To: KailuaBoy who wrote (24666 ) 8/15/2000 2:55:36 PM From: Rob C. Read Replies (1) | Respond to of 29970 (New throughout, adds analyst conference call) By Jana Sanchez and Lucas van Grinsven LONDON/AMSTERDAM, Aug 15 (Reuters) - Cable TV operator UPC said on Tuesday its new digital TV set top boxes could run on software from rivals to its shareholder Microsoft Corp., as the U.S. company was late supplying its interactive TV software. Microsoft, which owns an 8 percent stake in UPC, will miss its September deadline and its software may not even be ready by the first quarter, UPC Chairman Mark Schneider told an analysts conference. United Pan-Europe Communications NV, Europe's largest cable operator with close to 7 million subscribers, would pursue the launch of its digital set-top boxes, albeit with bare-bones functionality from non-specified vendors. If Microsoft did not have its full interactive software ready by the first quarter, UPC would use software from others, Schneider said. "Microsoft is late .... There's working software out there, the OpenTV <OPTV.O><OPTV.AS>, Liberate <LBRT.O> platform and ExciteAtHome <ATHM.O> platform," Scheider said. "We'll work with them." By the end of the year UPC would decide which software to use, he added. Sources familiar with the situation had told Reuters earlier this month that Microsoft was unlikely to meet the September deadline for its interactive digital TV services. Microsoft said last week it had drawn up a "Plan B" to provide UPC with basic software that would help it go ahead with the introduction this year of the first 30,000 digital set top boxes. But these boxes would only have one or two of interactive functions, instead of over a dozen. UPC did not specify whether the simple software for the first 30,000 boxes would be from Microsoft or others. When the improved software was ready, UPC said it would download it straight into the set-top box at home without a technician present. "It's a computer. You can do that with a computer," Schneider said. UPC WILL NOT WAIT UNTIL MICROSOFT IS READY Its stake in UPC would not give Microsoft the clout to hold back UPC's introduction of interactive TV, UPC's chief executive said. "If you (Microsoft) can't show up at the right time to deliver, frankly, you don't have any rights," Schneider said. Microsoft has numerous investments in cable companies worldwide, which competitors in the past have dubbed part of a strategy to buy itself a presence in the TV software business. In addition to UPC, Microsoft has taken stakes in Britain's Telewest <TWT.L>, NTL <NTLI.O> and Portugal's TV Cabo <PTMN.IN>. All of these companies have said they will use Microsoft software in their digital TV boxes. But UPC said it was not doing any favours. The Microsoft TV software, if working, would be the Rolls Royce of the pack. "We like Microsoft software best," Scheider said. NO FINANCIAL HIT EXPECTED UPC said it would not be financially hurt by the delayed introduction of full-fledged set-top boxes. Scheider said his company had not factored in large interactive TV revenues for this year anyway. But he did expect UPC to offer a wide range of interactive services by the beginning of next year, such as video-on-demand, telephony, electronic programming and Internet access. On top of the 30,000 boxes UPC would sell this year, the company expected to distribute another 300,000 set-top boxes in 2001, Scheider told analysts. Europe's largest cable operator in terms of number of customers, UPC is 51 percent owned by UnitedGlobalCom <UCOMA.O>.