(C)1993, FRIDAY NIGHT LIVE, Gary Bourgois, and Robert Smathers.



Transcript of the Gary Bourgois/Jim Shelton interview conducted on
FRIDAY NIGHT LIVE, August 13, 1993 edition.  

Transcribed from audio tape by Robert Smathers.

GB = Gary Bourgois
JS = Jim Shelton

(normal opening music)

GB: Well, good evening to you.  Here we are with Friday Night Live. 
It is a very special edition of the program tonight.  We have Jim
Shelton who is with General Instruments. He is going to answer a
lot of questions we took during the week.  Hopefully your question
will be answered tonight.  We are going to try to answer as many
questions as we can about Digicipher, Videocipher, and even one
question about G.I. IRD's.  So, stay with us.  That is all coming
up here tonight on this very special edition of Friday Night Live.

GB: So, without further ado, we'll take you out to California and
hello Jim.

JS: Hello Gary.

GB: It is nice to have you with us tonight.

JS: Well, I appreciate the opportunity.

GB: Now what exactly -- for those folks who don't know -- what is
your position at General Instruments?

JS: My position is -- I am responsible for the Videocipher product
for North America, as in anything to do with U.S., Canada, and to
an certain degree Mexico.  

GB: O.k.  Do you wear any other hats over there as well?  'Cause I
know we have a new product coming on the line soon known as
Digicipher and I imagine you have your fingers in that as well. 

JS: That's correct.  That's correct.  My job is to bridge the
product of Videocipher heading on over to the Digicipher arena. 
So, yes, I am pretty much involved in the digital area.  

GB: O.k. Well, we have a number of questions about that but let's
start off with what most of our listeners are familiar with and
that would be the Videocipher.  This is the gizmo that makes
possible satellite reception of cable-type programming -- encrypted
subscription programming.  Now there have been -- this is a big
question I've gotten from a lot of people -- and we would like to
find out -- I've heard this from programmers as well as from
dealers that legal subscription using versions 1.08 and 1.10 ROM
revisions have been losing their paid programming.  Now, we
understand that G.I. has been working on that problem and there is
a programming place to help those customers.  Could you tell us a
little more about that?

JS: Yes, that's correct.  It's been something that is very
sporadic, it's been something we haven't been able to track any
trend analysis through the DBS Authorization center which I'm
responsible for, so it has been very difficult to get our hands
around it, but nevertheless we recognize that there is a problem. 
We believe it is with the encoder and we've got a software
development team and firmware development team that has been
testing some of the modules that we have gotten from the field
thanks to the help of consumers that cooperated with us and we
should be pretty close to identifying what we feel is the message
rate -- what I mean by that is the message rate is the error
messages going out, the time period that they are received.  So,
that -- you know -- is the probable cause but we can't confirm that
yet.  We haven't been able to duplicate it in the lab, but
nevertheless it is something we've analyzed and that is the
direction we are heading right now.  We should have something in
about a month, Gary.

GB: O.k., well, I hope you let us know when you have pinned that
down because it is a concern.  In the meantime, if people are
having problems with these particular units, what will G.I. do to
help them out?  

JS: Well, the problem doesn't rely -- or doesn't reside -- with the
module.  We've swapped out modules and that doesn't fix the
problem.  The problem being at the uplink in the scrambler and at
the rate messages are being transmitted.  So, changing out the
module really doesn't solve anything.  I'm very sympathetic with
the fact that when something occurs on a weekend an instant trip
does fix the problem but depending on who they are purchasing from
they may or may not be open.  And that is a difficult situation. 
However, there is several companies who are open 24 hours seven
days a week and even if you don't subscribe through those
companies, they will take a call, collect the information, give an
instant trip, and you'll be up and running should that occur on a
weekend.

GB: O.k. Can you perhaps off the top of your head tell us who some
of those programmers would be?

JS: Yes, Superstar Connection and Netlink both have operations that
are open 24 hours seven days a week -- around the clock.  And they
both have 800 numbers.  So, my advice is -- you know -- if the
consumer can bear with us -- because we do need to confirm that we
have identified what the problem is with the scrambler, make that
correction, and get it fixed -- and I know we are very close to
doing that from talking and working with the software people -- if
they could contact those companies and I know Superstar will take
a name and an address, phone number, trip it, refresh that mask
which gives it all the programming that it is authorized for --
that would help.  That would definitely be a relief.  So will
Netlink.

