TCI.NET Picks Data Suppliers

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After a year of vigorous evaluation, TCI.NET last week
selected four suppliers of high-speed-data equipment, just as @Home Network was readying
to unveil an arrangement with ComputerCity, making it the first national computer reseller
to deeply promote the high-speed-data service.

Tele-Communications Inc.'s TCI.NET data group chose
3Com Corp. and Bay Networks Inc. for headend equipment, and 3Com, General Instrument Corp.
and Thomson Consumer Electronics for cable modems.

Specific order quantities were not disclosed. Two of the
vendors contacted by press time described the TCI.NET deal as more of a strategic win than
a huge financial boost.

"I can't talk about the monetary value [of the
order], but this means a lot more than that for us," said an elated Levant Gun, vice
president and general manager of 3Com's cable-access division.

Rob Davenport, president of TCI.NET, said in a recent
interview that he's planning for multiple, simultaneous launches of high-speed-data
services in several markets, starting this summer. TCI.NET markets and distributes @Home,
and TCI plans to put @Home in front of 2.5 million homes by year-end.

TCI.NET issued a request for proposals a year ago, and it
has since put all key equipment manufacturers through the technological wringer before
making its selections. The MSO is hard-core about sticking to an industrywide plan to only
purchase modems that comply with Cable Television Laboratories Inc.'s DOCSIS (Data
Over Cable Service/Interoperability Specification), said Susan Marshall, vice president of
products and technology for TCI.NET.

"We made a commitment to stick with standards-based
products, and this is evidence of how steadfast we are about that commitment,"
Marshall added.

Davenport and Marshall characterized the orders -- which
will span the next 15 to 18 months, in declining quantities -- as an "interim
step" until retail channels are firmly established.

Field trials of the four vendors' wares start this
summer, and commercial rollouts will begin after each supplier's product is
DOCSIS-certified, Marshall said. The trials will coincide with ongoing certification tests
at CableLabs.

Notably absent from TCI.NET's supplier list were
headend-equipment-supplier Cisco Systems Inc. and end-to-end system-supplier Motorola Inc.

Marshall said 3Com and Bay were more immediately responsive
to the TCI.NET RFP last year.

"Cisco has a strong product, but the fact is that we
aligned more quickly -- both culturally and technologically -- with 3Com and Bay,"
she said.

Cisco executives weren't available for comment at
press time.

Dick Day, corporate vice president and general manager for
Motorola's multimedia-product division, said the vendor "learned a painful
lesson" from the experience, and it is already turbocharging its standards-compliance
strategy. On April 21, Motorola sent gear to CableLabs for interoperability testing, which
quickly passed four tests, Day said.

Karl May, vice president of Bay's broadband-technology
division, said last week that TCI "really took a lead position in vetting the various
vendors in very serious forums."

Bay, which was a key vendor-author for DOCSIS, and which
has already generated 10 patents for its cable-modem technology, is still formulating
plans to snag some of TCI.NET's future data-equipment business for its cable-modem
line, May said.

"I am very much interested in getting part of the
cable-modem business," May said. "There are some things that we're doing
that will make [our technology] very attractive, at least from a cost-performance
perspective."

Michael Harris, senior analyst with Kinetic Strategies
Inc., called the deals "huge" for 3Com and Bay.

"They're fighting for headend real estate,"
he said.

The cable-modem orders are "nice, but I'd expect
that somebody like 3Com or Thomson is expecting the real volumes from the retail
play."

Marshall said Com21 Inc. will also receive some of
TCI.NET's order load to get the MSO's installs going before the commercially
available DOCSIS modems are ready.

Marshall added that another key decision-driver was each
manufacturer's retail plan. 3Com already sells network-interface cards and other gear
through 6,000 storefronts, noted William Markey, director of marketing for 3Com's
cable-access division.

3Com kicked off the first in a three-phase
cable-modem-retail plan two weeks ago in York, Pa., working with Staples Inc. and other
local retailers to sell its U.S. Robotics-brand modems there.

Jonathan Magasanik, divisional merchandising manager for
Staples, said last week that he's enthusiastic about the possibilities of selling
cable modems.

"The cable companies weren't going to come to us
to buy what they needed, obviously," he said. "Now, we can sell modems to people
who have cable."

He also said Staples and other national retail chains will
"rely on strong partners like 3Com" to sidestep any issues that arise when
customers buy a modem, then go home to find that data service isn't available in
their cabled area.

"We'll be able to pinpoint [cable areas that are
equipped for data services] almost down to the block," Markey said.

Meanwhile, @Home's retail plans with ComputerCity
involve the installation of kiosks in stores where the service is available, starting
toward the end of this month.

Rob Bonham, vice president of affiliate relations and
marketing for @Home, said customers will be able to walk into a ComputerCity store, sample
the speed and always-on connectivity of the service, then pick up a phone linked to
@Home's call centers and order the service.

"We've identified about one-dozen stores in the
United States and Canada," Bonham said.

He added that @Home will kick off a "mall tour"
to 12 high-traffic shopping areas starting this summer, with Cisco as a funding partner.

The project will be branded the "@Home Internet
Revolution" tour, and it will get the service in front of an estimated 360,000
potential subscribers, Bonham said.

Paul Salzinger, director of business development for @Home
and the executive who hammered out the ComputerCity deal, said consumers who visit the
kiosk-equipped ComputerCity stores will have three purchase options: New personal
computer-buyers can have their machines set up to run @Home; the store can install the
service in existing PCs; or customers can call a service rep from a kiosk and arrange for
in-home installation.

Bonham said @Home will forge other alliances with
retailers, but it will be "very careful" about which ones it selects.

"We want the right store demographics, and the right
aisle environment, or whatnot," he said.

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