Cable & Wireless Communications, which has 760,000 cable television customers in the UK, will launch its digital service this autumn with software provided by Network Computer Inc, a joint venture between Netscape, best known for its internet browsers, and software group Oracle.
Subscribers will receive a digital set-top box for their television sets, giving them access to 200 channels. But with the NCI software - known as the DTV Navigator - they will also be able to surf the World Wide Web, send and receive e-mail, and eventually play games, make bets and do their shopping on-line.
Digital cable will be the third form of digital television to become available to viewers this year. Satellite broadcaster BSkyB will start transmitting a 200-channel digital service in June while British Digital Broadcasting, a joint venture between Carlton and Granada, plans to launch 30 channels in the autumn. Both suppliers also plan to offer interactive services.
Graham Wallace, chief executive of CWC, said that customers would have "more control, choice and flexibility in how and when they access a whole range of information and entertainment services - all through their existing TV sets."
Industry analysts welcomed the move. "They're taking cable beyond being just a telephone service like BT or a pay-TV service like Sky," said James Ross, an analyst with ABN Amro. CWC shares closed up 3p at 351p.
The announcement is a setback for Microsoft, which has been attempting to corner the market for set-top box software through WebTV, the software company it took over last year. The UK market is seen as particularly crucial because it is leading the world in the introduction of digital television.
Microsoft has been talking to a number of British broadcasters, including BDB and Flextech, the programme packager, about supplying them with the capability to launch interactive services. Last night, a spokeswoman for WebTV said the company was talking to "a variety of people" but was not ready to make any announcements.
Mr Wallace said: "We've had extensive talks with Microsoft, and they effectively said there was no way they could provide a product for our launch in 1998." He added that CWC had "chosen the best product available" though the company did not "want to be in anybody's pocket".
Mr Wallace said interactive services were the key to increasing use of CWC's existing network. "We have had a high capacity network, and until now have just chugged a few television channels along it." The DTV Navigator will provide CWC's digital customers with access to an electronic programming guide - an advanced form of teletext. From there, they will be able to access interactive services like games and on-demand movies as well as jump to sites on the World Wide Web.
CWC is expected to launch the service this autumn after conducting trials throughout the summer. One advantage will be that, unlike BSkyB and BDB, customers will not have to spend pounds 200 on the set-top box required to receive the service. CWC currently rents boxes to its customers and takes them back if they no longer require the service.
Mr Wallace said CWC was considering charging less than pounds 10 a month - the current standard charge - for internet access even though CWC's service will offer connection at 20 times the speed of the most powerful modem available.
Yesterday Greg Clarke, CWC's chief operating officer, said the company was talking to a "long line" of leading companies about providing their services on-line next year.
CWC's service will compete with that provided by BSkyB, which plans to launch its own interactive services through a joint venture with British Telecom, Midland Bank and Matsushita.
The venture, called British Interactive Broadcasting, will provide internet access and a range of services from home shopping and banking to educational, sporting, entertainment and public service information. The launch is subject to approval from regulatory authorities in Brussels.
BIB is in talks with up to 30 content providers including Sainsbury, HMV, Thomas Cook, Great Universal Stores and Dorling Kindersley, the educational publisher.
The four partners in BIB have put up pounds 265m to develop the service and help subsidise the cost of the set-top boxes needed to receive digital satellite services. The set-top box will be connected to an ordinary telephone line which in turn provides access to the internet.
This means that it will take longer to get onto the internet than through CWC's service. But BT is conducting trials with a range of more advanced technologies that provide much greater capacity and quicker access.
Trials with a technology known as ADSL, which compresses signals and makes the traditional copper wire pair work like "a modem on steroids" begin this summer in west London.
At present there are an estimated 1.8 million personal computers linked to the internet. But BT forecasts that within five years there will be 3.5 million set-top boxes and integrated televisions in use providing internet access and 14 million by 2010.Reuse content