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AnalysisofTCI's"SOO-ChannelTest'' December14,1993 Preparedby INPUT TheAtriumatGlenpointe 400FrankBurrBoulevard Teaneck,NewJersey 07666 201-801-0050 Fax: 201-801-0441 AnalysisofTCI's"500-ChannelTest" L StudyObjectives ThisreportanalyzesthescopeandresultstodateofTCI's"500-Channelmarkettest"inDenver, ColoradoaswellastheadequacyofTCI'splanned$1.9billioninvestmentinfiberopticbackbone capacitytoupgradeTCI's10.2millioncablesubscribers. n. Approach INPUTinterviewedTCIexecutivesandconductedaliteraturesearchforthelatestinformation aboutthetesttrial. TCIcooperatedwithINPUTsinquiryandINPUTwasabletoobtainall relevantpublicinformationplusadditionalinformationnotgenerallyavailableinthepublic domain. ni. StudyFindings TCI,AT&TandUSWestarecooperatingtotestconsumerbehaviorandbuyingpreference bVieetwweere-nCotnwtorcoollmepdetCianbgleapTperloeavcishieosnt(oVdCeTliVv)e,riinsgsviimidleaor-toon-otdheemranVdO(DVOtDes)t.spTlhaennteesdtotrrianl,ocwalled underwayinArlingtonCounty,Virginia(BellAtlantic);Cerritos,Califomia(GTE);Omaha, Nebraska(USWest);Orlando,Florida(TimeWarner);andQueens,NewYorkQty(Time Warner). Thetesttrial,currentlyunderwayinasmallsectionofArapahoeCounty(southofDenver, Colorado),involves330customersoftheUnitedArtistsEntertainmentCorporation,aTCIimit. TCIinitiatedthetestandrecruitedAT&TandUSWest. pTahye-ptewro-vcioemw,pectaillnegdaHpiptrsoaatcHheosmteo.VODareMoviesonDemand,calledTakeOne,andenhanced • TakeOneoffersabout2,000movies. • HitsatHomeoffers6moviesatatime,rotatedamong15titleseachday.Afreemovie- previewchaimelhelpsviewersdecidewhattowatchinsteadoftheprintedguideofTake One. ThePreviewchannelalsoindicateshowmanyminutesbeforethenextshowing(nomore than15minutes). SonyCorp.(YNY) Page1 TCIprovidestheprogramming,accesstohouseholds,themarketing,regularcableservicessuchas ABC,CBS,CNN,andESPN,andstaffstheVCTVcenter24-hours-a-day.AT&Tdesignedand suppliedthecentrally-locatedvideoserverequipment,thecompressiontechnology,thefiber-optic capacitybetweentheheadendandhouse,thesmartset-tops(SST),andtheprogramremote scounptprloylsdiemviilcaerst.eScehenoElxohgiybittoIPIaIc-ilfifcorTeslyesstiesmfcoorniftisgpulraatninoend.VINOPDUTserbveilcieeviensCtahlaitfoArnTia&,Tpewinldlianlgso regulatoryapproval.USWestprovidedthepoint-to-pointsignaltransmissionbetweentheTCI- ownedandTCI-operatedVCTVtestcenterandtheTCI-ownedheadendfacihties.USWestalso providedtheconsumermarketresearchexpertiseandstaff. SonyCorp.(YNY) Page2 Cas CUentObjectives oVeverage^"' expanse" EXHIBITIII VCTVTestTrialSystemConfiguration New 330TCI Fiber- Households optic Re- Cablein mote Parallel with Existin Coaxi Cab VCTVCenter Fiber-opticLink Headend USWest AT&T-provided TCI serverand digital compression technology TCIoperated andstaffed CompressedMovies(AT&TTechnology) ConsumerSelection(AT&TTechnology) AT&T AT&T SonyCorp.(YNY) Page3