD STB purchases (STB average price $20; 98.5% subscribers) 92.6 million

Estimated HD STB purchases (STB average price $40; 1.5% subscribers) 1.4 million

Estimated value of STBs to be purchased in all the 4 phases of digitization $1.9 billion

Note: As per present trend CMR expects 2-2.5% DTH subscribers to use HD services and for cable it is estimated at 1.5% for above calculations

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Specifications – Digital Cable Set Top Box

BIS specifications for Digital Cable Set top Box – IS 15245: 2002

• Forward Path: DVB-C compliant digitally modulated signal and AM-VSB modulated analog signal received via a cable system in accordance with IS 13420 (Part 1). Service information to be carried as per EN 300468 and ETR 211.

• Return Path: STB may have provision for processing signal on return path to support interactive applications, if provided by the operator. Return path signal to be in accordance with IS 14231 (Part 8) or any other international standard.

• Conditional Access / Scrambling: to conform to DVB-C (EN 300429) and DVB-CSA (ETR-289).• Middleware: Any suitable middleware.• Smart Card: STB may have provision for smart card. If provided, it shall conform to IS 14202 (Parts 1, 2 and

3).• Subscriber Management System (SMS): A service provider can opt for any SMS.• Safety Requirements: STB shall conform to IS 13252 to meet safety norms.

• Electromagnetic Compatibility (EMC) Requirements: EMC requirements to conform to IS 6873 (Part 3).

• STB should be able to bypass free to air RF signal.• Remote Control support is optional.

Mandatory specifications in bold

Import

Manufactured

S

T

B

International DVB-C Standard

BIS specifications for Cable STB

Specifications – Digital DTH Set Top Box

BIS specifications for Digital DTH Set Top Box IS 15377: 2003

• Forward Path: Support reception and processing of DVB-S (EN 300421) compliant digitally modulated signal. Service information to be carried as per EN 300468 and ETR 211.

• Return Path: STB may have provision for processing signal on return path to support interactive applications, if provided by the operator. Return path signal to be in accordance with ETS 300801 for interaction through PSTN and ISDN, with EN 301195 for GSM and with EN 301790 for satellite.

• Conditional Access / Scrambling: to conform to DVB-S (EN 300421) and DVB-CSA (ETR-289).

• Middleware: Not specified• Smart Card: STB may have provision for smart card. If provided, it shall conform to IS 14202 (Parts 1, 2 and

3).• Subscriber Management System (SMS): Not specified.• Safety Requirements: STB shall conform to IS 13252 to meet safety norms.• Electromagnetic Compatibility (EMC) Requirements: EMC requirements to conform to IS 6873 (Part

3).• Remote Control support is optional.

Mandatory specifications in bold

Import

Manufactured

S

T

B

International DVB-S Standard

BIS specifications for DTH STB

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Specifications – International versus BIS

� Core standards (Forward Path, Conditional Access) adapted from international DVB

standards. BIS has prescribed own norms for safety, EMC etc.

� As per the current regulations, DVB-S and DVB-C compliant STBs are permitted to be

imported into India for DTH and Cable networks respectively. However, globally there is a

shift towards 2nd generation of these standards ; DVB-S2 and DVB-C2 allowing for MPEG-4,

HD and interactive services.

Towards Indigenization

� Development and manufacturing two most important elements of indigenization. Product development

leads to manufacturing and manufacturing, in turn leads to increased research & development.

� India is engaged in product development of various STB components and manufactures some STBs based

on acquired standards and protocols.

� To maximize indigenous value addition in the end-product and benefit from domestic manufacturing, we

must see the product R&D-manufacturing continuum as a long term strategy.

� The first step in this direction should be identification of products and components that can be

indigenously developed and manufactured within a short but reasonable time period considering

availability of resources. For instance, we may continue to import chips for the moment as there is no fab

in the country to support domestic manufacturing.

� Specs and protocols need to be researched and developed for:

CAS, SMS, EPG and other important components of STB as well as digital broadcast systems.

Development Manufacturing

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STB Value Chain Analysis

Product / Component

PCB Chip Memory Power Mgmt.

CAS SMS* EPG ^

Development Almost negligible, mostly dependent on acquired R&D.

Designed by MNC R&D centres in the country.

Designed by MNC R&D centres in the country.

Very few companies focused at development of Power Management modules in India

India has the potential through its software skills expertiseto develop CAS.

Indian software skills can be utilized efficiently to develop SMS solutions.

Like CAS and SMS, EPG can be developed in India, provided standards are prescribed.

Manufacturing PCB industry is primarily export oriented.

Manufacturing possible only after setting up of fab.

Manufactur-ingpossible only after setting up of fab.

Manufacturing dependent on fab for some components.

CAS solutions can be productized in India.

Productis-ing SMS is fairly possible in India.

EPG products can be rolled out in the country.

• Subscriber Management System^ Electronic Programming Guide

Issues for Discussion

� MPEG2 or MPEG4?

� Defining minimum standards for EPG, SMS and other applications for digital TV

� Mandatory “return path”?

(to allow interactive services for ambitious national missions?)

� What kind of CAS? If card based, what's required, what specs?

