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Wink Deals with Some Digital Delays

2/27/2000 7:00 PM Eastern

Wink Communications Inc. faces some software-integration
work that will prevent MSOs deploying digital set-tops other than Scientific-Atlanta
Inc.'s "Explorer" line from launching the interactive service until at
least this summer.

The delays may be only temporary. But Wink's future is
tied to digital-cable launches, and the company is banking on widespread deployment of its
service through in order to collect fees from advertisers that have agreed to produce
Wink-enhanced ads.

The company expects all of its subscribers to be using
digital set-tops by the end of next year, but only one MSO -- Charter Communications Inc.
-- has Wink running on digital set-tops in subscriber homes.

Wink is deployed on 250,000 set-tops in the United States,
mostly advanced-analog boxes.

One of Wink's first carriage deals, announced in
December 1998, was a coveted spot on Time Warner Cable's New York City
advanced-analog rollout. The deal also included Wink distribution through digital
set-tops.

But Time Warner did not add Wink to its recent digital
rollout in New York, explaining that Wink doesn't work on its platform yet.

"We do have an agreement that we will work with them
for a digital rollout, but Wink is not ready developmentally or technically to be on
'DTV,'" Time Warner Cable New York City spokeswoman Harriet
Novet said.

"They have some things to do before they'll be on
our digital tier," Novet added, noting that it may take six to nine months for Wink
to complete the software integration needed to make the service operate on the
system's digital platform.

Time Warner is rolling out a combination of S-A Explorer
and Pioneer New Media Technologies Inc. "Voyager" digital set-tops, but the
system is using Pioneer's "Passport" software platform to run both
set-tops.

If the system had chosen S-A's "Sara"
software platform -- the only digital platform Wink currently supports -- Wink could have
launched earlier on the New York system, CEO Maggie Wilderotter said.

The company didn't begin the integration work for the
Pioneer platform until several months ago, when Time Warner selected the Passport
platform, she explained.

Wink expects to complete the integration work for the
Pioneer set-tops by July, Wilderotter said.

In December, Wink announced a deal with Insight
Communications Co. Inc. to deploy Wink early this year on Insight digital systems, which
run on Source Media Inc.'s virtual-modem platform.

Wink now expects a 60-day delay in completing the software
integration that will allow it to operate on the Motorola Broadband Communications Sector
"DCT-2000" digital set-tops Insight will deploy. Wink figures to launch on
Insight this summer, Wilderotter said.

But both she and Insight president Michael Willner said
Insight didn't plan to launch Wink until this summer anyway, emphasizing that the
DCT-2000 integration work isn't an issue for Insight.

Willner added that integration issues are fairly common in
the industry. "It took us probably six or eight weeks longer than we expected to
integrate the Diva [Systems Corp. video-on-demand] product into the DCT-2000
configuration, and there were bugs that needed to be worked out. It's no big deal.
It's just the integration process that needs to take place," he said.

Wilderotter said last week that Wink has no plans to
integrate its product with the lower-end "DCT-1000" and "DCT-1200"
digital set-tops. "We are not focused on those platforms today. It's not that we
can't be, but there's no more volume of those products shipping," she
added.

"That's going to be an issue that follows the
DCT-1000 and 1200 around wherever they go. The difference between those two systems and
boxes and the 2000 and above is the fact that they don't have the memory and
wherewithal to handle some of [these interactive applications]," Paul Kagan
Associates Inc. senior analyst Leslie Ellis said.

Many MSOs will eventually replace those low-end digital
set-tops with more advanced set-tops capable of running Wink and services from other
interactive-television vendors, she added.

Since more than 6 million of the lower-end Motorola
set-tops have already been sold to U.S. operators, this may cause some problems for MSOs
that plan to deploy DCT-2000s in systems that already have the lower-end boxes, one MSO
executive said.

"If you're in a big market with 100,000 DCT-1000s
and you're going to try to market Wink, you can't market it to your digital
subscribers because one-half of them aren't going to get it," said the
executive, whose company has deployed Wink.

Wilderotter countered that the lack of DCT-1000 and
DCT-1200 support is not a concern, adding that it was an "opportunity for the
consumer to upgrade to a new tier or a new box."

Wink also has no timeline for integrating its product with
the high-end Motorola "DCT-5000" digital set-top, Wilderotter said. But Wink is
already integrated with Microsoft Corp.'s "TV Pak" platform, which works on
the DCT-5000 system, she added.

"If AT&T [Broadband & Internet Services] wants
to [deploy] the 5000 with Microsoft, Wink is automatically part of the platform,"
Wilderotter said.

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