Telewest to offer modem service through Internet

Telewest, Britain's largest cable operator, yesterday announced a branded Internet service as a first step towards offering a high-speed cable modem service to UK homes and businesses.

The new service, available to both cable and non-cable subscribers, will provide competitive access to the Internet network, and could help the struggling cable industry improve its market penetration, its backers said.

"We aim to make this the best value in the UK," Ross Fitzgerald, Telewest's multimedia vice-president, said yesterday. Cable Internet will be provided and promoted by a Telewest subsidiary that will be open to equity investment from other cable operators.

"It makes sense for the industry to work together on this," Mr Fitzgerald said. Nynex CableComms, the second-largest cable operator, indicated support for the new service. International CableTel, which earlier this year bought transmission company NTL, has established its own Internet service, and has no plans to join the Telewest initiative.

The cable industry, which has been struggling to improve take-up rates by potential customers, has increasingly focused on the Internet market as a prime target. Currently only one in five households, on average, subscribe to cable when offered the opportunity.

To date, subscriptions have been driven by cable TV and cable telephony, which has been priced at 10-15 per cent below BT's standard rates. Despite the cost advantage, penetration rates have remained below the forecasts established at the time large cable operators were floated on the stock market.

Publicly quoted companies, including Telewest, saw their shares languish throughout the second half of 1995. But there has been a sharp improvement in recent months, with Telewest, the first operator to list its shares, trading above its issue price this month, for the first time since autumn last year. It gained a further 21/2p to 1881/2p yesterday.

Cable Internet will be up to three times faster than standard dial-up services, Telewest claimed yesterday. While the system will initially be limited to standard modems, the company expects to introduce advanced cable modems by next year, which will increase the speed and capacity of the service.

The cable industry is spending a total of pounds 10bn over 10 years to build a fibre-optic network in the UK. The broadband connection is brought to within a few hundred yards of individual homes, with the final distance covered by either twisted copper pair (for telephones) or coaxial cable (for cable television).

The industry claims that it can provide the most advanced telecommunications connections, although it concedes that both BT and digital satellite service providers will be fierce competitors.

BSkyB, which plans to launch a digital broadcast service next year, is negotiating with BT to provide interactive banking, shopping and Internet services using its digital platform. These would use BT's conventional lines to send information from the home to the BSkyB's service centre.

Yesterday, Co-operative Bank announced a new service that allows BSkyB subscribers to call up their latest bank statement on the screen, provided they have a satellite dish, tele-text TV and a telephone.