Check on China: China Digital TV Holding Co. Ltd.

A generation ago, less than half of Chinese households owned a television set — just one in 10 rural homes. Two decades later, things look decidedly different. Today, TV ownership in China is almost universal, and the Chinese channel surf with the best of us. All of China, it seems, has embraced the latest technology wholeheartedly, and the country is poised for a digital television boom.

That's where China Digital TV Holding Co. Ltd. (NYSE:STV) enters the picture. Beijing-based China Digital TV provides conditional access (CA) systems to mainland China's digital television market. The company’s CA systems, which include security code-programmed smart cards and software that communicates with smart cards, allow television network operators and TV set-top box manufacturers to provide custom content, electronic program guides and subscriber management systems (SMS). China Digital's head-end software gives its customers the ability to selectively charge subscribers on a per-channel or per-view basis, and to restrict viewers from copying the programs they watch. Its SMS software is capable of maintaining subscriber information databases; processing orders for new services; maintaining billing, payment and authorization records; and processing service requests (to repair or replace defective or lost equipment). The company also licenses its designs of set-top boxes to manufacturers, and provides its customers with computer chips for set-top boxes made to its specifications by third-party fabricators. The majority of China Digital's revenues are derived from smart card sales.

The digital cable TV market is one of the China's fastest-growing consumer sectors (it is expected to grow at a five-year compound annual growth rate of 45% (between 2007 and 2012), as the nation preps for a digital television explosion. The government has mandated a transition from older analog signals to state-of-the-art technology in all major cities by the end of this year and nationwide by 2015. Eyeing the huge potential of the marketplace, China Digital TV is looking to broaden its reach in China (it already has contracts with 170 . . .

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