Tele-Communications Inc. last week clarified its position
on HDTV formats with a strong rebuttal to criticism from consumer-electronics companies,
amid continuing confusion over which approaches to digital television will prevail in the

'The technology in TCI's advanced digital set-top
devices allows a television signal in any HDTV format to be transmitted to a
customer's high-definition television set,' said TCI president and chief
operating officer Leo J. Hindery Jr., in a prepared statement.

A week earlier, at the National Association of Television
Programming Executives conference in New Orleans, Consumer Electronics Manufacturers
Association president Gary Shapiro sharply criticized TCI. Shapiro contended that the new
OpenCable digital set-tops ordered by the MSO will not transmit what CEMA defines as true
high-definition formats.

'CEMA's information is incorrect, and it was
extremely irresponsible for them to mislead the public,' Hindery said. 'The
truth is that TCI has provided for additional choices and flexibility for all

The issue is extremely sensitive, as signaled in
Shapiro's reference to the need for must-carry rules that would require cable
operators to deliver signals in the HDTV formats chosen by broadcasters.

Members of Congress have already warned broadcasters not to
undermine the intent of the free allocation of digital spectrum for HDTV by delivering
services exclusively tied to lower-level formats, which has prompted many broadcasters to
downplay any plans that wouldn't include at least some HDTV programming.

TCI would much prefer to negotiate format and other issues
with broadcasters as a matter of mutual business interests, as opposed to being forced
into specific solutions by must-carry rules, said TCI spokeswoman LaRae Marsik.

'We think that the choice of formats should be
market-driven, but whatever the market determination is, we have the capability to support
it,' she said.

TCI has said that its new set-tops, due to be deployed
sometime in 1999, will be equipped with the capability to convert signals delivered in
what Microsoft Corp. refers to as 'HDO,' which includes 480P (progressive scan)
and 720P/24 frame iterations, to the analog NTSC (National Television System Committee)
format for reception on traditional TV sets.

The ability to perform this conversion, thereby opening a
vast audience to broadcasters' and other providers' digital programming, could
help to sway programmers to operate in this format, as opposed to what CEMA defines as
true HDTV, which is either 1080I (interlace) or 780P.

TCI chairman and CEO John Malone alluded to the benefit to
broadcasters in this approach during his press conference Jan. 10, saying, 'This
could turn out to be a very positive aspect for the broadcasting industry as they try to
make economic sense out of their entry into HDTV.'

Malone added that the 480P approach 'will enhance the
quality received on any TV set and reach its maximum quality on HDTV receivers.'

Such thinking has long inflamed consumer-electronics
manufacturers, which have pegged their product strategies to a 'bigger is
better' stance that says that any display format with less than 1 million pixels
won't stand up to consumer expectations when viewed on big screens. While
consumer-electronics manufacturers say their HDTV receivers are designed to take in any of
the 18 digital TV formats endorsed by the Federal Communications Commission, most are
limiting their display capabilities to 1080I, 780P, or both. Some are adding special
filtering equipment to enhance lower-level formats so that when they are displayed on the
high-end screens, the quality gap will be mitigated somewhat.

'How long will it take a broadcaster that has
standard-definition digital [SDTV] on his channels to realize that he's losing market
share to the channel that is delivering true high-definition?' asked Lou Lenzi, vice
president of multimedia services at Thomson Consumer Electronics Inc. 'The name of
this game is bigger and better pictures, and that is what will drive market penetration of
digital television sets.'

TCI officials said that if the broadcast industry
ultimately agrees with this view and chooses to go with 1080I as the predominant HDTV
format, the company will react accordingly.

Marsik said TCI could specify that its set-tops convert
higher-level signals to analog if it turns out that this is the direction that the market
takes, but the intention is to only convert the HDO formats to analog at this point.

After Malone announced the MSO's agreement on set-top
software and HDTV formatting with Microsoft Jan. 10, there was a widespread perception
that the commitment to HDO included a decision to downconvert higher-format signals at the
headend so that only the lower, more bandwidth-efficient format options would be passed
through to subscribers.

At the TCI press conference, Microsoft senior vice
president Craig Mundie appeared to set limits on the signal pass-through capabilities of
the planned set-top terminal

'This box, as currently specced, will provide for the
original set of video formats up to and including 480P and 720P/24 that was originally
proposed by Compaq [Computer Corp.], Intel [Corp.] and Microsoft as the base level for
HDTV,' Mundie said.

In an interview at that time, a Microsoft official
indicated that this was the case, and that's how the HDTV-format decision was

By leaving its options open, TCI avoids the controversies
that a more limited approach to HDTV might provoke -- not only with consumer-electronics
manufacturers, but within the cable industry, as well.

At the same time, however, it remains to be seen whether
the manufacturers will ultimately prevail in pushing the full HDTV format over other
options, given the uncertainties surrounding consumer perceptions of differences in
quality among the various formats.

That uncertainty was reflected in the initial
broadcast-digital product being shipped through the new strategic partnership involving
Lucent Technologies Inc. and Harris Corp.

'We're shipping chips supporting 480I
[standard-definition] at this point,' said Paul Wolford, an executive in
Lucent's new digital video group.

Harris and Lucent have teamed up to create a completely
integrated encoding and transmission system for broadcasters that allows them to start out
with the SDTV format and to later migrate to full HDTV without having to add a separate

As the encoding capabilities are upgraded to include full
HDTV, broadcasters will be able to shift from one format to the other, as programming
needs warrant, using the same chip set, Wolford said. He added that Lucent will
demonstrate full HDTV capability over the chip set starting in April, and that it will
begin shipping the multiformat version by midsummer.

Initial customers for the SDTV chip set are A.H. Belo
Broadcasting of Dallas and Cox Broadcasting station WSB-TV in Atlanta. Most broadcasters
have not indicated detailed plans as to what portion of their airtime will go to full HDTV
and which formats they'll use.