(click thumbnail)Ian LernerSupply Side is a series of occasional interviews with suppliers in the news. Ian Lerner is president and CEO of San Diego-based X-Digital Systems Inc.; he spoke with RW via e-mail.
Who is X-Digital?
X-Digital Systems Inc. designs, manufactures and sells satellite and terrestrial multimedia communication systems. We have 14 employees in the United States and two in Japan. We specialize in advanced communications systems for both wireless and wired applications. We have focused on both satellite and cable technologies in the U.S. and Japan.
Our primary market is broadcast audio. Unlike other telecommunications companies, XDS has pursued audio-centric applications.
X-Digital recently picked up assets of StarGuide Digital Networks from DG FastChannel and you got a license for StarGuide patents. What is your history with StarGuide and what does this acquisition mean?
A few of the founding members of XDS are also founding members of StarGuide (then Virtex).
At StarGuide we were the development and technical team that designed and manufactured the SGII and SGIII products and systems. In mid-2003 we, as a group, decided to leave and form X-Digital to pursue pure technology-related business to pursue opportunities, initially in Japan.
By 2005 our attention was refocused to the U.S. network broadcast radio market. By mid-2006, ABC Radio (now Citadel Communications) selected X-Digital to provide the next generation of satellite receivers, head end and services for their network-wide distribution system.
In early 2007 we entered into an agreement with DG FastChannel to acquire certain assets of StarGuide. With the StarGuide assets and certain intellectual property, it would allow us to build the next-generation platform with some backwards compatibility. This is a strategic decision and has worked well for our customers.
It is very hard for a station or a network to switch technology platforms. Customers need the old technology, but they know that newer technology will require them to phase out their legacy systems. Our new X-Digital PRO4-SG receiver enables customers to operate on both StarGuide and XDS platforms, so the decision to migrate to the improved technology becomes easier.
It seems the radio industry is undergoing one of its occasional reworkings of the satellite delivery infrastructure.
Yes, the radio industry seems to be on an 8- to 10-year cycle.
From SA to SGII/ SGIII and now to X-Digital’s PRO4, X-Digital offers new disruptive technology that enables networks to do several things.
First, to copy split — achieve spot insertions in specific time segments and targeted to a specific receiver. So for the first time a network can sell ads targeted to specific stations, markets or day parts, thereby being able to charge a premium to targeted advertising.
Second, to time shift — our internal Flash storage enables networks to broadcast a program once rather than three times to account for the time zones in the United States — thereby reducing space segment transmission costs.
How is X-Digital’s business plan better than the model StarGuide followed in the past?
While at StarGuide we realized that given the long purchase cycle of the radio industry it was not sustainable to simply sell equipment and wait 10 years until the next purchase.
At XDS we formulated a model that is based on long-term service rather than equipment sales. We are offering plans that allow the networks to contract with us for a full turnkey network solution. The customer enters into a contract with us for a long-term service plan that includes the distribution equipment, software, support and service.
This has been well received by customers because they don’t have to make a large cash outlay. At the same time, it provides X-Digital with a sustainable business model. With the service model, our goals are aligned with our customers’, so as we develop new innovations, they benefit, and our customers have an incentive to provide us input and suggestions for improvements. So in a sense the model is more like a partnership rather than the old vendor-purchaser model.
One of the future services we are developing is off-air monitoring and some other exciting industry-wide services that we are able to disclose yet, but are geared toward expanding the ease and reliability of radio advertising.
The XDS-Pro4 is the first in your line of receivers. What sets it apart?
The PRO4 is based on technology we developed for the Japanese market. It is designed as a low-cost communications appliance. It is also highly integrated with many features built in to the base model.
Many of our competitors use a PC platform with specialized PCI cards to achieve the functionality needed for the radio market. This approach limits the cost targets compatible with today’s cost-sensitive radio networks. Supporting PCs in the field is also not as robust as our receivers.
The PRO4 is fully featured with onboard VLAN for Internet-ready access, four analog and digital interfaces and on-board Compact Flash storage. It is automation-ready with both relay outputs and optical inputs and a DVB-S L-Band satellite receiver. All of this is done on a single motherboard using our proprietary IP, which helps keep the cost low.
Satellite distribution has used MPEG I Layer II or Layer III for over a decade. Are you offering new audio algorithms for improved quality at the receiver with higher efficiency?
Yes, we are very excited about our DSP architecture. We are able to decode multiple formats including MP2, MP3, AAC and WMA. We realize that in today’s Internet-driven codecs we must maintain our compatibility. We design a high-powered digital signal processor into the code of the PRO4. This allows us to not only support multiple compression formats but also allows digital mixing, trans-coding and other audio manipulation.
What does the newest generation of satellite receiver technology offer that past systems didn’t?
Our key difference is the internal patent-pending architecture. We have designed the PRO4 to be completely IP-based.