GB: O.k. So you see this as something that is going to be
identified fairly soon and people should just be patient and hold
on then?

JS: Yes. Definitely.  It is very frustrating because I know what it
is like -- I got a system here and to lose authorization -- you
know -- is not, especially something you pay and subscribe for. 
But we have devoted a huge amount of resources in setting up lab
and trying to duplicate the situation and identify.  It's something
to give you appreciation for the degree of frustration when we
analyze these instant trips that come through the DBS center. There
has been no trend whatsoever historically since 1992 coming forward
with any spikes of instant trips.  So we know it is very sporadic,
small, random, like finding a needle in a haystack.  But we have
definitely dedicated a large degree of our engineering resources to
identifying it and getting it corrected.

GB: O.k. So, from what you have described, this is not as some
people have thought related to the ongoing electronic counter
measures against the illegal pirates who are using the commercial
datastream?

JS: No, not at all.  This is something that has to do with the
consumer data that comes through the DBS authorization center and
its encrypted with the scramblers at the programmer's uplink.  The
commercial data is a complete different datastream and a different
set of keys.  VC2+ consumer units do not even look at those keys. 

GB: O.k.  Talking about the consumer datastream brings us up to
this piracy issue which has been cropping up and has been I guess
a thorn in the side of all of us who are in the satellite industry
because if piracy could be eliminated hopefully programming costs
could come down and we wouldn't have to see an ongoing program of
new equipment in order to keep thwarting those guys.  What about
the current situation regarding the commercial datastream?  I
understand that there are some things taking place now and 
eventually that datastream is going to be eliminated -- at least
the one that still works with the old VC2 units.

JS: Yes, that is correct Gary.  The pay-per-view channels are
underway of being upgraded to both VC2+ or VCRS and digital along
with HBO, Showtime, and the broadcast signals being Netlink and
PrimeTime.  Other contracts are underway to proceed on with the
rest of the basic channels.  The pay-per-view is scheduled -- well,
many of them have already shut down and are transmitting 2+ only --
Playboy, Cable Video Store, TVN, Spice, and many other signals are
under way such as Viewer's Choice, Request TV, Action to go 2+ only
and then HBO and Showtime are probably scheduled right around the
September/October timeframe.  I know from the information that I've
received, we have shipped out everything that we have received
names and addresses for from those programmers to the cable
affiliates and they are installing the units.  Now, in between that
period of time there is a lot of -- as you stated earlier --
counter measures.  The certain form of piracy has moved towards
cloning commercial VC2 units and trying to selling those to
consumers as "here's 38 or 40 channels" that are cloned and of
course those are easily identified and can be shut down and that
has been in progress along with investigations and raiding of some
of the locations that authorized and had those commercial units. 
It is not a very viable method to go.  The next step is obviously
a modem to download consumer or commercial keys constantly since
they are changing every two or three days in order to steal the
programming.  So far, those techniques have not been very
effective.  We, however, do not underestimate the pirate
underground.  We anticipate they will perfect it in a matter of
time, but there are investigative methods underway with the FBI and
Customs and I would not spend a great deal of money going in that
direction either.  There is software in counter measures that can
eliminate that type of theft.  So, it is not a very good,
rewarding, quick return on your investment to pay somebody to go in
that direction just to encounter that it does not last less than 30
days.  And, what it comes down to is an economics game, and we
recognize that.  

GB: Well, this is a thing I've often said.  I don't understand the
mindset of someone who will spend thousands of dollars keeping this
pirate stuff running when the cost of subscriptions have dropped to
a point where it is much more economically feasible to go the legal
route.  

JS: Well, it does defy the term theft.  I mean, when you are
spending thousands of dollars really not stealing anything would be
a lot cheaper and more economical to go legitimate.  But,
historically, and I don't know how old you are Gary, but...

GB: I've been in this satellite industry since 1979, so I've seen
it all.

JS: Both you and I grew up with pre-over-the-air TV advertiser
supported and that mindset is still out there.  A lot of the
revenue that is paid for the programming does go back into
production of new movies to the studios.  A good 50 percent of
that.  Over-the-air broadcast advertiser supported -- you know --
that was a different ballgame.  What we are looking at now is cable
programming, movies, sports, and -- you know -- the players on the
teams do get receive pretty hefty salaries.  I wish I received some
of those.  But what that does is -- when you -- when everybody is
legitimate and is purchasing, then you got better quantity and
better quality of production of new product and that is what the
legitimate industry does provide the legitimate consumer.  So,
theft does penalize those who are legal subscribers and that is the
whole emphasis is protecting those legitimate subscribers.  

