PRADMAN KAUL
Business India Jan 22-Feb 4, 2001
Beam me up Scotty
By Shivanand Kanavi
People in Gurgaon, Navi Mumbai and elsewhere in Maharashtra
call it a 'huge company'. Pradman Kaul, the chairman and CEO of HNS, easily
pardons their mispronunciation. "After all, we are relatively huge in
India. The group that has brought in the maximum amount of foreign direct
investment in telecommunications in India is Hughes Network Systems," he says.
Obviously, the business opportunity in India, where telecom
infrastructure has been abysmal, has attracted over $300 million FDI from this
group. This has led to the creation of entities like Hughes Software Systems, a
software development company focused on telecom software; Hughes Escorts
Communications Ltd, a company that leads the segment of satellite services
through VSAT systems and Hughes Tele.com, the basic telephone service provider
in Maharashtra. What is not so well-known is the key role played by the
umbilical cord between a large number of Indian-Americans working in key
positions in HNS (1999 revenues: $1.6 billion) led by Pradman Kaul, and India,
in taking these investment decisions.
"I was part of a trade delegation from the US that visited
India in 1979. We saw the opportunities growing for our communication equipment
with India taking the first steps in setting up a national satellite
communications system through Insat. We started selling the hardware for satcom
in India to VSNL (then Overseas Communication Service), DoT, ONGC and so on. In
the mid-'80s, we saw the opportunity in using India's software talent and set
up Hughes Software Systems. As the value-added services to business
communications were opened up in the early '90s with VSAT licences, we set up
HECL. Later, when the basic telecom services were opened up, we successfully
bid for the licence in Maharashtra through Hughes Ispat Limited (recently
re-christened Hughes Tele.com)," says Pradman.
Today GM, which owns HNS as a part of Hughes Electronics
(NYSE symbol GMH), wants to sell it off. There is speculation over who will buy
it, and one likely candidate is Rupert Murdoch. But what is Murdoch going to do
with a satellite communications company? Well, HNS has slowly shifted from an
infrastructure company to a services company and has been successful with its
Direct TV, a DTH broadcast service. Without making much noise like Teledesic or
ICO, HNS might very well become the first to roll out Internet in the sky, with
its Spaceway project. Already, one can get broadband Internet access in the US
through a small 2 ft satellite dish with the innovative Direct pc, from HNS.
Thus, for Murdoch it will mean shoring up his existing broadcasting business
and convergence with data.
Though we had met Pradman a couple of times in India - since
he comes here for business and family reasons quite often - meeting him in his
lair at German Town, a suburb of Washington DC, was interesting. A sprawling
campus with tight security, since Hughes Electronics does a lot of work for US
Department of Defence, paper shredders liberally placed around the office,
greeted us.
Pradman's chauffeur who picked us up from our hotel in
Alexandria looked more like a commando bodyguard. Not surprisingly, he also
happened to be the security chief. Thus we had smooth sailing through all
barriers despite all our equipment.
Once we entered Pradman's office, it was lovely to see a
warm smile and receive a warm Indian welcome: "aap kya lenge, chai ya
coffee" from Pradman himself. It warmed our day when outside temperatures
were falling rapidly.
Pradman grew up in Bombay where his father was working in
RBI and went to St Xaviers School in Dhobi Talao. When his father shifted to
Washington DC in 1963, on a deputation to IMF, the family shifted too.
"That is how I ended up doing my bachelors in EE in George Washington
University, Washington DC. Otherwise, my middle class family could not have
afforded to send me to the US for undergraduate studies. In those days, Indians
were so rare on the streets or in campuses, that if one saw an Indian, one
would stop, greet him and introduce oneself," says Pradman.
He remembers his Berkeley days fondly. "Those were the
days of free speech movement and antiwar demonstrations in Berkeley. We were
used to tear gas and police brutality. Everybody said that what Berkeley thinks
today, America will think two years hence and I think it is pretty much true
even now.
The EE department was a great place. Lotfi Zadeh, who taught
us Fuzzy Logic, was the chairman of the department," recalls he. But if
you ask "was not the nearby Stanford a more interesting place to
study?" the genial Pradman turns combative. "Stanford was always an
elitist rich kids’ college, whereas Berkeley was for the janata, it was free
for California residents, and definitely more innovative and interesting. It is
like comparing Cathedral and Xaviers," he adds, using a Bombay expression.
Pradman has mastered the art of begging to differ politely.
Firmness in his views need not mean brashness or throwing his considerable
weight around. Not surprisingly, he rose through corporate America, from his
beginnings as a fresh engineer in Digital Communication Corp in 1973 to being
the chairman and CEO of HNS in 2000. DCC, which pioneered digital
communications in the '70s with its innovative products in packet switching,
fibre optics and satellite communications, was taken over by MIA-com in 1978.
Hughes group bought this company from MIA-com in 1987 and christened it Hughes
Network Services. Satellites became the main dish at the HNS cafeteria from
then onwards.
Today Ku band satellite services and broadband data from
satellites form the basic strength of HNS. With a satellite dish costing about
$1,000, which can actually be pro-vided at a subsidised rate by service
providers at as Iowa price as $300, your PC can directly receive Internet at
high speeds, hence the name Direct pc. The next generation of Ka band services
are being designed with geo-synchronous satellites carrying 10 GB routers on
board that route the data you had asked for into a narrow beam that will come
to your location. The project is called Spaceway and, as Pradman explains, is
being built prudently module by module and regionally. That is, no mega-project
to provide broadband in Sahara and North Pole, with $10-20 billion budget is
being announced - a lesson no doubt from the late Iridium and other sat phone
projects.
"We will roll out the services over North America
first, then over Europe and then over Asia as demand builds up, and connect the
regional services through fibre," he says.
For the first time in their history, they are digging and
laying cables and fibre in India. The vagaries of Indian telecom policy have
naturally affected their pace in India. For example, even though the NTP 99
allowed connectivity to foreign satellites, nobody has been allowed to do so
yet. "The day we are allowed, we can connect up to Panamsat, which has a
footprint over India and provide Ku band services for rural telephony as well
as broad band Internet," says Pradman.
However, he still retains hope for their investments in
India. "We have realised that everything in India takes two years to
implement after the policy has been announced. So, hopefully NTP 99 will be
implemented in 2001," he says tongue in cheek. “We have a major plan to
expand our software business and make it more broad-based than just telecom
software so that we continue to grow at 70 per cent CAGR," he says.
From the lofty heights of 36,000 km, Hughes has been brought
down to earth in India. "We understand the Indian government's concerns
and we are ready to wait," he says.
Like a true Indian, he has enough patience.
