Ethnic Channels Group: How investing in the risks of being a small broadcaster is paying off with global growth

July 05, 2016

Nextologies is changing the economics of signal transport

SLAVA LEVIN WANTS to show me something.

We walk through his new building in Markham, past his master control which now offers 107 TV channels to Canadian distributors (making ECG the largest broadcaster in Canada, by number of channels), past one of his studios where a Canadian Filipino-language talk show is being shot, and through a tech-cluttered storage area to a set of tight, narrow stairs and then a ladder.

We're now on the roof among 27 satellite dishes pointed out to the present and future of far lower-cost signal transport than the TV world has known. They're actually pointed towards various satellites in space, but we really like the future metaphor.

Levin (pictured) is CEO of Ethnic Channels Group, which those in the Canadian TV industry know best as a plucky, independent, upstart independent broadcaster, now 12 years old, which delivers TV channels with content from Russia, the Philippines, India, Israel, Italy, the Middle East (23 Arabic brands), Germany, Greece, Croatia, China, Poland, Serbia, Spain, Portugal, Brazil, South Asia, and the Ukraine. Some are in English but most are in their native languages.

While there are all sorts of challenges in running brands which can only be enjoyed by a slice of our population, easily the biggest hurdles for ECG have been the small size of the Canadian market " and the transport costs in getting the signals to Canada from elsewhere around the globe.

While still anchored in Canada, Levin says his company's focus is global, and has been for some time. The company has a strong foothold in the U.S. as Dish Network's main international channels partner and is now distributing channels into Australia too. The company also has plans for European and African expansion. (It's worth noting that Dish Network alone has more total TV subscribers than all of Canada.)

"Our channels are global channels so for us it's just about extending our rights for other territories. Originally we just wanted Canadian rights but now we are expanding it out to everywhere," explained Levin in an interview after our trip to his roof. "The goal is to make Ethnic Channels into a multinational company. We were a Canadian company for a very long time and in 2007 we moved into the U.S. Now we are worldwide."

However, moving all those video signals all around the globe has traditionally come at an enormous expense " up to $30,000/month per channel just to get it to Canada, to say nothing of then distributing it to carriers here" and most of the channels ECG offers earn nowhere near that much a month in subscriber revenue, says Levin. Ten years ago, when carriers could consider charging $15/month for a single channel, the business got by but as broadband became ever more prevalent and as more people pirated or otherwise sourced content from the Internet rather than pay a cable subscription for the channels from their country of birth, those types of retail prices have become untenable" and the CRTC's Let's Talk TV policies will also put pressure on retail pricing. ECG's Filipino TV's stand alone price on Bell Fibe, for example, is down to $4/month.

In order to survive, ECG had to act to figure out how to bring its transport costs way down and initially, it perfected all sorts of technical gymnastics, compressing the content to get the channels here more cheaply and then re-encoding them for broadcast. However, the channels took as serious quality hit. we received it here via satellite. We had a piece of gear which took coax in and spit out Ethernet. Then we would plug the Ethernet into a computer, punch an IP address. Get the picture on screen, screen capture the screen, push it into a MPEG-2 encoder and then push it to the operators. The quality was garbage, but the cost factor was the importance of that point," said Levin.

"That's how creative we had to get to make this business survive: We weren't a Cat A, we weren't a 9(1)(h). We were a specialty channel that had zero protection in this environment." Slava Levin, ECG

"That's how creative we had to get to make this business survive," he added. "We weren't a Cat A, we weren't a 9(1)(h). We were a specialty channel that had zero protection in this environment. We were very, very creative and fortunate we had some really smart people that we brought on board, like Sasha here, who saw what we were doing said, 'Interesting, but it does not comply with the broadcast standards'."

Levin brought on Sasha Zivanovic as an engineer years ago and Zivanovic is now chief technical officer of ECG who, along with his team, worked over five years of development to create a proprietary algorithm that now allows ECG to bring TV from the other side of the world up to 90% cheaper than the traditional ways " by using the public Internet.

Now, as soon as you say that however, broadcast and cable engineers generally scoff and walk away, fearing pixelated video filled with jitter and latency. Their technology, however, delivers a 100% broadcast compliant transport stream. "The signal is no different than if it was travelling by private fibre," says Levin. "That type of thinking is just old-school thinking."