GB: O.k. Moving on, Jim, with Digicipher being introduced about a
year from now as I understand it and couple that with the fact that
the pirates haven't really managed to crack the actual VC2+, do you
think there is going to be a need to implement the renewable
security technology or do you see us moving into something else
such as the Digicipher?

JS:  We are prepared to implement the TV passcard and also what is
called as the uplink encryption engine.  For most of the pirates
that don't understand what that is about -- it is basically an
encryption engine that accommodates up to 8 different type of TV
passcards.  So, yes, the system has been developed with a great
deal of paranoia towards piracy and we have prepared to step into
the next phase and send out cards if necessary.  However, as you
stated, yes, quite rapidly the digital arena is moving upon us and
all that is built in with this degree of paranoia being the TV
passcard and encryption engine at the digital uplink.  So, either
direction we are ready to move with digital -- that's something
that is not going to turn around and just replace the analog
signals that are out there today.  Consumers will see some of them,
such as Viewer's Choice has two transponders that are going digital
as we speak, Request, HBO does have a multiplex feed that is up
there digital, but nevertheless, they still have many choices on
analog feeds for the same product and that will continue on to the
future as far as those choices in analog.  What we are gearing
towards next year is to have a consumer unit that can receive both
analog and digital, so if the consumer does want many more choices
than what the analog market provides today -- then it is out there
and readily available.  

GB: Now, I saw an article in a trade publication just a couple of
weeks ago which caused me to wonder just what the real facts are
regarding the digital system.  Some of the technical
specifications.  Now, I don't know if you saw this particular
article, but it indicates that according to G.I.'s own spec sheets,
the signal to noise ratio necessary for error free reception is
about double that required for analog reception and also that the
signal takes longer to lock up than we are used to with the
Videocipher.  Now, is that true and is there anything else we need
to be aware of?  

JS:  Gary, I can't answer that question.  I am not an engineer to
be honest with you.  I have had a digital and analog receiver in my
home -- I honestly with that right now for the last couple of years
that has deciphered the HBO signals along with the Videocipher and
what it does --- when it hits the digital transponder, it'll go
18.1 and 18.2 and the picture pops in quite -- well, fast as the
analog.  Now, that is Digicipher I, o.k.  And Digicipher II, and I
think what you are talking about, is an MPEG-2 compatible
technology that is not -- well, it is designed for compression of
data and transmission for the computer industry.  It has a lot of
overhead that isn't necessarily beneficial to a consumer watching
video and audio signals.  Will that delay the acquisition?  I am
not real sure because -- you know -- we haven't used it, we
actually haven't been living with it, testing it.  But I doubt it
because consumers in this industry are used to instant
gratification.

GB: Right, when we go channel surfing we want to know what is there
right now.

JS:  That's right.  The most frustrating part is waiting for the
dish to move to the next satellite.  And, that is another issue
that we are dealing with too in the future.  But, I do not believe
-- knowing the engineering resources that have been applied towards
Digicipher II -- that it could be any significant delay.  Right
now, from my own experience the only delay in changing channels on
digital is just a brief molecular breakdown of the old channel
while the new pops up and I can barely see it.  So, it has been
very impressive, and a great picture. 

GB: o.k. That is something -- many of our listeners being
technically oriented -- we are interested in the picture quality,
the signal to noise ratio.  Well, this -- I know we guess we have
to buy a new receiver to take advantage of this technology, but
what about the dish and the LNB and the outside electronics.  Is
there any upgrade needed there or will that stuff work?  

JS: It is designed for the current equipment to continue working 
with the new product.  The only upgrade required is the new
receiver.  Like I said, I just literally have one of these that I
am using with my other analog receiver -- I have two of them at my
house.  The picture quality as a consumer and all I do is test this
equipment with my wife and kids -- it has made our 10 year old Sony
TV look like a brand new TV.  But we haven't gotten rid of the TV -
- it has really, definitely improved it -- now that could be the
tuner.   But the digital picture quality with six channels on one
transponder was just tremendous.

GB: Well, I'm looking forward to seeing that.

