ORLANDO, Fla. — Dec. 14, 1994 — Time Warner introduced the Full Service Network(TM) (FSN) — the world's first digital, switched, interactive broadband communications network delivering a range of services — today in Orlando.

The company demonstrated for the first time the system's capability to deliver movies on demand, video games and home shopping services. Attendees at the introductory event also saw a wide range of interactive services now under development by several different providers, and heard about the company's plans for further evolution of the network.

"The debut of the Full Service Network is a turning point for the communications industry," said Gerald M. Levin, chairman and CEO of Time Warner Inc. "The network's breakthrough architecture makes true video on demand a reality for the first time. With digital interactivity, consumers are in total control of the programming they bring into their homes.

"The FSN is an integral part of Time Warner's strategy for driving the growth of our copyright businesses. We are the largest creator and distributor of copyrights in the world, and as the first to deploy the FSN — an entirely new distribution channel — we can now accurately assess the potential for such on-demand programming as movies, sports, news, advertising, shopping, education, games, music and more. This knowledge, and having it before anyone else, will give us a competitive advantage.

"At the same time as we move ahead in Orlando, we are installing the FSN's fiber-optic backbone in our cable operations across the country. These upgrades will improve reliability and quality across the board, and enable us to offer a much wider range of programming choices. The total package will mean we can attract new customers and retain existing customers in greater numbers than ever before.

"In addition, we are already leveraging the power of the FSN's broad-brand architecture into telephony, adding another layer of revenue generation from the same basic capital expenditure.

"Over the long term, the FSN opens a whole new world of distribution opportunities for every division of Time Warner. It will challenge us to do more of what we do best: create the most innovative information and entertainment content anywhere in the world," Levin stated.

Joseph J. Collins, chairman and CEO of Time Warner Cable, added: "The creation of the Full Service Network is a tremendous accomplishment for Time Warner Cable and its talented technology partners. Nothing of this complexity and sophistication has ever been achieved in this industry. We intend to learn from Orlando, refining the technology, pushing down its cost and determining precisely what our customers want. We will then continually fold that knowledge into the eventual roll-out of interactive television operations across the country.

"In the initial phase of the Orlando project we are offering core services — video on demand, home shopping and video games. With us today are representatives of nearly 20 developers of additional interactive services which will become available to our customers. The key to today's introduction is that we now have a superbly functioning and powerful network upon which we can build a system of services that will evolve over time, but with increasing momentum as we refine this revolutionary new technology."

At the event, the company demonstrated the newly developed Carousel(TM) navigation system which allows customers to choose a movie or other product instantly. The on-demand technology of the network was used to call up Warner Bros.' recent hit films "The Specialist," and "The Client," and fast-forward, reverse and pause the pictures, as well as skip forward ten minutes into the movies. The video shopping mall was also demonstrated by ordering products from the Warner Bros. Studio Store and the U.S. Post Office, as was the video games venue, which was used to play a game of electronic gin with a player at another location. Atari Jaguar 64-bit games on the system were also shown. Finally, an interactive program guide from Prevue Networks, which allows viewers quickly to check program listings and push a button to select a highlighted program, was also shown.

Customers of the Full Service Network today can instantly order any of approximately 50 movie titles from an electronic video store, with hundreds more available in the future. More than 300 items are currently available for purchase at seven stores in the video shopping mall, with many more to be added shortly. Besides Warner Bros. and the Post Office, the mall stores are Spiegel, The Nature Company, Time Warner Viewers Edge, Sharper Image, Crate and Barrel and Williams Sonoma. Customers also can receive information about Chrysler automobiles from an informational video application.

Many future applications that will become available to customers of the Full Service Network next year were also shown for the first time. These include: educational applications such as access to a local public library; Shoppervision grocery shopping service; Sports Illustrated's sports on demand service; HBO's HBO on demand service; Time Inc.'s The News Exchange, the world's first news on demand service; US WEST's Go TV and U S Avenue services; the Warner Magic Music Store for the purchase of recorded music; and Warner Bros.'s Omnio navigator, which also will be tested as a gateway to the network.

A broad range of companies responsible for creating the advanced, digital hardware and software for the FSN participated in the demonstration. Primary technology partners in the FSN are AT&T, Scientific-Atlanta and Silicon Graphics, Inc. AT&T Network Systems provided the high-speed ATM (asynchronous transfer mode) switch. Scientific-Atlanta manufactured the home communications terminal, in cooperation with Toshiba and also supplied the head-end and distribution electronics. Silicon Graphics created the FSN system software, the Carousel(TM) navigator and video-on-demand and interactive games application. Silicon Graphics also developed graphics and computing technology for integration into Scientific-Atlanta's home communications terminal, which is powered by MIPS(R) RISC microprocessors. Silicon Graphics' Challenge media servers were also deployed for use in the Network Operations Center. The underlying system software architecture will be used to commercially deploy large-scale, fully integrated, interactive video server solutions by Interactive Digital Solutions, a joint venture company of Silicon Graphics and AT&T.

"The Full Service Network is the world debut of true interactive television," said Edward R. McCracken, chairman and CEO of Silicon Graphics. "The advanced technology developed by Silicon Graphics and the other FSN technology partners has created a revolutionary network capable of delivering on the promise of the Interactive Age. We ultimately expect these powerful interactive services to be widely accessible, as set-top capabilities are integrated into low-cost MIPS media processor technology, and as Interactive Digital Solutions commercially deploys the basic FSN software architecture."

"Scientific-Atlanta's role in the Full Service Network underscores our mission as a technology enabler of multimedia applications," said James P. McDonald, president and CEO of Scientific-Atlanta. "We're extremely proud to be a partner with Time Warner in introducing the digital era of interactive broadband networks. The success of this project continues our tradition of providing leading-edge companies with the latest communications technologies, from the satellite to the set-top."

"Right now, this technology puts us on a new electronic frontier. The technology exists. We can deliver. As this new electronic dawn breaks, we need continually to work to understand what customers value," said Dan Stanzione, president — Global Public Networks for AT&T Network Systems.

Other key technology providers to the Full Service Network include Hewlett Packard (home color printer), Hitachi (multiplexer/demultiplexer), AND Communications (support to Silicon Graphics for Carousel), Ikonic Interactive (software and user interface for The News Exchange), Medior Inc. (design and production of Warner Bros. Omnio navigator), Objective Systems Integrators (systems monitoring), Time Warner Interactive (navigator support and applications development expertise), Warner Bros. (Omnio navigator) and Andersen Consulting (systems integrators).

Time Warner Inc. is the world's leading media and entertainment company, with interests in magazine and book publishing, recorded music and music publishing, filmed entertainment and theme parks and cable television and cable television programming.

Time Warner Cable is the nation's second largest cable television operator. It presently serves 7.3 million customers in 34 states. After the closing of previously announced transactions with Advance/Newhouse and Summit Communications, the company will serve approximately 9 million customers.

AT&T Network Systems is one of the world's largest manufacturers and providers of network communications equipment, offering communications service providers virtually everything they need to build and operate their networks. AT&T provides communications services, equipment and computer systems to consumers, businesses and communications companies around the world.

Scientific-Atlanta, Inc. is a world leader in broadband communications systems, cable television electronics, satellite-based communications networks and instrumentation for industrial, telecommunications and government applications.