LAKE OSWEGO, Ore. -- Tut Systems, Inc. (Nasdaq: TUTS) today announced that PCCW (NYSE: PCW), one of the world's largest telecommunications operators, purchased additional encoding and content processing equipment to expand the channel line-up of its existing Tut Systems digital headend system.

In related news, Tut Systems also shared the most recent results of PCCW's strong digital TV subscriber growth. Hong Kong-based PCCW announced 316,000 subscribers for its now Broadband TV service as of August 26, 2004, making it one of the world's largest and most successful digital TV deployments over fiber and DSL. PCCW has signed up approximately 30,000 subscribers per month since launching its digital TV service in September of 2003 and anticipates maintaining that pace through the end of 2004.

"Tut Systems has played a key role in both the launch and expansion of our digital TV service," said Belinda Chan, VP, Operations & Technology. "They've proven to be a strong partner and have demonstrated the video networking expertise critical for successfully scaling our deployment as we sign up new subscribers. We look forward to working closely with Tut Systems going forward."

"PCCW is providing the vision and leading the way when it comes to advanced telecommunications services," said Sal D'Auria, Tut Systems' CEO and President. "With the world's largest and fastest growing installed base of TV over DSL subscribers, PCCW's success confirms the business case for Telco TV."

Tut Systems Inc.

PCCW Ltd.