BROUGHT TO YOU BY TAXMAN / Sc@@pex SAY IT WITH A CALLING CARD Subject: NS Video Content-Length: 11368 FOR RELEASE: MONDAY, MAY 4, 1992 MORRISTOWN, N.J. -- AT&T said today it will provide technology and equipment to companies to help them deliver a host of new entertainment offerings -- including pay-per-view and video-on-demand services -- to their customers. Using digital compression technology, AT&T will offer an "end-to- end" system -- ranging from equipment used by program providers down to the set-top box in people's homes -- to help speed the delivery of entertainment services to consumers. Today's announcement is the latest in a series of offerings reflecting AT&T's commitment to visual communications over a variety of media and through various providers. "Digital signal processing is one of AT&T's key strengths," said Robert M. Kavner, group executive, communications products. "AT&T expects to use this strength to become a leader in visual communications, including both transmission products and services for digital standard and high-definition television." Working with partners such as the ComStream Corporation and News Datacom, AT&T will provide an integrated system to deliver entertainment programming via satellite to headend locations and then to people's homes, said Bob Stanzione, vice president- transmission systems. ComStream Corp., a leading supplier of satellite products and networks, will work with AT&T to provide the equipment needed to transmit compressed channels via satellite to the headend location. News Datacom, a subsidiary of The News Corporation Limited, will provide the systems needed to authorize and process customer requests for programs. The company's encryption/security system uses "Smart Card" technology to give cable operators the highest level of protection against program theft by unauthorized persons. AT&T initially will provide the satellite program delivery system needed to carry channels from programmers to the "headend" office of cable television service providers. The system is comprised of compression, transmission and access control network elements at the satellite up-link and down-link sites. Following testing later this year, equipment for the satellite delivery system will be available for sale in 1993. At the same time, AT&T is exploring potential partnerships for and continuing development of the cable-plant portion of the system -- from the cable headend to consumers' homes. The company ultimately plans to offer an end-to-end system that will boost the capacity of today's cable networks 3-13 times. The digital compression technology underlying today's system announcement is key to paving the way for new entertainment options for people. AT&T's video compression algorithm for cable television service is based on the one used in the high-definition television (HDTV) system that AT&T and Zenith Electronics Corp. are asking the Federal Communications Commission (FCC) to adopt as the U.S. HDTV standard. The technology -- an outgrowth of advanced research in Bell Laboratories -- allows programmers to squeeze 4-18 television channels onto a single satellite transponder, and 3-13 digitally compressed channels onto a conventional analog cable channel. Without digital compression, only one channel could be transmitted over a single satellite transponder to the cable headend. Bottomline, the technology is expected to have a dramatic impact by making available to consumers hundreds of new entertainment offerings in movies, live-action sports, homeshopping, in-home education services, etc. Not only that, it will give people the shows and services they want, when they want them. AT&T already is working with U S WEST and Tele- Communications, Inc. (TCI) to explore two video entertainment services -- enhanced pay- per-view and video-on-demand -- in a market trial set to begin this summer. The trial, which uses existing technology, is designed to measure customer reaction to and acceptance of these services. AT&T's commitment to create innovative visual communications products and services has been demonstrated through several earlier announcements this year. In January, AT&T introduced the VideoPhone 2500, which delivers images of calling parties through ordinary phone lines. The company subsequently introduced the AT&T Group Video System, a compact, rollabout system that can extend digital videoconferencing throughout a business. Global Business Video Services recently expanded its service offerings, and NCR announced a multi-media automatic teller machine (ATM) with video-conferencing capabilities. In addition, AT&T Microelectronics introduced a video codec chip set that will permit videoconferencing and full-motion video on equipment as compact as desktop PCs and video telephones, and as varied as teller machines and point-of-sale terminals. Digital compression technology will be demonstrated in AT&T's exhibit at the National Cable Television Association (NCTA) convention this week in Dallas, Texas. By offering compression technology and equipment to cable and telephone companies, AT&T expects the entire market for visual communications will grow to the benefit of all. # # # Backgrounder on Digital Compression Technology Digital compression uses computer and algorithm techniques to compress a video signal from 216 Mb/s (CCIR-601) or 120 Mb/s (NTSC) to between 1.5-8 Mb/s while maintaining good picture quality. With digital compression, more programs can be squeezed into a single transponder, and more channels can be packed into a 6 Megahertz slot on the broadband cable spectrum. The technology promises a host of benefits to cable programmers, operators and subscribers. For programmers, it means up to 18 programs can be transmitted via a single satellite transponder to the cable headend. Up until now, a single satellite transponder could only handle one program per channel. With this technology, the amount of compression -- also known as the compression ratio -- can be flexibly selected by a service provider to match a particular service offering like pay-per-view movies and video-on-demand, live-action sports, in-home education, homeshopping, etc. For example, compressed rates as low as 1.5 Mb/s can be used to provide fairly inexpensive -- but highly compressed -- VCR- quality services from film sources. On the other hand, an 8 Mb/s compression rate can transmit the most complex video material -- a Superbowl game, for example -- while maintaining the highest "broadcast quality" picture for viewers or other distributors. Digital compression not only provides programmers with tremendous savings, it offers spectrum capacity that wasn't previously available for new types of programming. Once the technology is fully deployed, it's expected to boost the capacity of today's cable networks 3 to 13 times. With more programs and channels squeezed into a set amount of space, the technology ultimately will allow hundreds of programs to be transmitted from cable operator "headend" locations to subscribers' homes. More channels for cable operators means, of course, new sources of revenues. For cable TV subscribers, digital compression will provide a wealth of new video services. Enhanced pay-per-view -- giving people the shows they want, when they want it -- video-on-demand and interactive services are just some of the possibilities. In fact, the technology promises applications that have yet to be developed or even imagined. AT&T's video compression algorithm is based on the one used in the high-definition television (HDTV) system that AT&T and Zenith Electronics Corp. are asking the Federal Communications Commission (FCC) to adopt as the U.S. HDTV standard. AT&T proposed its program delivery system to CableLabs, Inc. (CableLabs), Tele-Communications, Inc. (TCI), Viacom International and the Public Broadcasting System (PBS) last December after the industry consortium asked companies to describe how digital compression technology could be deployed. # # # Backgrounder on AT&T/TCI/U S WEST Video Services Trial This summer, AT&T, Telecommunications, Inc. (TCI) and U S WEST will begin a market test of two services -- enhanced pay-per- view and video- on-demand -- in a suburb of Denver, Colo. The test, which will use current technology, is being conducted to measure customer reaction to and acceptance of "viewer-controlled cable television" (VCTV) services. The trial will allow customers to view programming in two ways. Half of the more than 400 customers participating in the test will use a remote control device to select more than 1,000 movies and special events from a printed guide. Customers will have total control over what to watch and when, without having to leave home. They'll also be able to "pause" programs for up to 10 minutes at a time. The other half of the test group will be able to watch any of 15 movies and features a day, at least six of which will be available at any one time. About halfway through the test, both groups will receive both services. In all cases, the services will be offered in addition to TCI's regular cable service. And Denver-based consumers who do not currently subscribe to cable TV will be able to participate in the test, which is expected to run for between 12-18 months. AT&T is participating in the trial to gain insights into customer desires so it can develop and deploy technology that best meets customers' needs. Jerrold Communications, a division of General Instrument Corp., will supply the set-top equipment that will be installed in customers' homes for the duration of the test, as well as the modulators, encoders and scramblers for the video source systems. Optical Networks International is supplying the AT&T LaserLink II optoelectronics and AT&T fiber-optic cable that TCI and U S WEST will use for their portions of the test network. TCI, headquartered in Denver, is the nation's largest cable television company. It serves 11.3 million cable customers in 48 states. AT&T Network Systems, headquartered in Morristown, N.J., is among the world's largest suppliers of communications network equipment. AT&T's equipment is designed by AT&T Bell Laboratories, the research and development arm of AT&T. Its products include digital switching and transmission equipment, fiber-optic and copper cable, operations support and data networking systems, and wireless systems for mobile phone networks. U S WEST owns companies involved in communications, marketing, services and financial services, as well as cable and telecommunications operations in the United Kingdom, France, Hungary and Scandinavia. U S WEST Communications provides telecommunications services to 25 million customers in 14 western states. # # #