Terayon Lands $60M UPC Modem Order

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Denver -- In one of the largest European orders yet, United
Pan-Europe Communications N.V. (UPC) is buying 225,000 cable modems and related equipment
worth about $60 million from Terayon Communication Systems.

Terayon's contract with UPC, the European arm of
Denver-based United International Holdings Inc., highlights expected international growth
in demand for high-speed Internet-access service, which has been centered in North America
so far.

UPC, which has cable operations in 11 European countries,
said it planned to initially deploy the modems in the Netherlands, Norway, France, Hungary
and Malta.

The MSO provides high-speed Internet-access service through
its wholly owned Chello Broadband N.V. unit, which it has positioned to compete with @Home
Network both on its own cable systems and elsewhere.

"As a combined entity with all of the operators in its
different countries, it has a scaling capability that is magnified by Chello,"
Terayon CEO Zaki Rakib said of UPC. "It has the capability to expedite and accelerate
cable-modem deployment, just like @Home was able to dramatically accelerate deployment in
this country."

World-cable modem shipments last year totaled about 955,000
units, according to the Strategis Group, and they are expected to grow to upward of 2
million in 1999, according to various estimates.

Although Terayon supplies proprietary cable-modem systems
based on synchronous code-division multiple-access (S-CDMA) technology, UPC said it
believed that the company's products had the best migration path toward future
cable-industry interoperability standards, set forth by the Data Over Cable Service
Interface Specification (DOCSIS).

Terayon is one of the companies working with Cable
Television Laboratories Inc. on the creation of the DOCSIS 1.2 standard, which encompasses
a number of enhanced protocols not covered by the current 1.0 version and the upcoming
DOCSIS 1.1.

Amsterdam, Netherlands-based UPC has been expanding
aggressively, fueled by a $300 million capital infusion in January from Microsoft Corp.
and by its own $1.25 billion initial public stock offering last month.

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