Other MSOs Ahead of TCI With OpenCable

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Obscured in the din surrounding Tele-Communications
Inc.'s push into the digital future is the fact that a growing coterie of MSOs is
preparing to bring the advanced digital service venue of OpenCable to market well over a
year ahead of TCI's agenda.

'The orders that we're seeing aren't for
late '99,' said Allen Ecker, chief technical officer at Scientific-Atlanta Inc.,
the first set-top manufacturer to move to the interactive digital platform now promoted as
OpenCable. 'We'll actually be putting in 50 digital interactive systems in major
cities over the next six months.'

Within the next week or two, S-A will be announcing
'several major orders' to go with those already announced by Time Warner Cable
and Comcast Corp., Ecker said.

While the set-tops conform to the requirements listed so
far for OpenCable, the company's preparations in support of interactive services
extend well beyond the home terminal to include the full array of hardware and software
components required for the launch of advanced services, he added.

The fact that several MSOs will be moving to put OpenCable
systems in place this year sheds a different light on the industry's agenda than the
perspective offered by TCI.

At the Western Show last month, TCI chairman and CEO John
Malone characterized the Pegasus interactive platform defined by Time Warner and supplied
by S-A as a 'half-step' toward OpenCable, which TCI might itself take in a
limited deployment of S-A's Explorer 2000 set-top this year. He said TCI would do
this just to get familiar with the business environment associated with delivering
on-demand and other interactive services.

Malone indicated that the power of the set-top that TCI is
looking for would be sufficient to run the cable-adopted version of Windows CE that
Microsoft Corp. has been shopping to the industry since April.

The set-top would have a microprocessor running at '50
to 200 MIPS' (million instructions per second), and it would support Internet
telephony, as well as Internet surfing, e-mail, electronic commerce, home banking,
video-on-demand and a bevy of other interactive services, Malone said.

But these are benchmarks already achieved in the Explorer
2000, said Bill Wall, chief scientist for digital technology at S-A. 'The current
Explorer runs on a 54 MIPS [Sun Microsystems Inc.] Microsparc processor,' he said,
adding that additional MIPS of support for the processor are generated by the
system's graphics accelerator.

'Most of the operators that we've talked with
strongly believe in things like e-mail, a browser, electronic commerce and VOD, and
there's a great emphasis on IP telephony,' Ecker said. 'The Explorer
supports all of those applications.'

Michael Luftman, vice president of public affairs for Time
Warner Cable, added, 'The facts are pretty simple that OpenCable and Pegasus are
fundamentally the same thing, and that's what's included in the boxes that
NextLevel [Systems Inc.] is building for us,' referring to Time Warner's
500,000-unit piece of the 15 million set-top order that several MSOs have placed with
NextLevel.

While the full set of OpenCable protocols is not expected
to be completed until May at the earliest, the early starters using S-A boxes noted that
the Pegasus system already conforms to the fundamental OpenCable requirements by using
JavaScript programming instructions and HTML (hypertext markup language), the Internet
hyperlinking protocol.

These are the guarantors of interoperability in the
middleware that links the set-top operating system with applications delivered from the
headend.

The software interface elements that remain to be chosen in
the OpenCable process will be easily added to the Pegasus system to ensure
interoperability with set-tops from other vendors, Ecker noted.

'We'll be rolling out the first of the S-A
OpenCable boxes in one city in the first half of this year, and we will be adding a
handful of other markets by year's end, with many more to be rolled out next
year,' Luftman said. 'In late '99 and 2000, these rollouts will be joined
by ones that use the NextLevel boxes.'

TCI's focus on late 1999 in conjunction with efforts
to raise money to help fund box purchases attests to the different approach to introducing
digital services that it has taken over the past couple of years, as Time Warner and other
Explorer platform users ramped up to pursue the interactive agenda.

Where Time Warner and other MSOs concentrated on raising
capacity in their major networks to 750 megahertz, TCI held to lower capacity levels,
viewing digital compression as a way to expand the channel count at low cost.

Now, however, the consensus in the industry is that the
interactive visionaries were right, which means that more capacity will be needed to
handle the delivery of dedicated, on-demand services on top of the digital and analog
broadcast venues.

TCI is capturing the headlines, but other MSOs are taking
the early lead in the race into the long-awaited era of data and TV convergence.

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