SoftNet Eyes U.S. Video Business

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SoftNet Systems Solutions Inc. may add video to the
cable-modem services it provides to small and midsized U.S. operators under a new joint
venture with Pacific Century Group.

The companies announced a deal last week that will leverage
SoftNet's experience in launching and managing cable-modem systems for Hong
Kong-based PCG's expansion in Asian markets, while exploring ways to deploy
PCG's own converged Internet and digital-cable-TV platform among U.S. operators.

Pacific Century CyberWorks, PCG's technology arm, is
investing $129 million for a stake of roughly 20 percent in SoftNet, which offers turnkey
cable-modem systems and service to U.S. operators through its ISP Channel business. PCCW
also gets two seats on SoftNet's nine-member board of directors.

Initially, PCCW wants to use SoftNet's experience in
launching and managing cable-modem systems utilizing very-small-aperture-terminal
satellite technology linking cable headends to the Internet backbone in its 63-country
Asian market.

"The investment by PCCW and our joint venture
represents a vehicle to rapidly enter a very large Asian market," SoftNet CEO
Lawrence Brilliant said in a news release. "In addition, we look forward to teaming
up with PCCW to expedite their launch and to take PCCW's converted Internet and video
service to the United States."

PCG was created six years ago with proceeds from the sale
of Star TV to News Corp.

The SoftNet deal follows PCG's investment and
technology-development deal with Intel Corp., announced in August. Intel agreed to invest
$50 million in PCCW and to supply set-top-box and server-based solutions using
Intel's chip architecture for helping to deliver PCG's TV and Internet-access
services.

PCG will also market SoftNet's "Intellicom"
VSAT solution to cable systems, hotels, hospitals and multidwelling units.

"We see our investment in SoftNet as a vehicle to form
a strong relationship with a leading U.S. cable-modem and satellite-services company and
to secure a beachhead for launch of our converged Internet and video services in the U.S.
market," PCCW chairman Richard Li said in a news release.

SoftNet senior vice president of marketing Kevin Gavin said
PCG's Internet/digital-television platform, "Network of the World (NOW),"
could be offered initially to ISP Channel affiliates passing 2.4 million U.S. households,
and later to other operators.

The platform offers video over a 6-megahertz cable channel,
with hyperlinks shown on the TV set that enable viewers to access related Internet content
for interactive applications or electronic commerce.

SoftNet could set more specific deployment plans once it
has the opportunity to work with PCCW on the product's development and determine the
best way to approach U.S. operators, Gavin said.

"We believe that over time, Pacific Century CyberWorks
has the inside track not only in terms of the converged TV and computer space, but also
for significant efforts in technical development," Gavin said. "We would become
the vehicle to bring this into the U.S. market."

He added, "It's the least developed but the most
exciting of the opportunities we are embarking on with them."

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