Pace Micro Lands Time Warner Order

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Pace Micro Technology plc finally cracked the U.S. cable
market, notching a major deal to supply Time Warner Cable with advanced digital set-top
boxes.

Pace -- which claims deployments of some 2 million
digital-cable, satellite and terrestrial-broadcasting set-tops worldwide -- won a contract
to provide Time Warner with a minimum of 750,000 boxes over the next three years.

The new, customized boxes will be configured to the
specifications of Time Warner's "Pegasus" set-top platform, and they will
include integrated cable modems based on the Digital Audio/Video Interoperability Council
standard to enable interactive services such as Internet access.

Pace will join Scientific-Atlanta Inc., Pioneer Digital
Technologies and Toshiba America Consumer Products as Pegasus-box makers.

"We believe it makes good business sense to increase
our breadth of set-top-box suppliers, and Pace was an obvious choice," Time Warner
vice president of advanced engineering Mike Hayashi said.

U.K.-based Pace will power the box with an 80
million-instructions-per-second processor, versus the 54-MIPS chips used in early Pegasus
configurations, and it will license software from S-A and Pioneer to create a new
electronic program guide.

Neil Gaydon, president of Pace Americas, said the company
might use PowerTV Inc.'s set-top operating system for the new box.

"The fact that Time Warner [signed] a three-year
contract [with] us is a real indication of their commitment to us, and vice versa,"
Gaydon said. "This is Pace really in the heartland of the U.S. cable business now.
For us, it's a tremendous steppingstone."

The deal is the first North American cable win for Pace --
one of several set-top makers with widespread international deployments that had trouble
cracking the North American duopoly of General Instrument Corp. and S-A.

Pace earlier this year landed an agreement to provide
100,000 set-tops to BellSouth Corp.'s BellSouth Entertainment for its multipoint
multichannel distribution service. Those boxes are about to be deployed for field trials,
Gaydon said.

Time Warner developed the Pegasus platform based on open
standards supporting Internet protocol, forming the basis for the OpenCable specifications
being developed through Cable Television Laboratories Inc.

Pace's digital deployments so far have been based on open
standards such as MPEG-2 for compressed video and the Digital Video Broadcast standard
prevalent in Europe.

Gaydon said the company was helped by its experience with
digital video and with advanced boxes such as its "Di4000," which incorporates
standards-based cable modems.

Pace offers its Di4000 set-top in configurations
integrating a modem compliant with either DAVIC or the North American Data Over Cable
Service Interface Specification, and it has won deals to supply those boxes to U.K. cable
operators NTL Inc. and Cable & Wireless Communications plc, respectively.

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