� Government support? Fiscal policy - rebates, incentives, taxes?

� What other devices could be developed around the STB manufacturing ecosystem – gaming

consoles, etc.?

� Tackling energy for 100 million STBs

Should DAS technical standards define nominal energy consumption?

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Thank you

Office of Principal Scientific Advisor, Government of India

Organized by

Knowledge partner

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Annexure II - Components and Sourcing Grid

Sheet Metal PCB 2 / 4 layer Plastic RCA Jack Transformers

RCA Cables Power Supply

Unit (external) HDMI Cables PCB 1 layer

Passive and

Active

Components

Smart Card CAM modules Remote Control ICs Packaging

material

Smart Card

socket

Carton, labels

and manuals ELCOs Tact Switches

Imported Domestically

manufactured

Presently

imported;

Localisation

effort required

Partially Imported and localised.

Localisation effort required

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Annexure III - Letter from CEAMA to Ministry of Finance seeking support for addressing disability issues w.r.t taxes and duties Mr. Kamlesh Kumar Pant Director (ST) Ministry of Finance Dept. of Revenue Room No. 40-C North Block, New Delhi 110 001

Sub: Disability Factors being faced by Indigenous Set Top Box Manufacturers

Dear Sir, We thank you for giving us an opportunity to meet you and discuss the issue of disadvantage being faced by the domestic Set Top Box (STB) manufacturers. It would be pertinent to mention that a few of our members have done pioneering work in the field of design, development and manufacture of STBs – in the face of severe competition from imported products - with value addition of almost 40%. The disability faced by our members is arising out of the business model practiced by Direct-To-Home (DTH) and Main Service Operators (MSO). Some of these operators, who provide content to subscribers through a Set Top Box, pay Service Tax only on the content provided and not on the Set-Top Box which is packaged as installation charge, with tax being charged on installation alone. Since the STB is not being supplied against a charge or deposit, DTH and MSO operators are not paying VAT and hence are unable to issue Form ‘C’. This makes the landed cost of locally manufactured products more expensive versus imports, since Indian manufactures have to pay CST equivalent to local VAT (which is 12.5% without `C’ form). Indian manufacturers are therefore unable to compete with imported equivalents. It is expected that over the next 3 years, there will be a demand of almost 150 M subscriptions to DTH through Digital Set-Top Boxes, enabled by the recent legislation of the Government of India to move to digital content. At present, 90% of this demand is being met through imports ex-China. This is despite availability of large capacities for manufacturing Set-Top Boxes in the country, amounting to ~ 50 M units per annum. This capacity is already under-utilized and the situation will aggravate unless this disadvantage against domestic manufacturers is corrected urgently and conclusively. In this regard, we would like to offer a solution to resolve the issue: to enable issue Form ‘C’ without disturbing the business models of the DTH/MSO’s. In this context, we would like to draw your attention to Section 8, 3(b) of CST Rule 13, referring to which states: “Goods can be procured at concessional rate of sales tax for use in

telecommunication network”. (As per amendment to section 8(3)(b) w.e.f.

11.05.2002 . Corresponding change has been made in rule 13 of CST Rule only

on 11.03.2010. However, this should not make difference as Act always

overrides Rules.)

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The term ’telecommunication network’ has not been defined under the Act. Hence, it has to be interpreted in the way it is commonly understood, i.e. understood by those dealing with it in the trade or from definitions in dictionaries.

� As per Concise Britannica Encyclopedia, `telecommunication’ is communication between parties at a distance from each other.

� As per Concise Oxford Dictionary, `telecommunication’ means communication

over a distance by cable, telegraph, telephone or broadcasting.

� As per Encyclopedia Britannica, ‘telecommunication’ is science and practice of transmitting information by electromagnetic means. A wide variety of information can be transferred through a telecommunications system, including voice and music, still-frame and full motion pictures, computer files and applications and telegraphic data.

As per above definition in Concise Britannica Encyclopedia and Oxford Dictionary set top box being a device performing similar function should also be considered in telecommunication network category. Should the case be disposed in our favour, we can assure you that at least half the demand 150 M boxes will be met through domestic manufacture, potentially generating employment of >5000 people. Further, increased local manufacture will enhance the revenue opportunity for state exchequers with the payment of 2% CST by manufacturers. The current skew towards imports (90%) deprives state governments from any earnings at present. We request you to kindly remove this anomaly, so that local manufacturing of Set Top Boxes can take off in India. With regards, Yours sincerely,

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Annexure IV - City-wise DAS implementation programme

Phase I

Delhi Mumbai

Kolkata Chennai

Phase I

Bangalore Hyderabad Ahmedabad Pune

Surat Kanpur Jaipur Lucknow

Nagpur Patna Indore Bhopal

Thane Ludhiana Agra Pimpri

Chinchwad

Nashik Vadodara Faridabad Ghaziabad

Rajkot Meerut Kalyan-Dombivli

Varanasi

Amritsar Navi Mumbai Aurangabad Solapur

Allahabad Jabalpur Srinagar Visakhapatnam

Ranchi Howrah Chandigarh Coimbatore

Mysore Jodhpur

Phase III

All other Urban Areas (Municipal corporations / Municipalities) except 4 metros and 38 major cities listed above)

