The Israeli algorithm inside your satellite box

NDS smart cards, based on Israeli technology, enable broadcasters to offer customers new services without having to replace the set top boxIf you’re one of the 13 million or so American households who subscribe to DirectTV – the largest satellite …

NDS smart cards, based on Israeli technology, enable broadcasters to offer customers new services without having to replace the set top boxIf you’re one of the 13 million or so American households who subscribe to DirectTV – the largest satellite broadcaster in the world – take this test. Go to the box on the TV, and look at the little window on the side. Inside there’s a smart card; if you take it out and turn it over, you’ll see the logo for NDS.

Founded on Israeli technology, NDS is a consumer’s and a supplier’s delight. For the consumer, NDS’s technology makes the viewing experience more engaging, informative and entertaining, offering audience building interactive TV events like the FIFA World Cup and NFL Super Bowl, or delivering the most popular services and merchandise at the click of a button, like QVC’s buy button, home banking, shopping and Internet services that are fast, secure and easy to use.

For the communication industry, NDS is the leading global supplier of open end-to-end digital pay-TV solutions for the secure delivery of entertainment and information to television set-top boxes and IP devices. NDS enables broadcasters, network TV operators and content providers to profit from the deployment of digital TV technologies including innovative solutions for personal TV, interactivity, secure broadband, home networks, and content on the go.


Part of Rupert Murdoch’s News Corporation media empire, NDS is the dominant provider of encryption services to providers of pay per view television by satellite. The Anglo-Israeli company’s technology, both hardware and software, scrambles the television company’s pictures and ensures that only those who have paid and subscribed for the service over which they are sent receive them at the other end. This technology is crucial for the operation of the new generation of digital services, which allow subscribers a greater choice in what and how they watch both television and, increasingly, the internet.

NDS has also led the way in the use of smart cards – a credit card-sized piece of plastic on which a computer chip is embedded – for its so-called conditional access technology. Given out to subscribers, they can be programmed to decode only those services for which they have paid. This gives the broadcaster greater flexibility to add new features and services without having to replace the set top box used by the customer to receive his pay television service.

“NDS-Israel is extemely valuable to us both offensively and defensively,” said Peter Chernin, News Corporation’s President and COO. “As we look to distribute our content – ultimately we consider ourselves as a content creation company that is interested in distributing our content to as widely and many different platforms as we can – we consider NDS as the foundation to transport our content to new media applications — like satellite, broadband, cellular. The company here in Israel is providing incredible R&D that is the vehicle by which we moving many of our content focuses to the future.”

“Defensively – the most important issue to us as a media company is piracy – and NDS is at the forefront of protecting our product – not only for ourselves but for other companies. $30 billion a year of content going through pay television platforms that are protected by NDS security. It’s a critical issue for us to fight piracy and NDS is at the forefront of that fight,” he told ISRAEL21c.

Chernin was in Jerusalem last week, along with other New Corporation executives, for the gala inauguration of NDS-Israel’s sprawling, new offices in the Ramot neighborhood’s ‘Har Hotzvim’ Industrial zone.

NDS has come a long way from the 15-person startup called News Datacom which was founded in 1988 on the technology of acclaimed Israeli cryptographer Adi Shamir.

“The NDS technology was built around a particular algorithm developed by Prof. Shamir, a Weizmann Institute professor and one of the world’s leading cryptographers,” explained Dr. Beth Erez, NDS VP for Israel and Latin America regions.

“In 1988, News Corporation was about to start its satellite business in England, they were looking for technology that would protect their broadcast signal. They made their way to Shamir and together with him, ended up setting up News Datacom Research,” she told ISRAEL21c.

Established to exploit Shamir’s algorithm in all data security and identification applications, the company’s first products didn’t involve TV at all.

“We were developing secure transactions for banking and other fields,” said Shamir.


By 1992, the company was taken over by News Corporation and has since benefited from its close relationship with one of the world’s leading satellite broadcasters. Murdoch customers like British Sky Broadcasting, one of Europe’s biggest satellite companies, has helped NDS take what it estimates is a market share covering over half the world’s subscribers to digital satellite services.

NDS CEO Abe Peled told Interactice TV Today how Murdoch recruited him to head the company in 1995.

“I said to him, “I have 3 questions: First, you are running a company [News Corp.]that has $12 billion in worldwide sales, and this company [NDS] has $50 million in sales and 2 or 3 customers. Why are you so involved in who is going to run it?

“His answer was, ‘It’s a small company now, but it has great potential. It has strategic importance in our plans for satellite worldwide, and so it could be very valuable to us with the right man in charge.’

“Then I asked him my second question: ‘Why did you start a company like this back in 1988?’ And he answered, ‘Because it was clear to me that, when media become digital – whether it’s newspapers, television or whatever – encryption will be very important. And I thought we should have access to the best encryption technology in the world. So I sent people around the world to look for it, and we found that the best encryption technology was being done by Adi Shamir in Israel.’

“So anyway, Mr Murdoch had found that the best encryption technology was being done in Israel, and so he had set the company up. Then, 2 years later, having launched BSkyB in England, they needed to encrypt movies, and so he asked this new company he’d founded whether it could provide a solution. So that’s basically how the smart-card approach to conditional access came about. Because, prior to that, there were no smart cards in pay TV.”

So, what is NDS, a security company or an entertainment technology company?
The answer is both.

“We want to protect the revenue streams of the broadcasters that chose to use our technology and that is a key element,” David Nabozny, vice president, digital systems told The Jerusalem Post. “We have a desire to see zero piracy within our customer environments.”

The Murdoch link has not precluded NDS from other business. One of its biggest and oldest customers is DIRECTV, part of General Motors’ Hughes Electronics Corporation and the world’s largest digital satellite broadcaster.

“We’re responsible for the entire mechanism for pay television that enables you to see what you want when you want,” said Erez.

Some of the interactive platforms for viewers which have come out of the Jerusalem office include: Viewers can pick the angle from which a soccer game will be transmitted, ask for an instant replay, or check on player stats, moving into interactive news stations that allow the viewer to select a special report from a number of different video streams, or read news highlights as texts, and ending up with programs on channels like Discovery that allow the viewer to choose one of the personalities on the show, zero in and view their biography.

As of two months ago, 54.7 million set-top boxes in more than 30 coutnries worldwide were using NDS conditional access — up from 3.8 million in 1995. Some of their new applications — like VideoGuard — which helps operators earn revenues by ensuring that customers pay for what they watch – has 54 million subscribers.

NDS is one of Jerusalem’s largest high tech employers, now boasting a staff of almost 800. And they’re not resting on their laurels, with new innovations constantly in the pipeline.

“We’re working on integrated personal video recorder technology – it will be introduced to DirectTV sometime in the future,” said Erez.

According to News Corp’s Chernin, the success of the company would have been impossible without NDS.

“The more distribution moves to new technologies, the role played by NDS will be more central. NDS is a very important company for us,” he told Ha’aretz. “Without it, we would not have a satellite TV business, we would not have digital recorders and interactive applications.”