I'm still sorting out this MediaOne-General Instruments deal and its
potential impact on BRCM. It appears that MediaOne has adopted an
open cable platform which will put General Instruments and Philips
directly into competition with each other for MediaOne's digital
set-top business (C-Cube is supplying the headend for the Philips
deployment.) MediaOne has already deployed with GI in Detroit, so
Philips really looks like a second-source supplier to put competitive
pressure on GI. Evidence of that is the fact that MediaOne put out
two releases, one which announced the selection of all the partners
and another which only extolled its relationship with GI. This is
good news for BRCM. However, in the long run, an open cable platform
and the presence of giants like Philips will pressure BRCM since it
encourages entry by a number of competitors.
Here's the full release:
MediaOne(R) Selects Initial Partners to Deliver
OpenCable(TM) Platform; Initial Partners Include Canal+,
DiviCom, General Instrument and Philips
PR Newswire - February 08, 1999 09:14
ENGLEWOOD, Colo., Feb. 8 /PRNewswire/ -- MediaOne(R), the Broadband services arm of
MediaOne Group (NYSE: UMG), has become the first U.S. cable company to select an open
conditional access system -- already widely used overseas -- that allows cable companies to
accommodate digital set-top boxes from several manufacturers in a given market.
In addition, MediaOne has chosen several global providers of digital technology -- Canal+, DiviCom
and Philips -- to provide initial digital video platforms that will use this system and will be compliant with
U.S. OpenCable(TM) specifications. These suppliers already collaborate on multiple digital cable
projects around the world.
And MediaOne has expanded its agreement with General Instrument, an active participant in the
OpenCable process and the leading interactive digital video network and set-top supplier in North
America. As part of that expansion, GI has committed to evolve the digital systems that it supplies to
MediaOne to incorporate the international open system consistent with the other technology partners,
scheduled to be accomplished in collaboration with those partners by the first quarter of 2000.
OpenCable is important because it allows operators to accommodate hardware and software from a
variety of vendors without proprietary technological constraints. This competition among vendors means
lower prices for both operators and consumers. The open standard will also allow set-top boxes to be
sold at retail, giving customers the opportunity to purchase boxes themselves, as they do with other
consumer electronics. This consumer option has been a long-standing goal of the Federal
Communications Commission and legislative leaders.
MediaOne's OpenCable platform will be compliant with the OpenCable specifications developed by
CableLabs, and supports multiple conditional access technologies. Conditional access allows cable
companies to scramble programming signals and to authorize descrambling for customers who pay to
view specific networks or special events.
MediaOne launched digital service in suburban Detroit last year, and is planning to launch digital in two
additional markets by the end of second quarter 1999. In one of these markets, MediaOne will use GI
digital headends, software and set-top boxes; in the other market, MediaOne will deploy Canal+,
DiviCom and Philips products.
In this market, Canal+ will supply the open software platform, which is currently deployed in more than
three million households internationally. Silicon Valley-based DiviCom will supply MediaOne with
OpenCable-qualified headends. Philips, a global leader in digital video and consumer electronics
equipment and one of the largest set-top box suppliers world-wide, will provide the digital set-tops.
Canal+, DiviCom, and Philips, through their collaboration, have broad and deep experience on multiple
digital projects, primarily in Europe.
"Our customers will benefit from our selection of this OpenCable platform. They'll get to choose from a
variety of set-top boxes from different manufacturers, all with better features and lower prices. In
addition, this move is a giant step for both MediaOne and the U.S. cable industry," said Jan Peters,
president and CEO of MediaOne. "We could not have picked a better set of world class, global
partners to meet our goals for the deployment of digital video."
In support of MediaOne's announcement, Dr. Richard R. Green, CableLabs president and CEO, said,
"We have enjoyed strong support from our members in the OpenCable effort. This initiative by
MediaOne is indicative of that kind of support and greatly facilitates our ability to complete the
OpenCable project and to meet the needs of our member companies and cable customers."
"MediaOne's move toward an OpenCable platform is a welcome development for the OpenCable
effort," said Bill Schleyer, who has been heading the OpenCable initiative for CableLabs, the research
and development arm of the U.S. cable television industry. "CableLabs has been aggressively
developing OpenCable specs that will create an environment of new development in content and
hardware, ultimately creating a better product at a better price."
"Time Warner is a strong supporter of the OpenCable initiative, as opening the doors for competition
will ultimately benefit customers with more choice in set-top boxes, functionality and content," said
Glenn Britt, president of Time Warner Cable. "This OpenCable path is the direction the industry should
go to provide our customers the next generation of video services."
"Working with a large number of international manufacturers has allowed Canal+ to achieve extremely
competitive prices and enabled us to achieve a high degree of independence from any particular
supplier," said Henri Joubaud, group senior vice president, Technology, of Canal+. "The Canal+
technology is now being integrated by several manufacturers into television sets and set-top boxes that
are increasingly being sold at retail, particularly in the United Kingdom, France, Italy and the
Netherlands, making it a standard consumer electronics good," adds Joubaud. "With over three million
digital set-top boxes from ten leading vendors, Canal+ is delighted to share our unique field experience
with many different countries and with clients in Europe, Asia, Latin America and the Middle East to
make the MediaOne digital roll-out a success."
