VOD Leaves Drawing Boards, Crashes Cable Homes

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With top MSOs embarking on trials and large-scale
deployments this year, the cable industry is poised to finally move video-on-demand onto
the existing menu of interactive digital services.

Both MediaOne Group Inc. and Comcast Corp. will test VOD in
undisclosed locations this year, with MediaOne using Diva Systems Corp.'s platform
and Comcast choosing SeaChange International Inc.'s VOD system.

Last month's Western Show provided a new flurry of VOD
deals and deployments, including Comcast's choice of hardware and software from Vivid
Technology (which was acquired in October by Concurrent Computer Corp.) for another VOD
trial beginning in the first half of this year in an undisclosed location.

Hardware provider nCUBE also announced a deal to provide
VOD servers to GTE Corp.'s GTE Americast to use more than 50 channels in the
operator's Tampa, Fla., system.

And nCUBE scored an agreement with Microsoft Corp. to port
VOD onto the "Microsoft TV" platform, which boasts such customers as AT&T
Broadband & Internet Services.

Time Warner Cable's Oceanic cable system in Hawaii has
already rolled out VOD, while trials are under way in the MSO's Tampa and Austin,
Texas, systems, using Concurrent/Vivid and SeaChange systems, respectively.

Time Warner also signed a memorandum of understanding to
test nCUBE's VOD equipment in an unspecified large system, nCUBE senior vice
president of product management Dan Sheeran said.

Insight Communications Co. Inc., which offers VOD to its
Rockford, Ill., customers, recently launched the service in Columbus, Ohio, using General
Instrument Corp. "DCT 2000" set-top boxes and Diva's VOD platform.

Cox Communications Inc. executive vice president of
engineering Alex Best said the MSO intends to test VOD in the second quarter of this year.
Cox has not yet picked a site, but Best sounded serious about the trial moving to a full
deployment.

"I'm not doing a trial for a trial's
sake," he said. The scope of the deployment will encompass "as big of a
footprint as we possibly can."

Expect more MSOs to jump on the bandwagon and announce VOD
trials.

Allen Chournos, field-marketing product manager for Unisys
Corp., said five of the top 10 MSOs have asked Unisys to help set up trials. At the
Western Show, Unisys announced its own "e-action" lineup of interactive-TV
solutions, including VOD.

"Customers are hungry for these services," said
Charlie Dietz, senior vice president of engineering at Insight.

Operators are also ready to realize the revenue potential
of VOD, and they see VOD as a key differentiator between cable and direct-broadcast
satellite services.

While the business case for VOD has been cemented in the
minds of most cable executives, network engineers are just now beginning to gain hands-on
experience with VOD in the field.

Initial deployments are demonstrating that video-server
placement within a cable-TV network is no longer a distributed-versus-centralized choice.

In Columbus, Dietz said, Insight is placing video servers
that store VOD content at the primary headend. In other markets, Insight is looking to tie
hubs serving 50,000 homes off the master headend and place servers with
"heavy-use" VOD titles out in the hub.

"We will start, in all probability, with the bulk of
the titles in the headend," he added.

Based on his experience in Rockford and Columbus, Dietz
stressed the importance of maintaining accurate databases of which homes are served by
which nodes to ensure that the right movies are delivered to the right homes.

Greg Graff, general manager for Insight's Columbus
system, said a challenge there was ensuring that the billing system, digital-TV service,
Source Media Inc.'s "LocalSource" programming and Diva's VOD platform
all worked seamlessly on the GI box. "We knew we were going to have some
issues," Graff added. "In reality, it came together very quickly."

Dietz said Insight is sending technicians to its
digital-tier/VOD subscribers' homes to check the integrity of the drop, establish
home-to-headend-and-back connections and walk customers through the various features of
Insight's digital services, including VOD.

In Hawaii, three fiber rings serve six to seven hubs, and
VOD servers are placed at each hub, said Michael Adams, principal network architect for
Time Warner. Eight VOD quadrature-amplitude-modulation channels of 6 megahertz each have
been allocated.

At a minimum, each channel can support 10 MPEG-2 video
streams. Given a projected 10 percent take rate per VOD program, 80 streams (eight
channels) can support 800 customers. The QAM channel count can be increased by dividing
service areas and narrowcasting to smaller groups of subscribers, Adams said. Statistical
multiplexing can also increase capacity.

The servers can be left unattended, managed and provisioned
using Simple Network Management Protocol, which differs from the past, when servers
required "some kind of care and feeding," Adams added.

Stephen Dukes, vice president of digital broadband
technology for MediaOne Labs, said his company's VOD trial this year will place video
servers at the headend, then determine whether storage needs to be moved out to hubs. Up
to 24 MHz of spectrum should be enough to support initial penetrations, he added.

Quality of signal sent down a VOD channel is of utmost
importance to MediaOne, so the MSO is using 10-to-1 programming ratios (10 programs per
channel).

Even as VOD grows in cable's repertoire, engineers are
looking to use the platform for future applications.

Insight, for example, is also offering children's
programming, Home Box Office comedy specials and Discovery Channel and The Learning
Channel programming on-demand.

Because VOD is a network service providing real-time
streaming content, down the road, VOD platforms could support electronic commerce, gaming,
niche programming and streamed video and audio events, Adams said.

Vivid president Fred Allegrezza looks ahead to on-demand
personalized news programs -- for example, a newscast without "murders and
fires," focused on business or sports news.

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