In fact, the algorithm, along with downlink facilities in Toronto, Spain, the Ukraine and Taiwan (with others coming in Italy and South America) plus the manufacture of its own single rack unit plug and play transport hardware spawned the creation of Nextologies in 2010 as a separate company under the same ownership as ECG. The broadcaster literally did so much independent research and development to make its TV operations work that it spun off its own technology company. We're not sure any other Canadian broadcaster can claim the same.

Nextologies is a global content and distribution network whose services consist of full-time point-to-point or point-to-multipoint video networks interconnecting TV production, aggregation and distribution centers. "Where we differ from (our competition) is the infrastructure behind it," says Zivanovic, noting the network hardware and global downlink locations.

"We had to be very creative many years ago to figure out how to land the channels here. Why were we doing it? To save money, because we are a niche space. We don't have tens of thousands of subscribers, where we get that money tree at the end of the month," added Zivanovic.

Levin and his CTO compare their transport solution to a highway where there is a high occupancy lane you can pay extra for, but they have instead said 'no thanks' and built an algorithm for the public part of the lanes where "we've put a police car in front, police in the back, us in the middle and the sirens are on and 99.9% of the time people get out of the way." Doing it this way not only skips the expensive private transatlantic fibre or satellite transport, but sustains broadcast quality from end to end because Nextologies merely transports the signal. It doesn't process or compress it and if it's encrypted, it stays encrypted.

It works well and it works quickly. We saw repeated live demonstrations at the companies' head office where international channels were quickly called up and displayed in full HD in mere seconds. Nextologies now has over 100 transport customers from around the world.

And, while ECG will continue to grow (300-plus channels run through its master control if you count the other broadcasters using its facilities), Nextologies offers carriers access to 13,000 global channels, a number which will grow to 60,000 by the end of the summer.That going to be pretty well every single television channel in the world at your fingertips," said Levin. It makes the company a cloud-based headend-in-the-sky.

Nextologies' ordering and billing is automated, too. Where once these transport arrangements were negotiated one at a time, channel by channel for big dollars and long terms, Nextologies has set up a portal where distributors (because this is a B2B service and not direct to consumer) can order the box, and the channels in a few clicks and pay for it on their Visa since the monthly charge per signal is now so low.

As part of the demonstration we saw in Markham, Zivanovic shows us the Reuters News video feed from Asia.

"Let's say I'm a carrier and I did a deal with Reuters and they say: 'no problem you can use the AsiaSat feed.' I'm like, 'Okay great: I've got a deal with Reuters, now we just have to get the signal. Well now the whole deal falls apart because getting this signal would have taken me about 90 days to find a facility, provide connectivity to that facility, bring this signal to us here " we are looking at least $10,000 a month, just for one signal," he explains.

"What you're looking at here I did in a mouse click." Sasha Zivanovic, Nextologies

"What you're looking at here I did in a mouse click. We built out the entire infrastructure to AsiaSat 5. We've propagated the list of channels that are sitting on AsiaSat 5. We can scroll through them and literally click. You can see we are getting Reuters News off of AsiaSat 5, sending that to us here from that satellite."

Now, of course it's up to the distributors and the content owners to do their own deals for content carriage in Canada or any other country (and Nextologies will shut down delivery to carriers who might be using its services without proper content contracts), but the company simply provides the link, disrupting not the broadcaster or the carrier, but the middle men (such as Level 3, or Tata Communications, among others).

Levin explains one of its international broadcasting partners saw their legacy transport costs cut in half thanks to Nextologies solutions, even while boosting the number of signals being shipped by a factor of 10. The decrease in cost to transport the signal means even foreign channels with just a few hundred subscribers are now viable, he added.

Nextologies can even be used for live news. When Sky News wanted live video of the Ottawa Parliament Hill shooter almost two years ago, they called on Nextologies to deliver CBC to them because it had no reporters on the ground. "We routed the CBC feed to Sky News and they went live to the CBC feed because they couldn't get it anywhere else," said Zivanovic. "As a tool for news agencies, it's amazing. As a tool for saving costs, the technical costs, it's amazing too."

"We Uberized the broadcast space so channels can be transported from any point in the world, to any point in the world within 40 seconds while at the same time maintaining full broadcast compliancy through and through without having to manipulate, touch, step on, or any other terms that you want to use about the signal," said Levin.

So far, resistance has come primarily from the engineers who fear internet delivery, thinking it will be like a blurry Skype home video. "We are actually trying to do it help save this industry. Internally, the engineers in the industry are still fighting against it because when they hear internet delivery, they hear cost-effective," says Zivanovic, "they hear these new methods, and they're afraid."

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