Expert View

December 3, 2003
Xalted positions strongly for Indian market

Geetanjali Wadhwa & Pradeep Chakraborty

BANGALORE -- Xalted Information Systems Pvt. Ltd. recently introduced the 7X BLX (broadband loop eXchange) -- its first product -- in the Indian market. It provides a complete multiservice access platform for all legacy and new video, data and voice services. The firm has also entered into a joint venture with Systeam SPA, a leading Italian vendor in convergent interconnect billing solutions. Convergence plus met up with Pratap S. Kondamoori, chairman, Xalted Information Systems, to learn more about the broadband loop carrier and what makes it a leading edge product, the firm's partnership with Systeam and its future plans. Excerpts from an interview:

Convergence Plus: How and when did you enter the broadband segment?
Pratap S. Kondamoori: My background is in NEC and in broadband. We did a contract with Cisco at that time, and became an anchor. Next, we joined SPC, a selected vendor for Verizon in the US. This was in 1995-96, when we did video-to-the home and video-to-the-premises, and we reached 60,000 subscriber homes. We discovered there were fundamental flaws in the networks. DSL was not fast enough and there were too many network overlays. Next, we founded I-Compression, a chip company, which was later sold to Globespan Virata for US $1 billion. Next came Luminous, which invented 802.17 -- Ethernet over fiber.

We saw a void and founded Xalted to fill it. The Indian company was established in June 2002 in Bangalore. We have 200 people, with over 100 R&D engineers. Our vision is to make Xalted a global company, to be based in Bangalore. We will set up a manufacturing unit in India to develop both hardware and software.

CP: What exactly made you develop the 7X BLX?
PSK: Our first product, the 7X BLX, is a broadband loop carrier. We saw a void -- to solve the last-mile problem. There were three reasons for developing the product. First, last mile access -- it should be compatible with all legacy networks and futureproof the network, besides cover all layers. Next, take all network elements and consolidate it in a box. In future, you can go to MPLS ATM/IP as required. Finally, the product itself should be dirt-cheap.

CP: What are the special features that make it a leading edge solution?
PSK: The product supports all the necessary loop access, both broadband and narrowband, thus giving the customer the choice of the network. The technology is based on 110G backplane architecture. All of the switching capabilities have been built into the product. We have done all the PPP termination as well. The product scales up to 10GBps. We are using Agere's processors. It also has 310, 330 cross connects as well as voice gateways built into it.

We believe that we have built a technology that will last for the next 10 to 15 years. Everything has been done in India. Now we are working on reducing costs. It offers up to 30,000 POTS lines or 24,000 DSL lines. This high-density product is highly scalable, and multiplexing and voice capability is built in as well.

CP: Have you conducted any field trials?
PSK: The field trials will commence from January 2004 with either BSNL or MTNL.

CP: You have recently announced a joint venture with Systeam. Can you please elaborate on this partnership?
PSK: We have bought 56 percent of Systeam SPA. This Italian vendor is into interconnect billing, fraud management, mediation, legal and email tracing, etc. They are currently servicing 13 networks. Some of those are Telecom Italia, Albacom, Hutch 3, Vodafone, Orange, Omnitel, Seat-TIN, BT Wireless, etc. Systeam is processing 50 million subscribers and 2 million calls per day or CDRs.

The broad partnership includes marketing, sales and development of the full range of Modula convergent billing software solutions. We will introduce it to all of the operators in India. It has the entire convergent billing platform. We have already bid on some interconnect tenders as well. Currently, they have 170 people -- 140 in Italy and 30-odd worldwide. We will now move the core R&D to India. The deal with Systeam was signed on 8 September 2003.

CP: The broadband product and Systeam seem to be two parts of a complete picture. What other strategic partnerships do you intend to form?
PSK: Yes, we have a specific business model. We will be shortly announcing a strategic tie-up for GSM/CDMA infrastructure with a public listed company in the US. This vendor offers solutions for end-to-end networks and currently serves 50 networks. We have signed the deal in the middle of November.

Next, we will be announcing a strategic tie-up with a CWDM/DWDM vendor. This vendor is serving six networks of 2,000 nodes each -- all in the US. After we have finished off with these transactions, we will be bringing all of these vendors to India. Thereafter, we will have a very powerful access portfolio. We will focus on local development and international penetration.

CP: All of these strategic partnerships should improve your financials tremendously.
PSK: Yes, the moment we move Systeam to India, we improve on our EBIDTA by a minimum of 20 percent. Therefore, it is a huge cash cow for us. The same goes for the GSM/CDMA infrastructure vendor as well. As for the optical networking company, it will add another 30 percent minimum. Moving the R&D to India should not be a problem at all as we are using highly software-defined technologies. We are now looking for partners in India as convergent billing is hotting up.

CP: Are you also entering the mass-market segment in consumer electronics?
PSK: Yes, we have already entered this segment this November 11, when DVS, I also happen to be its chairman, was launched in Bangalore. DVS is a separate entity, and not a part of Xalted. It manufactures all consumer electronics items such as DVD players, set-top boxes (STBs), DVD recorders, car DVD players, etc. It has plants in Seoul and Shanghai. We also do OEM work for leading vendors such as Sony, Panasonic, LG and Samsung, and a total of 67 OEMs in all. It has a manufacturing capacity of 18million units per annum.

We will be having a manufacturing facility in Bangalore as well. DVS will be focusing on DVD players, combo DVD-STB players and residential gateways for the Indian market. Lalit Ahuja heads the Indian arm. The first showroom has been recently started in Bangalore. We will be opening 180 retail stores in all. We believe that DVDs will take off in India.

We believe we have a very powerful business model going forward. All of the R&D work will come to India. It will take about a year to have everything in place. The company is financially very strong. This is just the start.