The UK cable company also says it is to launch its 150 channel digital television service later this year, with film on demand, interactive games and music on demand to follow early in 2000.

It will begin trials of its high-speed Internet service early next year as part of a strategic alliance with Microsoft, the US software group which owns 29.8% of Telewest.

It said its national network was fully digital ready "and we have a clear broadband digital strategy for both digital television services and PC-based high-speed Internet access."

The Internet service will provide connection speeds up to 100 times faster than using a conventional PC modem over the phone line, allowing much quicker downloading of pages and broadcast of higher quality video and sound.

Subscriber prices

Customers would pay a fixed monthly fee, expected to be about £30, which would include all the call costs of connecting to the Internet.

Market trials will start in the first quarter of next year, with a phased national launch in all Telewest regions during next year.

The move raises the stakes in the battle for the UK residential Internet market following BT's announcement last month that it is to upgrade its network for faster Internet access.

Cable companies in the UK, which have been saddled by the cost of constructing networks, are hoping that higher quality Internet and interactive TV services will be the applications which prompt subscriber numbers to break through the 20-30% level of homes which opt for cable services.

Chief executive Tony Illsley said he would be very surprised if rivals such as satellite giant BSkyB would be able to "get anywhere close" to its services because of technological differences.

But given the competitiveness of the market, Telewest declined to reveal a likely consumer price for its new offerings.

Mr Illsley said only that similar services in the US cost around $30 per month for a permanent Internet link. "You could generally translate dollars into pounds these days," he added.

One in three phones

"But as we get closer to it, we will have to get a better understanding of where BT is on all of these things and we may look at different, creative pricing packages, bundled packages combined with some of our other services."

There has been rapid consolidation in the UK cable industry as the series of regional cable companies have now been reduced to just Telewest and NTL, once the latter completes its purchase of Cable & Wirelesss Communications(CWC).

Industry analysts predict that there may end up being just the one UK cable operator, competing against BT and BSkyB for phone, TV, Internet and other entertainment services.

Is results for the first six months of 1999 showed a loss of £263.8m, compared to £180.5m. This was worse than analysts had expected.

The company, investing heavily in developing its network, said earnings before interest, taxation, depreciation and amortisation were 36.9% up to £106.9m

In its cable television business 25% of households in its franchise areas have signed up, with just a shade under one in three homes taking its cable telephone services.

Its total customer base is around 3.5 million in 1.4 million households. The average annual revenue per household grew to £412.