Phase IV

Rest of India

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Annexure V - BIS Standard – Digital Set Top Box - Cable

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Annexure VI - BIS Standard – Digital Set Top Box - DTH

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Annexure VII – List of workshop dignitaries & delegates Sl No

Name of the participant

Name of the organization

Designation Email id

Government/Government Agencies

1 Dr.R.Chidambaram

Office of the Principal Scientific Adviser to the Government of India

Principal Scientific Adviser to the Govt of India & Chairman, Scientific Advisory Committee to the Cabinet [email protected]

2 Prof. S. V. Raghavan

Office of the Principal Scientific Adviser to the Government of India Scientific Secretary

[email protected]; [email protected]

3 Neeraj Sinha

Office of the Principal Scientific Adviser to the Government of India Scientist 'F' [email protected]

4 Dr. Ajay Kumar

Deptt of Electronics & IT (DeitY), MCIT, Government of India Joint Secretary [email protected]

5 Dr. Debashish Dutta

Deptt of Electronics & IT (DeitY), MCIT, Government of India

Scientist G & Group Coordinator [email protected]

6 S K Marwaha

Deptt of Electronics & IT (DeitY), MCIT, Government of India Addl. Director [email protected]

7 Sunita Verma

Deptt of Electronics & IT (DeitY), MCIT, Government of India Scientist 'E' [email protected]

8 Yogendra Pal Ministry of Information & Broadcasting (I&B) Advisor [email protected]

9 Y K Sharma

Broadcast Engineering Consultants India Ltd (BECIL) Advisor (Trg. & HRD) [email protected]

10 Biju Oommen

Centre for Development of Advanced Computing (CDAC) Associate Director [email protected]

11 Prof. Rajat Moona

Centre for Development of Advanced Computing (CDAC) Director General [email protected]

12 Sourish Behera

Centre for Development of Advanced Computing (CDAC) Project Manager [email protected]

13 S N Singh Doordarshan Deputy Director General [email protected]; [email protected]

14 Dr. M J Zarabi Member - Empowered Committee on Fab [email protected]

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Industry

15 Ashwini K Aggarwal Applied Materials India Private Limited

Director-Government Affairs [email protected]

16 Ankan Biswas

Asha Electronics & Consumer Electronics and Appliances Manufacturers Association (CEAMA)

Chairman & Managing Director, Asha Electronics, and, Chairman, Digital Broadcasting Council, CEAMA [email protected]

17 Vivek Garg Bharat Business Channel Limited (Videocon) VP R&D [email protected]

18 Mukesh Singla Bharti Airtel Ltd. Vice President-Finance [email protected]

19 Nitin Kaul Bharti Airtel Ltd. DGM-Network Planning and Economics DTH [email protected]

20 Dr. R C Chopra Confederation of Indian Industry Senior Advisor [email protected]

21 Prasanto K Roy Cyber Media (India) Ltd. President & Chief Editor ICT Publications [email protected]

22 Faisal Kawoosa Cyber Media Research Ltd. Manager, Research and Consulting [email protected]

23 Apalak Ghosh Cyber Media Research Ltd. Manager Research and Consulting [email protected]

24 Anirban Banerjee Cyber Media Research Ltd. Associate Vice President Research [email protected]

25 Ajai Chowdhry HCL Infosystems Chairman [email protected]

26 George Paul HCL Infosystems VP-R&D [email protected] 27 D Mohanty HCL Infosystems VP-Operations [email protected]

28 Joy Kokkat Indieon Technologies Pvt. Ltd.

Vice President Technical Operations [email protected]

29 PVG Menon ISA President [email protected]

30 Rajiv Jain ISA Associate Director - Govt. Affairs [email protected]

31 Gaurav K Punjabi ISA Sr. Manager [email protected]

32 Vineet Wadhwa Logic Eastern India Pvt. Ltd. VP - CTO [email protected]

33 Divisha Saxena Masamb Electronics System Pvt. Ltd.

Business Development Manager [email protected]

34 Anurag Gupta Masamb Electronics System Pvt. Ltd.

Sr. Business Development Manager [email protected]

35 Amit Kharbanda Mybox Tech. Pvt. Ltd. Executive Director [email protected]

36 Ashok Bhatia NXP Semiconductors India Private Limited Senior Manager [email protected]

37 Sanjeev Keskar PMC-Sierra Managing Director Sales - India & SEA

[email protected]

38 Srinivas Prasad Sasken Head of Business unit for consumer products

39 Dorairaj Vembu Sasken Communication Technologies Ltd.

Senior Manager Portfolio Management [email protected]

40 Taruh Joshi STMicroelectronics Marketing Pvt. Ltd.

Manager India Field Technical Center GCSA Consumer Segment [email protected]

41 Ajax Thomas Tata Elxsi Limited

Program Manager-Broadcast Embedded Product Design [email protected]

42 Rakesh Malik TranSwitch India Pvt. Ltd. Technical Director [email protected]

43 Ramesh N Raghavan Wipro Technologies

Chief Architect-Product Engineering Solutions [email protected]

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