JS: Yeah.  With the existing equipment that you have, what we are
gearing up towards is -- yes, there will be an upgrade of a
receiver required.  However, we have put together a program that
guarantees a trade-in value on your existing General Instrument
receiver -- Innovation receivers.  Now, our thinking there is that
1) we know that dealers and distributors can beat our offer -- of
the value -- will not sell at manufacturer's suggested retail price
and can offer their consumers something better than we are offering
as a manufacturer.  And that is great.  What we want to do is
produce a ceiling -- or a floor if you will -- that what they have
right now is not obsolete.  And our thinking was that upgrading
equipment is probably going to be cheaper than upgrading modules
because of the cost of producing a digital and analog module that
could be inserted into the back of a receiver that would be
compatible.

GB: O.k. So I take it there will not be an insert or standalone
Digicipher unit that I could use with my -- let us say non-G.I.
IRD?

JS: What we are doing in that regard to the non-G.I. IRD is talking
to other manufacturers to see if they want to produce digital
receivers and I think you'll see some competitive programs
announced from the other manufacturers to compete with ours.  But
I can't say who and which manufacturers want to continue playing in
this arena.  Toshiba definitely has committed.  Uniden, I have
talked to them, and they have committed.  We have not gotten around
to giving them the specifications yet, but nevertheless they're
definitely committed and they will probably come out with their own
offers for the upgrade of their equipment to the new digital/analog
equipment.

GB: o.k.  But as far as a standalone unit, we should not hold our
breath?

JS: Standalone meaning?

GB: Meaning a box, like a cage.

JS:  No, no.  As far as the -- the units in the future are going to
be totally integrated.  No more modules. 

GB:  Really.

JS:  That is correct.  It provides a more sleeker, slimline,
totally integrated receiver decoder that processes both analog and
digital.  It does have a slot for an upgrade card.  But everything
in the future transitions to that TV passcard for security purposes
and not a module.  

GB: O.k.  So there is the necessity to purchase a new IRD or I
guess you're calling it an IRT -- Integrated Receiver Transcoder. 
Is that right?

JS:  That is correct.

GB: O.k. For people who want to get into this technology, how much
money are we talking -- lets say at the retail level and we can do
our own math to take it down from there.

JS: For a new digital/analog decoder receiver, manufacturer's
suggested retail price is around $990 and that is the
manufacturer's suggested.

GB: So that actually is very competitive with a similarly equipped
receiver with the old technology.  

JS: Definitely.  Because the high end equipment with the old
technology will manufacturer's suggested retail right around $1500-
$1600 for the high end.

GB:  What about the audio on these new transponder allocations?
What type of audio, how many channels is there room for additional
audio services like we are used to now?  How is that going to shake
out?

JS: There is additional room for audio.  The audio that we are
working with for the Digicipher II -- we are pushing very heavily
towards backward compatibility as far as Surround Sound, Prologic
audio, Dolby.  The equipment that I've used is seamless as far as
what the audio -- in other words, what you receive on the analog
the same as for the digital.  And with Digicipher II, I know there
are some additional audio channels just for the various languages,
but I can't quote off the top of my head what those are, Gary.

GB: O.k. Since we are involved in an audio subcarrier service, we
were wondering if there will be room for people who do what we do
in the new environment.

JS: Definitely.  I think that the best way of looking at it is when
you develop new technology and move forward, you have to
accommodate what everybody is used to and then add on to that
additional.  But you still have to maintain the old and then
increase your capacity for the new.  

GB:  Well, we also enjoy all of those audio services on the Mind
Extension University, and many other audio -- in fact, I know a lot
of people who have purchased their dish more for audio even than
video. Some people spend more time listening than watching and we
certainly don't want to see those folks get left out in the cold.

JS: Oh no.  My folks in Western Oklahoma do that.  That is why they
purchased.  In fact, I guess what I am saying is that you are going
to see increased capacity.  

GB: O.k. That is good news.

JS: Especially with digital.  But more towards not just providing
stereo and mono, but also the prologic surround sound audio.  

GB: And that comes right out of the back of the IRD?

JS: Yes.

GB: O.k. Now you had mentioned Digicipher I and Digicipher II.  I
know those are the two flavors of Digiciphers so far.  What we
understand from our own research is that the Public Broadcasting
System is going to be digital as soon as the new Telstar 401
satellite goes up but they are going to be using Digicipher I,
which is the non-MPEG-2 system.  Will the Digicipher II be
backwards compatible with the Digicipher I or will -- for those of
us who want PBS, what do we do?

