Cable prepares to turn interactive

Front line: The booming industry is set to move into a vast area of new technology
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The Independent Online

Media Editor

The cable industry is gearing up for a large investment in interactive media, following selective testing of new technology in franchises around Britain.

The cable operators, including market leaders Telewest and Nynex CableComs, are exploring the potential of so-called "cable modems" that allow high- speed interactive services such as home shopping, home banking and Internet connections.

Cable lines, which are mainly fibre-optic, can speed up the exchange of data compared with traditional copper wire, according to experts.

Nynex is running trials of modems in Bromley, Kent, and expects to be able to introduce a high-speed service throughout its network by as early as next year. Telewest's parent company, the media giant TCI, has launched trials in Baltimore,Maryland, and intends to set up separate tests in the UK within a few months.

"Our advantage is that cable is not just about the modem but about the broadband network," Adam Singer, chief executive of TCI International, said.

Bell Cablemedia is working with Telewest and Nynex on a test in Surbiton, Surrey, which will help the companies develop video-on-demand technology.

According to cable experts, the operators are looking at three different options to deliver Internet and other interactive services to homes and businesses. The first is to use existing technology, which allows a limited degree of two-way communication. The second is to furnish subscribers with an add-on box to supplement the existing equipment. The most expensive, but most effective option would be to replace existing boxes with cable modems.

The push to introduce cutting-edge technology is driven by cable's indifferent performance in the UK market. As General Cable's results, announced yesterday, suggest, the industry has struggled to win customers in the crucial "build- out" period, during which the main network is being established.

The industry faces competition for both its main products - telephony and television. BT continues to dominate the market for residential and business telephony, despite cable's sharply lower rates, while BSkyB, the satellite broadcaster, has developed a huge lead over cable television and has sewn up the big contracts for the supply of movies and sport, the main drivers of subscription television. "We have to offer something customers can't get elsewhere," a cable industry spokesman said. "Interactive services are an obvious choice." To compete, "the industry has to work together," Sir Anthony Cleaver, chairman of General Cable, said.

Meanwhile, expectations that the market for pay-TV programming is set to grow were heightened yesterday, with the news that PolyGram, the film and music company, was joining forces with actor Robert Redford's Sundance company and US pay-TV film company Showtime to launch a global version of the Sundance pay-TV channel.