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Pace Eyes Major Set-Top Push in U.S.

Pace Micro Technology plc, the set-top vendor that has helped operators in the United Kingdom to hike digital penetration close to 50 percent, is ready to make a bigger push into the United States, executives said.

Pace Americas has already made a sizable U.S. sale-Time Warner Cable ordered 750,000 of its boxes in the first quarter. The Time Warner box by Pace was designed as the first single-chip Internet-ready set-top box, executives said.

Asked for a cost compared with set-tops provided by the dominant makers-Motorola Broadband Communications Sector and Scientific-Atlanta Inc.-the executives said, "We're being very cost effective. That's why Time Warner gave us such a big order."

But executives said they would "love to sell" more to U.S.-based operators. The company is dedicated to open systems and, to that end, it has partnered with Cisco Systems Inc., Liberate Technologies, PowerTV Inc. and Microsoft Corp., among others, on middleware.

Pace Americas president Neil Gaydon predicted that the U.S. could hit 50 million installed digital homes in the next two years, adding that the delivery of premium TV services will continue to remain central to acceptance.

Consumers are familiar with that product, he added, but operators can use that anchor to build a networked home, perhaps with the use of handheld portable interactive-display devices to deliver the first wave of services through Internet TV.

"There has to be a limit to what is provided on the TV. In some ways, there's already too much choice," Gaydon said.

Such a service is already available to consumers in England. Digital homes use the Pace "Shopping Mate," a handheld unit similar to a "Palm Pilot." Consumers use the unit to scan the bar codes of foodstuffs in their homes, then zap the list to the participating grocery chain. Homeowners in the United Kingdom pay $5 to $8 extra to have the grocery list delivered.

"It's a product designed to deliver increased revenue.we can bring these services to market fastest," Gaydon said.

Home banking via a handheld device is also a big seller in England, the company said. Consumers and banks like the interactive feature, but only on the smaller unit. Banks were very concerned about presenting a sizable or past-due bill on a large TV screen, Pace executives said. But a handheld unit is not as impactful.

However, company executives conceded that such services are still perhaps 18 months off due to the current limited digital penetration. Only Time Warner is currently experimenting with t-commerce, according to Pace.

U.K. markets have hit 30 percent to 35 percent penetration, and that level attracts retailers and service companies.