Date: January 10, 1996

location: Middlesex

Title: Will Pegasus Fly to Digital Heaven?

Author: Mukul Pandya

Subject: Pegasus Data Systems claims to have developed technology that can revolutionize telecommunications. Tests will show its true potential.

In Greek mythology Bellerophon, a Corinthian prince, tried to ride the winged horse Pegasus to heaven. Zeus, incensed at this temerity, sent a gadfly to pester Pegasus and Bellerophon was thrown down. Today Harold Walker, chief executive of Pegasus Data Systems, is trying to ride his wireless-communications company to digital heaven. The question of whether he will fly or succeed, however, is still up in the air.

Walker, 74, who works with his seven-person staff out of an office in Middlesex, claims Pegasus has developed technology that could revolutionize wireless communications. The company has developed microchips that use so-called variable phase shift keying technology to compress data as it is being zapped over the airwaves. This, Walker contends, makes it possible to ship 15 times as much information over existing AM or FM bandwidths. Walker claims that while existing systems compress data at a maximum ratio of 8:1, Pegasus”s technology crunches it at a ratio of 15:1. “No other modulation system can do this,” he claims.

If Walker”s claims are true, the implications for wireless communications could be staggering. Walker argues satellites could carry 10 times more traffic; TV broadcasters could switch to digital transmission; and 10 times as many radio stations could be added to the dial.

All this was a long way off, however, when Walker joined the Navy after graduating from the Naval Academy in 1943. He eventually became the head of infra-red R&D at the Naval Air Research Center in Pennsylvania. Walker also worked for Blonder Tongue and Educasting Systems before starting Pegasus in 1965.

Pegasus initially made radio broadcasting equipment, but the product line was discontinued in 1972. Pegasus then turned to making computers under private label for companies like Hobart Scale. Walker began work in 1985 on his data-compression technology. Since then he has spent nearly $2 million on it.

The data-compression project has taken its toll on Pegasus. Walker says the company now has just two clients–one is Rupert Murdoch”s Star TV in Hong Kong–and orders worth some $40,000. He is looking for $500,000 in venture capital and another $2 million in later-stage financing. “If we could get the money, we could hire people,” he says. “We could be a $100 million company by the year 2000.” He admits, however, that his experience with venture capitalists has been very negative.

Three months ago, Pegasus began talks with the David Sarnoff Research Center in West Windsor. “We have had discussions with Pegasus, and we are investigating its claims,” says Anthony Musto, Sarnoff”s manager of business development. “Our initial experience was that the technology did not meet the expectations of its claims, but another demonstration is planned.” Musto adds if Pegasus”s technology works, it “breaks the laws of physics.”

So did the original Pegasus, though, when he took off for heaven. But then, he was a myth.