News

Time Warner Readies Digital Test

5/24/1998 8:00 PM Eastern

Time Warner Cable is getting ready to join the digital
dance.

The long-awaited foray into digital by the cable
industry's second-largest operator will begin in mid-June in Austin, Texas, with the
installation of several-hundred advanced-digital set-top boxes in the homes of local
employees for field-testing.

After an evaluation of the terminals and digital-headend
equipment, the 243,000-subscriber Austin system will launch commercially, probably before
the end of the year, MSO spokesman Michael Luftman said, although that timetable is very
tentative.

Time Warner will use Scientific-Atlanta Inc.'s
Explorer 2000 advanced set-tops in the test. The company recently doubled its Explorer
order to 1.1 million units.

Luftman said the Explorer boxes would be the "first of
the second-generation" boxes to be deployed in the industry. The platform, which had
been dubbed "Pegasus" internally by Time Warner (but which won't be
marketed under that name), features two-way interactive capability, an Ethernet port and
additional chip capacity that increases memory, processing power and software load.

What had been called Pegasus is now part of an industrywide
platform for interoperable set-tops called OpenCable.

Luftman said the "maximum incremental" charge to
subscribers for the digital box and programming would be approximately $10 per month.
Monthly fees for expanded-basic cable at the system currently start at $29.

Subscribers will initially receive about 60 new channels,
he said, with 20 more to be added later. Luftman said the MSO wasn't ready to discuss
what programming would be added, nor how it will be marketed.

The Austin system will be upgraded to 750 megahertz by the
end of the year, Luftman said. Approximately 70 percent of Time Warner customers in Austin
currently receive advanced-analog service, which has a 79-channel capacity, according to
Lidia Agraz, director of public affairs for the system.

Luftman said Time Warner would use its own programming feed
for its digital boxes in large systems, which will be uplinked from Home Box Office's
facilities in Hauppauge, N.Y. That digital feed, he said, will be made available to other
cable operators. The technology vendors and transponder for the feed will be announced
later in the year, Luftman added.

Pioneer New Media Technologies is also a key supplier to
Time Warner, with its "Voyager" digital set-top line, as is Toshiba America
Consumer Products.

Time Warner also plans to use Tele-Communications
Inc.'s Headend in the Sky digital feed for smaller systems, Luftman added.

The Austin launch was no surprise, as it was considered one
of the worst-kept secrets in industry circles.

Time Warner's progress to date -- not unlike that of
other MSOs that are deploying digital-video services -- hasn't been without some
delays, executives have said. Commercial deployments originally scheduled for March have
slipped, but when the MSO is confident about its readiness for commercial launches, it
will move at a heady pace, with simultaneous launches in several of Time Warner's
systems, executives have said.

Part of the delay stems from the fact that the original
Pegasus architecture was hammered out two years ago, and swift technology advances in
chips and software since then triggered the need to do a quick re-examination and to remap
some of the electronics under the hoods of the new set-tops.

The silver lining to the delay is a more muscular product,
said James Chiddix, chief technical officer for Time Warner Cable, in a recent interview.

Time Warner is the latest large MSO to go digital. TCI, the
nation's largest cable operator, has been the most aggressive, having already placed
close to 200,000 boxes providing its HITS digital programming in systems throughout the
country.

Cox Communications Inc. has rolled out digital systems in
five markets, including Orange County, Calif. And just two weeks ago, MediaOne, which has
been cautious about digital tiers, put its toe into the digital waters in suburban
Detroit.

Leslie Ellis contributed to this story.

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