What I mean is that not only does it communicate with devices outside the box using IP; we use IP inside the box too.
For instance, the satellite receiver circuit transfers IP audio to the DSP circuit. This all happens with the internal LAN inside the PRO4. We have built an Ethernet switch to manage internal communication between all the sub-systems. This also allows maximum flexibility for future features. If we need to add a new card or device, we simply connect it to the internal LAN.
You pitch features like copy splitting and targeted ad insertion. Engineers express interest in additional features. Do you support Internet back channels from the receiver to the uplink for authentication, updating and remote management? Receiver management at the receive station level via Ethernet connection? E-mail alarms and event notification from the receiver?
Yes, we actually offer all these features and much more.
Our receiver is fully integrated with the head end. It is part of the larger system. A station can log on to the X-Digital Network Management System, or XNMS, to manage their head end and to configure output schedule and the relay maps in the receiver at the stations. Network managers or engineers can schedule what programs come out of which ports and at what time. It is completely dynamic, with a direct IP connection back to the XNMS. Almost like a virtual network.
If a station is a Rush affiliate and they would like to delay the time when they would like to air his show, they simply log on to the head end and schedule it in, given they have proper authorization and permission from the network.
Describe your relationship with Clear Channel including Premiere Radio Networks and Clear Channel Satellite.
Clear Channel Satellite Services is X-Digital’s distribution partner. Early this year we strategically decided CCSS is well suited to sell and distribute the XDS-PRO4 line. They are already a SGIII distributor so they already have sales and support.
Premiere Radio Networks has recently contracted with us to supply them with the next-generation system for all of their affiliates. We have kicked off our integration to tie into their back-office systems and then we will begin the rollout of the PRO4 receivers.
You’ve won a contract with Premiere to provide receivers. What other companies have signed on?
In the U.S. we have contracted with PRN and ABCRN. We also have deployed some state networks and independent networks with our partners CCSS.
Are you getting into verification of spots and programs? If so, why — it seems like that market is saturated with offerings.
Yes. We realize that many others have entered this space, but our customers have requested to provide them certain services to leverage the distribution system we already have in place.
We have a new approach and new technology that will completely change the way off-air is done. Again, we are borrowing very innovative technology from our Japanese products that will allow us to monitor and process off-air signals in a highly efficient way. Because we are tied into the networks, we are able to consolidate and reconcile the information from our off-air monitoring system. We will close the loop from spot ingest to distribution to insertion to off-air and back to billing.
How much lead time will engineers likely get from the satellite programming providers regarding the transition from StarGuide receivers to a new technology platform?
Each network has its own schedule. The station should contact the affiliate relations department to get an idea.
How big are the new receivers physically? One engineer tells us, “We are running out of space in our terminal room.”
The XDS PRO4 is two rack units in height (2RU) and about 14 inches deep. Once we replace the SGII and SGIII systems they should be able to recover some space.
Will SGIII receivers become obsolete after providers switch to a new platform? Will there be any market or resale value for them?
It really depends on the networks. I believe that the SGIII platform will continue for at least two more years. Each network will have its own rollout schedule.
Will stations need better LNBs or different-sized dishes to work best with the new receivers?
We believe not. We designed the front end of the PRO4 to be compatible with most of the existing infrastructure deployed in more than 13,000 radio stations.
How much will the new technology depend on the Internet for co-ordination or backup downloading activity? Will the receivers’ TCP/IP function need to become joined to a station LAN as a member device like the new HD Importers/Exporters and exciters?
The PRO4 will be used by the networks with Internet connectivity. This is an operational decision that is made by each network. The PRO4 can be installed inside or outside of the firewall at the station because it has its own built in LAN switch.
Do you recommend acquiring “hot-standby” backup receivers for the new platform, or will the smart receivers likely be as reliable or more reliable than the StarGuides?
The last receivers this team developed are now 8 years old. I hope that the PRO4 will have a similar lifespan from a technical point of view. A backup receiver is always a good idea. Each station should assess the risk of a failure and make its own determination.
How much will the monthly service contract cost a station on a per-receiver basis?
The Service Fee is dependent upon the receiver selected, the network’s head-end equipment and service requirements, their need for redundancy, the term of the contract and the timing or urgency of roll out. We typically quote each network using its own requirements.
What else should radio engineers know?
We have worked hard to make this a simple installation for first-time users, or a simple migration for those folks who are upgrading from StarGuide receivers. If the equipment is purchased from ClearChannel Satellite Services, they will provide installation support. If the equipment is purchased directly from X-Digital, we will provide telephone support and online we provide technical documents and user’s manuals.
How can readers get more information?
Our Web site www.xdigital.com provides contact information. It also posts datasheets on both the PRO4 receiver and headend equipment. We will be also posting the PRO4 Receiver User Manual.