Pay-television software company NDS has paid over $100 million to acquire an Israeli company that provides software for domestic broadband access routers. It demonstrates the interest of the News Corporation controlled company in the emerging market for broadband video services.

Based in California, with research and development operations in Israel, Jungo was founded in 1998 and provides software and hardware for residential gateway systems. Its customers include vendors who supply major broadband pay-television operators such as France Telecom, Telecom Italia, Verizon, Qwest and NTT.

Residential gateways are increasingly deployed by telecommunications companies as the main service termination point in the home for the delivery of a variety of services over broadband.

The residential gateway and the software it contains act as the interface between the broadband network and the various consumer electronic devices that are attached in the home network including set-top boxes for broadband video services.

Providing the underlying software for both the residential gateway and the set-top box will allow NDS to offer an integrated solution for video services delivered over broadband.

Having control over both devices in the home network will accelerate the introduction of new services such as archiving digital content stored on the digital video recorder and enabling the set-top box to access music, video and pictures stored on personal computers on the home network, as well as applications such as video conferencing.

“The acquisition of Jungo positions NDS to better serve the ever increasing need of pay-TV and telecom network operators to offer reliable video over broadband services,” said Dr Abe Peled, the president and chief executive of NDS.

Jungo is a profitable and fast growing company. The company will continue to operate as a separate unit within NDS under its current management team. It will focus its activities on the residential gateway software market while closely collaborating with other NDS business groups to forge stronger relationships with broadband customers and to offer new and innovative end-to-end solutions.

“This is an exciting time for broadband,” said Ofer Vilenski, the chief executive of Jungo. “Residential gateways are enabling television, data services, telephony and a host of new services to be delivered over IP networks. Our association with NDS will allow both companies to deliver to consumers new and innovative applications and services.”

British satellite broadcaster BSkyB, which is controlled by News Corporation and uses NDS software in its set-top boxes, has also been investing in broadband services. These are currently offered to its subscribers as a separate service but there is clearly an opportunity to connect its satellite set-top boxes to the broadband network to offer additional video services.

Meanwhile, NDS is keen to exploit its experience in pay-television services in the emerging broadband video market which has to date been dominated by other hardware and software providers. Gaining a market presence with major telecommunications companies will help NDS to promote its Synamedia IPTV system offerings.