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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.
                             # # #
