Big MSO Orders Highlight Set-Top Progress at Show

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Los Angeles -- At a time when "new" vendors are
making inroads into the U.S. cable-equipment market, two old standbys made some of the
biggest set-top splashes at the Western Show here last week.

General Instrument Corp. announced a new deal to supply an
additional 1 million of its digital set-tops to Charter Communications Inc. for deployment
during the next two years.

Separately, Scientific-Atlanta Inc. said it won an order
for another 500,000 of its "Explorer 2000" digital set-tops from Time Warner
Cable.

The orders come as the two vendors -- which dominate the
North American cable-infrastructure market -- are seeing a variety of newcomers make tiny
but repeated inroads onto the landscape, aided by cable's evolution toward
standards-based, open-source-technology platforms.

Coinciding with the Western Show, MediaOne Group Inc.
formally launched service on its Jacksonville, Fla., system -- one built for the first
time to open standards based on the Digital Video Broadcasting protocols that are dominant
outside of North America. Philips Electronics is supplying set-tops for that system.

Pace Micro Technology plc earlier this month announced a
deal to supply Time Warner with digital set-tops for its "Pegasus"
interactive-television platform.

And Sony Corp. landed a blockbuster deal to supply the
advanced set-tops for an interactive cable network it will create in New York City for
Cablevision Systems Corp.

GI's deal with Charter is incremental to the boxes that
were purchased as part of an agreement between the two companies that dates back to 1997,
according to GI executives.

To date, Charter has deployed an unspecified number of GI
"DCT-2000" set-tops. The agreement calls for Charter to deploy more DCT-2000
boxes, in addition to GI's high-end "DCT-5000+" interactive digital set-tops, as
the MSO begins to roll out interactive services.

In a first for the market, some of the Charter boxes will
be outfitted with hard drives, according to David Robinson, general manager of GI's
Digital Network Systems business unit.

That technology is central to the
"personal-video-recording" platform being commercialized by companies such as
Replay Networks Inc. and TiVo Inc., providing viewers with VCR-like features such as the
ability to pause, rewind and fast-forward live programming by simultaneously recording it
on the hard drive while it's being watched.

The functionality also enables other revenue-generating
services, such as some types of video-on-demand and advertising targeted on the basis of a
user's viewing and recording habits.

"We expect Charter to be among the pioneers that use
this [disk-drive] technology," Robinson said, adding that Charter will soon launch
its 100th digital headend.

Robinson forecast that GI will ship nearly 4.5 million
digital set-tops in 2000, equally split between the DCT-2000 and the "DCT-5000."
The company said it has shipped about 200,000 DCT-5000s to cable operators, primarily for
trials, although there have been some small, limited commercial deployments.

The S-A deal is an addition to the 400,000 S-A digital
set-tops Time Warner has already deployed.

Time Warner chief technology officer Jim Chiddix told a
Western Show briefing that the new order for Explorer 2000 and "2010" set-tops
would help to support the MSO's rapid rollout of digital service, with the operator's
digital subscribers expected to at least double in the coming year.

The MSO only began deploying the Explorer 2000 in earnest
this past July, after extensive consumer testing, and Chiddix said Time Warner operating
executives were "giddy" at the way the deployments have gone.

"People love these digital set-top boxes," he
added. "They're installed very easily by our folks, they work well and they've got a
great program guide."

Besides straight digital-video programming, the new round
of boxes -- along with others from Time Warner vendors Pace and Pioneer New Media
Technologies Inc. -- will support the planned initial launch of advanced services,
specifically VOD and, to a lesser extent, high-definition television.

Chiddix noted the MSO's current VOD service trials in
Austin, Texas; Tampa, Fla.; and Honolulu with vendors SeaChange International Inc. and
Concurrent Computer Corp., as well as its experience with VOD in Time Warner's Full
Service Network in Orlando, Fla., in forecasting strong expected response to full
commercial launches.

He said VOD would launch commercially in the next several
months in at least one of the trial markets, with plans to roll it out next year in other
markets to all customers with digital set-tops.

"People love the idea of pushing a button … and
having the movie begin instantly just for them," Chiddix said of the response to VOD
in trials. "That has tremendous potential for generating revenue."

In response to questions, Chiddix said Time Warner had not
committed yet to future, advanced generations of S-A set-tops, such as the upcoming
"Explorer 3000" and "6000" models, because the boxes it is currently
deploying can support all of the services the MSO is interested in offering.

For example, he said, Time Warner did not yet see any
market justification for offering a set-top with an integrated Data Over Cable Service
Interface Specification cable modem. He added that the current generation has proprietary
modems and Internet-protocol capabilities already, and DOCSIS modems would essentially be
an added expense for capabilities the operator does not yet demand.

"If you want to do Web browsing, today's boxes can do
that," he said.

Communications Engineering & Design editor in chief
Roger Brown and
Broadband Week contributing editor Fred Dawson contributed to this
story.

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