JS: No, and this is a very important concept that I hope your
listeners can comprehend and understand.  Digicipher I was very
much on the move, very fast paced being adopted by the marketplace
and like you said I got a receiver that provided Digicipher I and
Videocipher decoding.  What came along was MPEG-2, which was a
standard for compression of data information for the computer
industry and was very much an important part of the analysis of 2)
let's step back and take a look at the future of everything and
make sure that everything is standardized so what consumers
purchase can provide additional means -- in other words, turn your
TV set into a computer.  So, it slowed down the process but
nevertheless, some of the companies that have already made their 
business plans and commitments said let's go Digicipher I and get
the compression -- I've got education, schools, networks, we need
to get them up and running and some of the programmers looking at
multiplexing said look let's move ahead with Digicipher I and start
providing these additional feeds to consumers of cable systems. 
And at the same time they recognized that going Digicipher II would
-- you know, which is MPEG compatible --   they didn't want to open
up the marketplace to the direct-to-home TVRO consumer and then
turn around and upgrade those many thousand consumers with the new
technology, so they've limited to just the commercial applications
with Digicipher I.  Most of them, including PBS and all the other
services, do want to upgrade to Digicipher II next year and at that
point in time "cut loose" so to speak and provide services to the
direct-to-home market and that is where the new receiver comes in
at that point in time.

GB: O.k. So if I was considering buying -- I don't even know if
they are available -- but a Digicipher I commercial unit just to
watch PBS I should just wait on that?

JS:  I would.  I would.  Because there is still some analog PBS
stations, so it is not like it is being completely taken away. 
They are trying to straddle the fence, and I know that is not a
very pretty picture so to speak, but they are trying to meet their
business needs while taking care of the existing market, wait for
that transition, upgrade, and then provide those services to the
direct-to-home market with Digicipher II.

GB:  Well, I certainly hope they will do that as they did in the
past when they were fixed key Videocipher because -- it is just
very convenient having those additional feeds as we understand
there will be one C-band feed and initially they will have some Ku-
band analog feeds as well as they make the transition over to the
Digicipher I.  But if it at some time in the foreseeable future PBS
were to go to the Digicipher II then I think there would be a lot
of very happy folks who are dedicated PBS viewers and want more
than just Nebraska and the Denver station and the one analog C-band
feed.

JS:  Right, it provides a lot of choice and a lot of selection
which is what consumers are used to in this business.  

GB:  That is why most of us got satellite dishes in the first place
I think. 

JS:  That's true.

GB: There is nothing like choice and I think that's one exciting
thing about the new technology is you are going to be able to get
more choice, especially if indeed these new multiplex services, and
we see a lot of them being announced coming out in the trades, that
one fixed dish system instead of 24 channels you get a whole lot
more than that.

JS:  Right.  By my calculations, with the signals that are going
Digicipher I and then turning around and upgrading next year, there
could at this point of upgrading to Digicipher II and with those
coming out with the new receiver it could be an additional 50 to 70
channels just because of the compression.  Now, a lot of that
simply does provide more choice as to what programming, but from
there on I think you are going to see a lot of new services
launching with Digicipher II -- niche programming that isn't
available on the current C-band market because of the economy.

GB: And that is the kind of thing we enjoy is the more or less
narrowcast stuff.

JS: Right.  

GB: So with this new technology, and you said you were looking at
a transponder that had 6 channels with video that at least on your
Sony looks pretty good, do you notice any type of motion artifacts
or anything that kind of gives it away that you are watching a
digital signal?

JS: No, and what I was watching, Gary, was HBO -- it was movies and
I've seen that from our lab with 10 channels and I cannot detect
any artifacts.  Now, on sports, where -- you know -- the background
is constantly changing and everything, the recommendation is four,
four channels.  So I think you'll see some combinations -- but for
the consumer, that will mean  -- gosh, the design of the new
product and everything is mind-boggling and since that is what they
call virtual channels, meaning you'll end up on a root channel and
from there it gives you a menu of all the product that is on and it
is not just one transponder but many transponders tied to that root
channel.  It is almost like a program guide and you are selecting
product, and it gets pretty transparent.

GB: Well, that sounds fascinating.  It also sounds real user
friendly.

JS:  It gets real user friendly.

GB: You mentioned an upgrade card that there is a slot in the new
receiver.  What would that be used for exactly?

JS: Just for security.

GB:  Primarily security?  In other words, it wouldn't be something
to add new features if new features came along?