"In an open standards environment, cable operators can directly benefit from a competitive marketplace
for all the components of their digital television system. As a leading provider of open standards-based
systems for digital television, DiviCom enables companies like MediaOne to take advantage of the best
solutions to meet their business needs," said Tom Lookabaugh, president of DiviCom, a C-Cube
company. "DiviCom is pleased to be chosen by MediaOne for this historic installation."
Commenting on the MediaOne agreement, Mr. Rob van Oostenbrugge, managing director of Philips
Digital Video Systems, said, "We are extremely pleased to provide our open platforms to MediaOne
and the opportunity to service the U.S. cable industry at large. We believe that open platforms are
critical for cable operators to enable the U.S. digital video market to grow and establish retail
distribution for digital cable set-tops. We congratulate MediaOne for taking this big step and look
forward to providing MediaOne and the U.S. cable industry in general the best choice in digital." Philips
has vast experience in the consumer electronics fields and has wide access to consumer retail outlets.
Philips Digital Video Systems is a world leader company in MPEG-2 compression and transmission
systems as well as set-top boxes.
"GI is in a unique position to assist MediaOne in achieving its near-term commercial objectives and its
OpenCable vision," said Ed Breen, chairman and CEO of General Instrument. "Since 1996, GI has
been providing commercial digital cable infrastructure and set-top terminals to hundreds of systems
throughout North America. We have worked closely with CableLabs and its member companies in
support of our industry's OpenCable initiative.
"Our recent DVB product award from one of Europe's largest cable operators, United Pan-European
Communications, further demonstrates the broad portfolio of open digital technology solutions that GI
has to offer broadband network operators. MediaOne is drawing on standard, open technologies and
driving them into a brand new mold to best fit its OpenCable, multi-vendor supply strategy," Breen
added.
MediaOne, the nation's leading Broadband services company, provides entertainment, information, and
communications services to about five million customers. MediaOne Group (NYSE: UMG) is one of
the world's largest broadband communications companies, bringing the power of broadband and the
Internet to more than seven million customers in the United States, Europe and Asia. The company also
has interests in some of the fastest-growing wireless communications businesses outside the U.S.,
serving more than three million customers. For 1997, the businesses now part of MediaOne Group
produced $6.6 billion in proportionate revenue.
Canal+ Technologies, the technology division of Canal+, Europe's largest pay-TV group, is a leading
provider of digital broadcasting software solutions in the world and the largest one in Europe with
approximately 65 per cent of the marketplace. Its product line comprises conditional access software
Mediaguard, hardware-independent interactive system and middleware Mediahighway as well as over
30 different interactive and multimedia applications. Canal+ Technologies has an installed base of over
three million digital set-top boxes in the world using its technologies. It most recently provided the
set-top box technology for ONdigital, the world's first digital terrestrial operator. Canal+ Technologies
can be found on the World Wide Web at canalplus-technologies.com.
DiviCom Inc. delivers digital television solutions. Products include audio/video encoding, data broadcast
solutions, network management systems, consulting and integration services. Based on the MPEG-2,
DVB and ATSC international standards, DiviCom products enable digital video broadcasting over a
variety of networks including terrestrial, satellite, wireless, fiber and cable. DiviCom is a wholly owned
subsidiary of C-Cube Microsystems Inc. (Nasdaq: CUBE), and both companies are based in Milpitas,
Calif. C-Cube is a leading provider of digital video silicon solutions for the consumer electronics,
communications and convergence markets. DiviCom can be reached at +1-408-944-6700 or at
www.divi.com.
General Instrument (NYSE: GIC) is a leading worldwide provider of integrated and interactive
broadband access solutions, teaming with its business partners to lead the convergence of the Internet,
telecommunications and video entertainment industries. www.gi.com.
Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and
Europe's largest, with sales of over US$39 billion in 1997. It is a global leader in color television sets,
lighting, electric shavers, color picture tubes for televisions and monitors, and one-chip TV products. Its
256,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics,
domestic appliances, components, semiconductors, medical systems, business electronics, and IT
services (Origin). Philips is quoted on the NYSE, London, Frankfurt, Amsterdam and other stock
exchanges. News from Philips is located at www.news.philips.com.
For More Information, please contact:
Jean-Louis Erneux Ben Stanger Sharon Corbitt --
Media Contact
Canal+ DiviCom Inc. General Instrument
011 33 14425 7581 408-490-6898 215-323-1873
Jerneux@canal-plus.com mediarelations@divi.com scorbitt@gi.com
Dario Santana -- Bart van Dijk - Europe & Far East/Pacific Rim
Investor Contact
General Instrument Philips Digital Video Systems - The Netherlands
215-323-1213 011-31-40-27-37466
dsantana@gi.com dijk3@am.umc.ce.philips.nl
Vince McNey -- Americas
Philips Digital Video Systems Company
801-977-1511
vmcney@mail.philipsdvs.com
SOURCE MediaOne Group
/CONTACT: Tracy Hollingsworth, 303-858-3418, or Dave Wood, 303-858-3404,
both of MediaOne; or Pete Campisi of Ruder Finn, 212-593-5863/
/Web site: gi.com
/Web site: news.philips.com
/Web site: canalplus-technologies.com
/Web site: divi.com
(UMG GIC CUBE)
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