Thursday, August 5, 1999 Published at 19:47 GMT 20:47 UK
UK broadband race hots up
Telewest is competing with cable rival NTL and BT
By Internet Correspondent Chris Nuttall
Telewest, the UK's second-largest cable operator, has announced a strategic alliance with Microsoft to develop broadband Internet services for consumers.
The deal comes less than a week after BT said it would be taking orders for high-speed Internet access from October using Digital Subscriber Line (DSL) technology.
Telewest will use cable modems rather than DSL for its always-on access. Both offer download speeds around 10 to 50 times faster than those of a 56K modem. Wireless radio access at 2Mb/s is unlikely to be available before 2002, although a fourth broadband option, satellite, should start appearing later this year, at even higher speeds downstream.
MSN concentrates on content
Telewest, already 30% owned by Microsoft, said its broadband services would start out as a normal narrowband portal jointly developed with MSN later this year.
"You will see MSN evolve to increasingly deliver broadband content and services," said Richard Tooth, Microsoft UK's Public Networks business manager.
MSN recently launched a free Internet Service Provider (ISP) spin-off, MSN Freeweb, and is shifting emphasis to its content offerings.
"We are unlikely to be an ISP for the DSL technology," said Mr Tooth. "We are not really in the ISP game. We are very much a destination site on the Net and are concentrating on great content."
Dutch ahead of UK
Its big rival, AOL UK, is starting DSL trials in the autumn, offering improved multimedia content.
MSN is not detailing the services it will provide but is looking into better multimedia, integrating voice communications, entertainment and music.
Broadband offerings are further advanced on the continent. The BBC announced last month that News Online would stream better than VHS video quality news bulletins for @Home's broadband service in the Netherlands.
Cable rivals merge to take on BT
Telewest currently serves 1.4 million homes in England and Scotland with telephone, TV and Internet access. It has 34,000 subscribers to its dial-up service Cable Internet. It charges £10 a month, although there is an offer of subscription-free access for those taking a second phone line.
Telewest lost out in a battle with its main rival, NTL, over a third cable operator, Cable & Wireless Communications (CWC). NTL, 5% owned by Microsoft, merged with CWC last month and analysts predict a merger with Telewest to create a single cable giant is inevitable.
NTL plans to challenge BT not just with cable modems but also in DSL technology. Cable companies run both coaxial cable and the copper twisted-pair lines that are used for DSL. NTL even feels it has an advantage over BT because its cables run closer to the consumer, aiding transmission. But its network covers only half the homes in the UK compared to the 85% coverage of BT.