TCA Cable TV Inc. has launched high-speed-data service in
Bryan/College Station, Texas, with plans to expand into Amarillo and two other markets
this year, using modems supplied by Terayon Corp.

The MSO, with approximately 860,000 subscribers primarily
in Texas, Arkansas and Louisiana, plans to offer business services, as well as residential
services, making use of the service capabilities of the proprietary Terayon technology,
said Bob Roseman, vice president of business development at TCA.

"We're very interested in the commercial
sector," Roseman said, noting that the Terayon system, along with supporting varying
levels of service, also interfaces with ATM (asynchronous transfer mode) over the
backbone, adding to the MSO's ability to deliver services for business users.

He indicated that TCA is also looking at Com21 Corp. as a
possible supplier in future rollouts, due to the QOS (quality of service) and ATM
capabilities of that supplier's system.

TCA is charging residential users $35 per month, plus $15
for modem rental, in the initial rollout in Bryan/College Station, which is home to Texas
A&M University. The installation charge is $100.

TCA is looking beyond the four markets -- two of which it
has not publicly identified -- for a wider rollout of the Terayon modems. These might
involve older, largely all-coaxial plant, as well as more recently upgraded HFC (hybrid
fiber-coaxial), like the 750-megahertz systems in Bryan/College Station and Amarillo,
Rosedale noted.

"We feel that time is of the essence in terms of
getting to market early and establishing strong market share," he said.

Along with considering two-way plant applications, the MSO
is also looking at the use of one-way modems with telco return in a trial currently under
way with Scientific-Atlanta Inc. gear in Lafayette, La., Rosedale said. TCA is also
interested in the possibility of using Terayon's system over older plant, he added.

So far, TCA is acting as its own Internet-service provider,
having acquired a local entity for this purpose in Bryan/College Station. Whether or not
the MSO will turn to an outside supplier, such as @Home Network, remains to be seen, he

"We're keeping all of our options open, including
the possibility of going with one of the smaller providers instead of one of the big
national cable operations," Rosedale said. "The national brands have to show a
capability of reaching our size markets," he added, noting that the business plan
offered by @Home doesn't work for TCA at this point.

The TCA contract represents the first U.S. deployment
commitment for Terayon, which recently won a contract from Canadian operator Northern
Cable for deployment of its modems for delivery of data services to two school districts
in Ontario.

Terayon CEO Zaki Rakib said some MSOs are holding back
because they're waiting for standardized MCNS (Multimedia Cable Network System)
modems. But others, afraid of digital subscriber line and wireless competitors, are moving
forward aggressively, he added.

The Terayon system uses a proprietary S-CDMA (synchronous
code-division multiple access) modulation scheme to deliver data at 14 megabits per second
in each direction over a 6-megahertz cable channel, and it comes with a proprietary MAC
(media-access control) capability, as well.

But the company has committed to delivering triple-mode
systems that will allow the modems to operate in either MCNS or Terayon mode, or in a
combination of MCNS QAM (quadrature amplitude modulation) downstream and S-CDMA upstream,
with headend gear supporting whichever mode is chosen without requiring a change to other
channels or an addition to the equipment.

"Hopefully, by the time this sort of issue has to be
decided, we'll see a decision on an advanced MCNS system that adopts S-CDMA for the
PHY [physical] layer in the upstream," Rakib said. "We feel more and more
confident that we will be included in the next-generation standard."

The company would also like to see its proprietary MAC made
part of any future standard, said Brian Bently, vice president of sales at Terayon.

The jury is still out on what next-generation MCNS will be
and whether, indeed, there really is a need for anything more robust than QAM and QPSK
(quadrature phase shift key, used in the upstream) in the PHY layer, said David Fellows,
chief technical officer at MediaOne Express and a leader in the standards-setting process
within the Society of Cable Telecommunications Engineers.

The SCTE subcommittee on digital standards, headed by
Fellows, is looking at alternate PHYs that might coexist with the current MCNS PHY to
provide cable operators with an option in dealing with upstream issues, including
technologies other than Terayon's, Fellows said.

Picking an alternative option could be difficult, since
various options address different potential problems, Fellows said. Moreover, he added, it
remains to be seen how necessary such an alternative might be, given his own and other
operators' satisfaction with the current MCNS PHY.

"As an operator, I'm pretty happy with what
we've got," Fellows said. "I can find enough clean bandwidth to support
upstream requirements, even with the lower-level legacy systems that we're using, let
alone the MCNS modems, which will be more robust."

But even though the use of ever more fiber means that MCNS
might be sufficient as is for current allocations of return bandwidth, the day could come
when more bandwidth is necessary to accommodate higher levels of usage in conjunction with
more advanced services, such as IP (Internet-protocol) telephony, Fellows suggested. In
that case, it might be necessary to go to lower-frequency return paths, where the
potential for interference from ham radio and other radio sources is greater.

"These are issues that we're trying to sort
through now and in meetings coming up," Fellows added.