JS: Ahhhhh, yes, no.  It does have that capability because it does
contain the battery and you can -- anytime you end up sending out
an upgrade card we took the market opportunities -- say what if we
want to add new features then let's do it through the upgrade card.

GB: O.k. Then so you wouldn't necessarily have to change ROMs out
and things like that.

JS: That's correct.

GB:  What we are interested in is, here is another piece of
equipment that people are going to buy and we want to make sure 
that this is the last transcoder you will ever have to buy.  

JS: (laugh) Well, the TV passcard or security card is something
that can be processed through the mail, hopefully the consumer
won't have to purchase that with the programs that we have put
together with the programmers to implement new security. But it is
not a module changeout, so it is much more economical and the
process can be a lot faster than modules.  When it comes to
technology and saying that the consumer won't have to buy anything
new...

GB: Well, that's.... (laugh)

JS:  I know.  I know.  It's kind of like everytime I purchased a
camcorder and said "O.k. this is my last one..."

GB:  Yeah, it never happened. (laugh)

JS: Well, it is a matter of managing it and making sure that -- and
I think overall, Gary, you'd have to admit the industry has done a
pretty good job for an industry -- being brand new out of the chute
in 1986 and moving forward and learning and growing without
penalizing a large number of consumers.  But, yeah, the technology
from the standalone and the old receivers to the new integrated
receivers and decoders and the features and the picture quality and
the sound -- it just keeps moving faster and faster and these
geniuses graduate from MIT keep coming up with better and better
ideas. 

GB: Well, talking about MIT -- and we certainly do live in
interesting times -- with HDTV just around the corner and
technology as you said changing so fast -- maybe faster than some
folks can keep up with -- will the new Digicipher receiver that we
are talking about -- will that be compatible with HDTV?

JS: Well, Gary, as a non-technical type -- from the meetings that
I have sat through, let me explain it in some layman terms, that
might be the easiest way. From my understanding with HDTV, is yes,
we are monitoring very closely, making sure that the receivers and
everything, processing of the digital signal, is compatible, but a
lot of the HDTV processing will be performed in the TV set itself.

GB: Oh, o.k.

JS: So it is something that is licensed, and this is what is
interesting because it is something that is licensed to the TV
manufacturers.  Why have them concerned?  Well, most of them come
from Japan so that means they will have to license something from
U.S. firms.

GB: Serves them right!

JS: I know.  (laugh)  

GB: I hear that one of the things the FCC wants to happen is that
HDTV makes some jobs over here and I am all for that.

JS: Yes. Definitely.  And the fallout of the -- it has been a
quantum leap technology over any other country and what they have
been doing.  Yea, you are right.  It serves them right.  But we
have invested millions and millions of dollars into that
development.  It has not set idle and drawn upon old standards and
copying.  It has been a great deal of engineering geniuses just
looking at new ways and saying what has been done in the past can
be done different.  Which takes a lot of money.  So it is very very
much rewarding I think for the U.S. public, American public, as to
what they have accomplished.  It is great to see.

GB:  Well, that is something else I'm looking forward to and I
think home theater is perhaps the wave of the future.

JS: I do too.

GB: Now we've heard -- getting back to the topic of Videocipher --
we've heard that there is at present, and maybe you can confirm
this, a shortage of VC2+ modules.  I understand this is due in part
to the fact that pirates have, a lot of them have started to give
up with their boxes basically being rendered useless or just too
much of a hassle to deal with calling the 900 numbers every other
day.

JS: If there are any 900 numbers, let me know.  We'll be glad to
shut those down.

GB: O.k. 

