Press Release

    SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 21, 2004--

       DiviCom(R) MV 100 Encoder Enables Video Networks Limited
           to Continually Expand Reach and Range of Services

Harmonic Inc. (Nasdaq:HLIT) today announced that Video Networks Limited (VNL), a leading video-over-DSL provider in the U.K., is deploying the DiviCom(R) MV 100 real-time video encoder to add broadcast and time-shifted television to its HomeChoice service and extend geographical reach. With industry leading MPEG-2 encoding capabilities and picture quality, as well as the ability to bring further benefits with MPEG-4/AVC, the MV 100 permits VNL to consistently provision a competitive suite of services. VNL's Harmonic-based service is expected to be fully operational by mid-2004.

The advanced capabilities of Harmonic's DiviCom MV 100 encoder allow operators to offer a full complement of broadcast television channels and VOD. Its innovative architecture and tremendous processing capacity yield compression efficiencies that redefine the meaning of ultra-low bit rate encoding for MPEG-2 and next generation video compression. The encoder's IP interface facilitates a seamless integration into existing environments in addition to simplifying the process of capturing and storing real-time content used to power on-demand applications. As the industry's most powerful and versatile encoder, the MV 100 makes it more feasible and practical than ever before for telecom-based operators to introduce revenue-generating television services.

"Video Networks Limited has been providing entertainment services via telecom networks for several years. In that time, we've acquired a solid understanding of the technologies and business models that work and those that don't," stated Roger Lynch, CEO of Video Networks Limited. "Harmonic's DiviCom MV 100 encoding platform, with its outstanding MPEG compression capabilities, makes video-over-DSL an even more attractive choice for the consumer. With our sights set on using MPEG-4/AVC to further expand our services and reach, the architecture of the MV 100 makes the transition easier and more cost-effective than any other solution."

"In many countries, DSL is the leading broadband platform, in terms of user base and homes passed, giving telecom operators and other Internet service providers the opportunity to secure and expand customer relationships with triple-play video, voice and data services," said Yaron Simler, President of Harmonic's Convergent Systems Division. "Further changes in telecommunications regulations are accelerating the introduction of video services to DSL subscribers. Video Networks Limited, with the new HomeChoice service, is at the forefront of this trend."

When the MV 100 is augmented to run MPEG-4/AVC, operators will be able to significantly increase the number of services while maintaining picture quality. The lower bit-rate also enables content to be carried longer distances and over lower bandwidth segments of the network.

The Harmonic-based video infrastructure reduces operating costs while providing a compelling viewer experience and capacity for future expansion. The MV 100's superior compression efficiency lowers the bandwidth requirements for each service, allowing more streams to be concurrently distributed from a video server and over the network. In addition, more programs can be stored per gigabyte of disk space, minimizing the need for costly storage upgrades and simplifying overall system management.

"The power and versatility of the DiviCom MV 100 make it ideal for bandwidth sensitive applications such as video-over-DSL. The benefits of the MV 100's compression efficiency are felt in all parts of the network from the video server, across the video backbone, through the last mile. These benefits will be magnified with the transition to MPEG-4/AVC, an emerging video compression standard," continued Simler.

VNL's new digital video infrastructure will be monitored and controlled by Harmonic's NMX Digital Service Manager(TM). NMX permits VNL to perform an automated, error-free installation of the MPEG-4/AVC technology in the MV 100s deployed in their network.

About Video Networks Limited

Video Networks is a leading provider of broadband entertainment through its interactive TV, video-on-demand (VOD) and Internet services under the brand name HomeChoice. HomeChoice is a package of the best on-demand television programming, including comedy, drama, music and documentaries; a huge range of pay-per-view films; and an Internet service with a speed of up to 1Mbps.

On-demand programmes are delivered instantly to customer homes from a central server down the telephone line to the television set so that content can be watched at any time. Content can also be paused, forwarded and re-wound like a video or DVD. Customers order what they want via a remote control and the selection is viewed instantly.

HomeChoice offers its customers a range of the biggest TV titles from the UK and the USA (recent hits include Friends, Buffy and The Office) and major new films (recent titles include Chicago, Harry Potter, Road to Perdition and 28 Days Later). In fact, HomeChoice offers subscribers access to almost 5,000 films, TV programmes and music videos -- more than any other TV-based VOD operator in the world.

About Harmonic Inc.

Harmonic Inc. is a leading provider of digital video, broadband optical networking and IP delivery systems to cable, satellite, telecom and broadcast network operators. Harmonic's open standards-based solutions for the headend through the last mile enable customers to develop new revenue sources and a competitive advantage by offering powerful interactive video, voice and data services such as video-on-demand, high definition digital television, telephony and Internet access.

Harmonic (Nasdaq:HLIT) is headquartered in Sunnyvale, Calif. with R&D, sales and system integration centers worldwide. The Company's customers, including many of the world's largest communications providers, deliver services in virtually every country. Visit www.harmonicinc.com for more information.

This press release contains forward-looking statements within the meaning of Section 27(A) of the Securities Act of 1933 and Section 21(E) of the Securities Exchange Act of 1934, including statements related to: VNL continually expanding the reach and range of services, the ability of the MV 100 to bring further benefits with MPEG-4/AVC, the expectation that VNL's service will be fully operational by mid-2004, the ability of operators to significantly increase the number of services while maintaining picture quality and the magnification of the benefits of the MV 100 with the transition to MPEG-4/AVC.

Our expectations and beliefs regarding these matters may not materialize, and actual results could differ materially from those projected. The forward-looking statements contained in this press release area also subject to other risks and uncertainties, including those more fully described in Harmonic's filings with the Securities and Exchange Commission including its Annual Report filed on Form 10-K for the year ended December 31, 2002 and its subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. Harmonic does not undertake to update any forward-looking statements.

EDITOR'S NOTE -- Product and company names used herein are trademarks or registered trademarks of their respective owners.

    CONTACT: AxiCom (Media Relations for Harmonic)
             Stephen Orr, +44-20-8392-4056 or 408-543-2360
             stephen.orr@axicom.com
                 or
             StreetConnect (Investor Relations for Harmonic)
             Michael Newman, 408-542-2760
             mnewman@stct.com

    SOURCE: Harmonic Inc.