Baer got word early about the development of a video game chip being developed by two engineers at General Instruments' labs in Scotland Meanwhile, he had previously met Arnold Greenberg, Coleco's president, at Marvin Glass & Associates in Chicago - the pre-eminent toy & game designers in the US at that time. Greenberg met Baer at GI's Hicksville, NY plant where the AY3-8500 single-chip, multi-game device was demonstrated to Baer by Ed Sachs, who ran the plant and later moved GI's IC manufacturing to Phoenix, Arizona (it's now Microcicuits). Thus, Coleco became GI's first and preferred customer for the AY3-8500, a chip around which millions of off-shore (HK, Taiwan,etc) games were built (on all of which Sanders/Magnavox collected royalties, by the way). Thus was born Telstar.

One late Tuesday afternoon in 1976, Baer received a call in his lab at Sanders from Arnold Greenberg. At the same time, his brother and CEO Leonard is on the phone with Dan Chisholm, one of Sanders' VP's. What did they call about? Well, Coleco personnel had been at the FCC radio-frequency-interference compliance testing labs in Maryland and flunked the RFI tests...too much radiation at harmonics (multiples) of the Channel 3 or 4 signals which video games use to get into a TV set via its antenna terminals. Coleco failed to qualify under Rules 15 of the FCC...and they were told to come back on Friday that week or they would have to get to the back of the line! Since Coleco had some 30 million dollar's worth of inventory sitting in the warehouse ready for distribution, there was a minor panic in Connecticut!

Fortunately for Coleco, Arnold Greenberg remembered Ralph Baer; and even more fortuitously, Baer had an RFI test lab under his control at Sanders at that time as part of his Equipment Design Division. Coleco was informed that if they would sign Magnavox' Licensing Agreement (which they hadn't done at that point in time), Baer would be glad to help them. They showed up on Wednesday morning with an executed copy of the Agreement and Baer's crew went to work on a Telstar console to get its RFI within FCC spec limits. Tests took place on the roof of Sanders Canal Street building; they tried various true-and-tried methods to supress the excess radiaton, all to no avail.....you might say they didn't do too well that day.

Early Thursday morning, Baer was in the lab on the partial floor adjacent to the roof test area. No one else had showed up yet to begin the RFI-reduction job. As Baer wandered through the large lab, he saw two pieces of electronic equipment sitting on a test bench that were connected together with some common coax cable. What attracted his attention was the presence of a couple of small ferrite toroids (powdered iron rings) through which the cable had been looped, one or two turns. On a hunch, Baer proceeded to ask around among the few engineers present at the early hour just what those rings were for. Lo and behold, somebody actually knew the answer: It turned out that during operation of those two electronic boxes, the coax had picked up stray signals from some nearby radio transmitter which had screwed up the performance of the boxes. So someone had the bright idea of suppressing the surface wave created by that radiation with some chokes... and that's what the ferrite rings were! At that moment, a lightbulb went on in Baer's head: He ran around the labs opening storage cabinet doors and generally poking around until he found some ferrite toroids. When the RFI crew arrived on the roof for further Telstar tests, Baer slipped one of these toroids on the shielded coax cable on Telstar and took two turns (loops) through the ring.......BINGO! The unit passed the spurious radiation tests. Baer's group sent the Coleco crew back to Maryland, Telstar passed the FCC tests and everybody breathed a sigh of relief.

As a result of this episode, Coleco further relied on Sanders to help with the development of next year's video games. Baer assembled a small group of engineers and technicians and had one of his department mangers head it up (an anomaly in a high-tech, defense electronics firm if ever there was one). They developed Coleco's triangular Telstar Arcade game and a Combat game. Sanders did the work, Coleco paid their bills and sold a lot of games. If anybody doubts that story, Ralph Baer has TONS of documents in his collection. According to Baer, every time he looks at them, he breaks out in a big smile. He always wanted to get into the video game business; however, there was no way Sanders would enter into it, especially because the Odyssey was not a runaway best seller... so he did it subliminally by doing Coleco's development work at Sanders.