JS: You're right.  There has been a -- the return on investment has
not been worthwhile and we are committed to insuring that that
continues on.  The shortage came about from -- I went to the
programmers in February this year and said "look, here's probably
what is going to happen to my best forecast with the authorization
with the demand 70,000 new units a month".  We also went to the
distributors, to Channelmaster, to the dealers even, and gave that
presentation.  No one really believed it.  However, we went and
purchased long lead item parts from our vendors -- what I mean by
long lead item parts, parts that we call 150 day advance orders or
120 day advanced orders even though we didn't have orders on the
books, and of course doing that and committing millions of dollars
and a company such as General Instruments figures you're crazy. 
Nevertheless, they backed me up and they backed up Jim Bunker our
President and we went and made those commitments.  What occurred
was what we forecasted that there would be an increase in
authorization.  At the end of the July -- actually, end of July
there were 130,000 units that we had shipped but never authorized.
In August, we're shipping over 74,000 units, we'll authorize
probably 71,000 and end the month probably with 130,000 once again
in the pipeline.  What happens as far as the shortage -- most of
our vendors came along and said "We've got an order on the books. 
Can you triple it?" and we could because we pre-purchased these
inventory items.  Some of the vendors came along and said,
"Multiply my order times ten."  Now that we could not do and we
said "No, we cannot do that and fulfill and ship this month." thus
it created a panning.  For the consumer out there that is going to
go legitimate, my advice is there are program distributors such as
HBO, Showtime, Netlink, and Superstar that have not marked up the
price of the module that do offer a module with programming and
those are readily available and will continue to be available.  So
the pipeline is being fed.  It just that we are not going to feed
anybody that wants to multiply their orders that they placed three
or four months ago by a multiple of 10.  We can't turn around and
produce those because we don't have enough parts.  But we will make
sure the industry continues with a smooth pipeline and the shipping
of modules.  

GB: Well, I've heard from a number of dealers who have experienced
the problem of availability and of course this always -- supply and
demand tends to drive prices up.

JS: Yeah, that is something we work very hard towards avoiding. 
And, I guess the best advice is that, now for a system being
installed in the ground, if there is no module, that consumer can
purchase a module and programming direct.  Discount the system
without a module, put it in the ground, and get the module and
programming from those suppliers that had purchased in advance and
built up inventory.  

GB: O.k. So a dealer can at still least make the sale.

JS: Exactly.  That was our biggest concern, that they could still
make the sale, that the consumer that wanted to go legit could
still get the module and programming at a fair market price without
a markup.

GB: O.k. Well, this is an interesting question that may sound like
it's out of left field, one of the listeners asked "Will the
Digicipher have an anti-taping circuit to prevent recording of
certain pay-per-view or other programming?"

JS: There has been discussions, yes, Macrovision as an entity that
we are looking at using to provide anti-taping for those
programmers transmitting and wishing to use anti-tape.  To be
honest with you, those have not been top-of-the-priority
discussions recently so I don't know if initial units will come out
with that device.  I believe that is something -- there again, I'm
probably the worst person to ask technical questions to, not being
an engineer -- I believe that has to do with the transmission that
requires the enabling or disabling of that anti-taping device.  

GB: But if you -- as those of us know how it works -- technically
it is added to the vertical interval so, actually you could
broadcast that over regular TV I would think.

JS: I believe so.  That's correct.  I'm not real sure, but it --
there again, it is a security measure, we're not foolish to think
that can't be violated to where you can override it.  But it is a
measure to protect product.  To get earlier windows.

GB: And that is something we'd all like to see, because there is
still -- I'd like to see the pay-per-view window in the same place
as the video tape release window, or very, you know, a week or two
after that, instead of the way it is now.

JS: Well, Gary, what is interesting is I would too but so would
cable.  And I've seen articles where TCI is purchasing studios to
where they have the rights prior to the theatrical releases to show
it on cable. 

GB: Well, I would actually like to see things simultaneously
released.  I think if a person has a home theater system,  it would
be much nicer to watch in your own environment than to have to sit
with the kids, and the throwing the popcorn, and not being able to
hear all the dialogue.  

JS: Well, there is -- I think you'll find the cable industry is
heading that direction, so is the direct-to-home, and they are not
really just providing this service about it, but they are literally
going out and buying the studios to where they have the rights to
that movie.  So it is very exciting.

GB: Yeah, I would say. 

JS: And, you know, what they are doing is they are saying "Hey,
look, he has a family of average two and a half people, here is
what they spend at the theater, we provide it in this method, along
with the theaters we turn a profit on the movie, put the money back
in the studios, make better movies, and on and on."  So, it is a
great concept and I think you are seeing it start to take off
already, which is exciting.

GB: Yeah, I am looking forward to it.  O.k. Now, this -- I don't
know if you would consider this an engineering question or not -- 
but this regards the General Instrument IRDs.  And just about
everybody who has an IRD these days has noticed that we have a
whole bunch of new satellites with real strange formats up there,
especially on the Ku-band.  When can owners of G.I. receivers that
are in current distribution, the line that you have now, when can
they expect ROM upgrades that reflect things like the G7 and G4 Ku
formats and the forthcoming Telstar satellites?  Do you have any
clues for us?

