LAKE OSWEGO, Ore. -- Tut Systems Inc. (Nasdaq: TUTS - News), an industry pioneer in enabling the delivery of next-generation data and video services over broadband networks, today announced that it is deploying what it believes is the first MPEG-4 AVC digital TV headend in North America at Farmers Telephone Cooperative, Inc. in Kingstree, South Carolina.

Farmers Telephone Cooperative, Inc. (FTC) selected the Tut Systems Astria® Digital TV platform to serve as the core video processing system for its all-MPEG-4 AVC digital headend. Tut Systems is also providing comprehensive systems integration services to FTC, including design, assembly and pre-launch testing of its digital headend. FTC plans to commercially launch its Digital TV service in the fourth quarter of 2005.

FTC is the 3rd largest telephone cooperative in the United States, serving more than 60,000 consumers. The company currently offers local, long distance, paging, digital wireless, high-speed Internet services, business solutions and data networking.

"MPEG-4 AVC supports all of the services we believe are required to effectively compete in today's digital entertainment marketplace," said Robin Coker, Chief Marketing Officer for FTC. "Tut Systems' MPEG-4 AVC solution has shown a significant quality advantage over other solutions and the flexibility of its platform ensures that it will continue to improve with time and support advanced functions. The track record of success Tut Systems has had in helping more than 120 telephone companies roll-out Digital TV, along with its active involvement in both the MPEG-2 and MPEG-4 AVC (H.264) standards bodies, made them the clear choice. The company's Astria platform provides us with a proven IPTV solution capable of delivering compelling, next generation digital entertainment services over DSL."

"Deploying the first MPEG-4 AVC digital headend demonstrates FTC's commitment to delivering a highly competitive digital entertainment package," said Craig Bender, VP of Marketing & Corporate Development for Tut Systems. "We believe this is the first of many all-MPEG-4 IPTV systems that will be deployed and is the starting point at which the IPTV industry rapidly moves towards a next-generation delivery platform and video compression standard."

Tut Systems Inc.