DiviCom, Inc. Selected by Thomson to Provide MPEG-2 Encoding Systems at Heart of TELE-TV Digital Television System; Contract Valued at Over $100 Million Under Negotiation.

MILPITAS, Calif.--(BUSINESS WIRE)--Jan. 29, 1996--DiviCom, Inc., one of the world's leading providers of MPEG-2 based products and components for digital video networking, announced today that it has been selected by Thomson Consumer Electronics to provide the head-end equipment used in TELE-TV's digital MMDS home video delivery system.

Thomson was named recently as the prime contractor for the TELE-TV system.

Thomson will work to develop a system infrastructure and will provide digital set-top boxes that will enable TELE-TV customers to receive 100 or more channels of digital television entertainment including local programming. As previously announced, the value of the Thomson/TELE-TV contract could range up to $1 billion.

DiviCom's contract with Thomson, which is under negotiation, could exceed $100 million. DiviCom's deliverables are integrated head-ends including its industry-leading MPEG-2 encoding, multiplexing, and system management products.

TELE-TV is a joint venture of Bell Atlantic, NYNEX and Pacific Telesis. The new venture was formed to spearhead the drive by these telecommunications giants into the video entertainment market. Thomson -- which manufactures and markets the RCA, ProScan, and GE brands of consumer electronics products -- is the world's leading producer of digital set-top receiver/decoders, the "brains" of the home video delivery system.

TELE-TV Systems, the unit responsible for assembling and integrating the technology needed for advanced video services, announced on September 21, 1995 that it had chosen Thomson to supply the end-to-end system. DiviCom's MPEG-2 encoding systems -- which could include several hundred encoders and remultiplexers -- are a key part of the infrastructure and could be installed in head-end facilities over the course of three years.

"We are pleased to include DiviCom's expertise in developing MPEG-2 digital compression systems in the planned TELE-TV MMDS project," said Thomson's James E. Meyer, senior vice president, product management. "DiviCom's head-end systems will play a major role in our solution for this large and critical digital television deployment."

Founded just two-and-one-half years ago, DiviCom has since won multi-million dollar contracts from companies including Bell Atlantic, EchoStar and others for both encoding equipment and set-top decoders. Today's announcement marks a major step forward for DiviCom as it expands its customer base to include NYNEX and Pacific Telesis, partners with Bell Atlantic.

"We are delighted to have DiviCom's participation in our MMDS system," said Ed Grebow, president of TELE-TV Systems. "The advanced state of their technology and record in the industry of timely delivery were key components in the ultimate success of Thomson's bid."

Added Nolan Daines, president and CEO of DiviCom: "We are very grateful for the opportunity to play an integral role in assembling the infrastructure that TELE-TV will need in order to offer customers a vast assortment of television and interactive programming. This partnership represents the continuation of our strategy to address key market segments such as Switched Digital Video networks (Bell Atlantic's Dover Township deployment) DBS satellite networks (EchoStar), and now MMDS wireless cable."

TELE-TV plans to offer consumers a service that includes local broadcast, basic, and premium cable channels and interactive services. This service will be provided via a microwave based wireless cable system known as MMDS, or Multichannel Multipoint Distribution System. This digital system will enable Bell Atlantic, NYNEX, and Pacific Telesis to offer video services to up to three million households in their service areas over a three-year timespan.

In addition to requiring set-top boxes for each of these households, TELE-TV's system may require up to ten head-end facilities where all of the major infrastructure equipment -- including DiviCom's encoding systems -- will reside. It will be DiviCom's task to integrate all of the equipment in each head-end facility.

Added TELE-TV's Grebow: "DiviCom is an important player in a very dynamic team of companies and individuals committed to leading in the next generation of video services for entertainment and education."

About DiviCom, Inc.

DiviCom, founded in 1993 by Groupe SAGEM (France), a European leader in electronics and telecommunications, develops and integrates products and components that make digital video networking possible. Products include audio/video encoding and decoding systems, and integration consulting and implementation services. Based on the MPEG-2 and DVB international standards, DiviCom's products enable digital video broadcasting over a variety of networks including satellite, wireless, fiber, cable, and twisted pair wiring.

DiviCom can be reached by phone at 408/944-6700, or by fax at 408/944-6705.

CONTACT: DiviCom, Inc.

Lisa Croel, 408/944-6530 or 415/326-0487

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