MediaOne Takes New Path in Digital

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Reaching across the Atlantic Ocean to bring largely
European-based digital technologies to the United States, MediaOne Group Inc. last week
finally announced its digital set-top plans for its next two digital deployments.

The MSO chose Canal Plus, DiviCom Inc. and Philips Consumer
Electronics Co.'s Philips Digital Video Systems as the providers of its digital-video
platform.

By breaking ranks with other U.S. MSOs in adopting Digital
Video Broadcasting-based conditional-access technologies -- and, possibly,
electronic-programming-guide applications -- MediaOne stepped outside of the predominant
Scientific-Atlanta Inc./General Instrument Corp. platform.

MediaOne's digital rollouts are scheduled for the end
of the second quarter, although the MSO refused to disclose the locations of the
deployments.

Significantly, MediaOne's announcement means that it
is finally embracing digital TV, after being slow to move from advanced analog, said Bruce
Leichtman, director of media and entertainment strategies for Cambridge, Mass.-based
research firm The Yankee Group.

Compared with the aggressive digital rollouts by other
MSOs, MediaOne has been "really behind" in its deployments, which are now
limited to its Detroit cluster, where it faces competition from Ameritech New Media.

Joe Wetzel, vice president of engineering for MediaOne,
said that while "we're fairly satisfied with what we can do with analog, the
timing is right for us to become more aggressive in digital."

The company had been reluctant to spend millions of dollars
on the early iterations of digital boxes, such as GI's DCT-1000, which some cable
operators installed last year.

One of the deployments will feature an "evolved"
version of GI's DCT 2000 set-tops incorporating the Canal Plus/DiviCom/Philips
platform. The other will feature Philips set-tops.

A source close to the situation said the GI boxes will be
used in MediaOne's Atlanta system, while the Philips boxes are earmarked for its
Jacksonville, Fla., system and, later this year, its Boston system.

MediaOne is expected to make announcements next month about
specific markets, pricing, packaging and programming related to its digital-TV rollouts.

According to MediaOne, it is the first U.S. cable company
to select an open conditional-access system used overseas to scramble and unscramble
programming signals.

Julie Berg, executive vice president and chief marketing
officer for MediaOne, said the adoption of the platform, which utilizes the European DVB
standard, will allow the MSO to deploy set-tops from several manufacturers in any given
market.

DiviCom president Tom Lookabaugh said MediaOne's
selection "provides access to high volumes of components," given the large
number of manufacturers producing digital set-tops with DVB in Europe.

For example, Canal Plus has licensed its
"MediaHighway" software to 10 set-top manufacturers, including Asian and
European companies, according to Jean-Louis Erneux, international communications manager
for the Paris-based company.

"We looked at solutions from around the world,"
including the GI and S-A platforms, Wetzel said.

He added that the Philips/Canal Plus/DiviCom platform is
consistent with Cable Television Laboratories Inc.'s OpenCable set-top
standardization effort, and it "marries the best of all options."

Importantly, MediaOne's selection of the DVB
common-scrambling conditional-access method marks a departure from DES (Data Encryption
System). But, Wetzel said, "DVB common scrambling is the base by which
conditional-access schemes can coexist."

In addition to conditional access, the Euro platform will
include Canal Plus' "Java Virtual Machine" software as a middleware layer.
While MediaOne hasn't made any decisions about its digital EPG, Wetzel pointed out
that with a well-known Java interface included in the platform, the MSO will "have
quite a choice among EPGs that we could run on this platform."

Whether MediaOne's announcement will influence the
digital set-top choices of other U.S. MSOs remains unclear.

Larry Schutz, director of network engineering for Charter
Communications, pointed out that in markets where the MSO has rolled out digital services,
it has tapped GI for its digital platform. However, former Marcus Cable properties
acquired last year by Charter utilize S-A's Explorer 2000 platform.

In light of the MediaOne announcement, Schutz said, Charter
will "certainly keep an eye on" the Euro-based platform, but he added, "I
don't think that it's earth-shatteringly significant."

Regarding future MediaOne digital deployments, Bud
Wonsiewicz, chief technology officer for the MSO, left the door open for other set-top
manufacturers to be part of the mix.

"We've been in extensive discussions with a
number of manufacturers ... including Pioneer [New Media Technologies] and S-A, and
they're very interested in joining this deployment," Wonsiewicz said.

Pioneer had previously been named as a partner with Canal
Plus and DiviCom to produce a set-top platform for MediaOne.

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