JS: Well, and I am, there again and I hate to claim ignorance, but
myself, what I usually do is just program that in myself.  

GB: Yeah, that's what most of us do, but we would save some memory
if it was already in ROM.  

JS: Oh, I see. 

GB: And there are folks like me who like to assign a name to every
transponder in the arc.  As the more you have in ROM, the better --
in fact, if you change, if you erase something that is in ROM
that's wrong, it actually takes more memory to do that and most
people don't realize that.  

JS: Uummm, so this would be something you'd actually end up sending
to a service repair?

GB: Well, no.  Most of the people that listen to this program are
capable of installing their own ROM chips.  It is something that,
I would say probably more than half of our current listeners would
do and many of them have done already with those units that have
released new chips, and if this is something you can't answer now,
maybe you can get back to me on, because it was a question.

JS: I probably will have to get back, because I am not sure what
the IRD group is developing as far as new ROM chips.  In the
meetings that I've sat in, it has not been brought up, discussed. 
Obviously, your listeners are much more technical than I am.

GB: Well, this is a high tech talk network and I guess we are all
kind of nerdy and geeky over here.

JS:  That is great.  I mean, verses the other scenario where when
you are on customer service and people are going out and cranking
their dish over to the next satellite, I mean, that helps, because
knowing your equipment and knowing what it accomplish maximizes the
features and benefits of it.

GB: O.k. we've talked about the Digicipher.  What about a
timeframe?  It was initially scheduled to be released this year,
now I understand because of the change to MPEG-2 that has been
pushed down the pike.  When can we expect to go down to our local
satellite dealer and purchase a brand new General Instruments
Digicipher receiver?

JS: Well, what was discussed as far as being this year was
Digicipher I, what we now call Digicipher I, and what I previously
talked about having in my house.  Digicipher II, because of the
MPEG issues and so forth, and by the time the programmers upgrade
their encoding system, Digicipher II will be mid to third quarter
next year.  You can expect four to six weeks after that upgrade has
occurred and product on the market, so that consumers can start
purchasing the programming.

GB: So we have to sit here and chew our nails for a year waiting
for this new technology that most of us want now.

JS: Pretty frustrating, I'd say.  It is for me too because I got
used to the Digicipher I signals from HBO and the ability to come
in and just on one transponder go through six different movies. 
But yes, I agree it is pretty frustrating.

GB: Well, we are looking forward to it.  Somebody is sending us a
FAX now, unfortunately the FAX machine is 60 feet away.  If that is
a question for Jim, we cannot take that now.  In fact, we are just
about out of time for this segment.  Was there anything you wanted
to leave us with regarding any of the topics we've talked about so
far that maybe we didn't cover in as much depth as you would have
liked?

JS: No. Overall, I think for your listeners you are going to find
a lot of companies very very much dedicated to C-band analog and
digital as far as the transition and very much concerned in taking
care of the consumers and making sure there is a smooth transition
path.  That is, something that is very economical if and when they
do want to upgrade -- what I mean by economical, the same as the
module if not less as far as the expense so they can upgrade their
current systems and continue having more and more choice.  That is
something that General Instrument and many other IRD manufacturers
are very very much concerned with.  It is, no one is turning their
back on this industry, and it is growing quite rapidly and I think
it will continue to grow.  So, you know, I hear concerns and fear
that everything is going to become obsolete and that is really not
the case.  It is a very big market for the programmers and to the
manufacturers, distributors, and dealers.

GB: O.k. So we don't birdbath and the skies are not going dark.  

JS: That's right.  That's right.

GB: Well, that's good news.  And with that, Jim, I'll let you get
back to your family.  I guess we may have made you miss your supper
tonight.

JS: That's o.k.

GB: Because it is a little earlier in California.  I would like to
thank you for spending this hour with us, and I am sure we will be
in contact again, and if you have anything you want to let us know,
I'm going to give you my FAX number when we go to commercial here,
and I hope that we can keep in touch, and if there is anything you
want to get out to the high tech, TVRO type dishheads, we'd be more
than happy to let them know what you have to talk about.  

JS: O.k. That'd be great Gary.

GB: Our guest on this first hour of FRIDAY NIGHT LIVE has been Jim
Shelton of General Instruments.  We'll be back with this week's
FRIDAY NIGHT LIVE news for an hour and then your phone calls as FNL
continues on the Let's Talk Radio Network, Spacenet 3, Channel 21,
5.8 wideband audio.