Telewest has placed an order for 100,000 set-top box decoders from Pace Micro Technology, the electronics manufacturer. It has also selected software supplied by NCI, the joint venture between the US technology giants Netscape and Oracle, to run the system. The move means the entire UK cable industry will be using the same standard for digital services.
Tony Illsley, Telewest's chief executive, confirmed that Telewest was having a "very positive dialogue" with Cable & Wireless Communications about co-operating on digital services. However, he denied the two were discussing a merger.
Analysts have long believed that the three cable operators will have to join together.
Telewest is planning to launch a high-speed Internet service that could work through a personal computer or over the television.
The news came as Telewest issued operating statistics which showed that in telephony Telewest's penetration jumped 1.9 percentage points to 31.6 per cent, while in cable television penetration was up 3.1 points to 25.1 per cent. But the "churn" rate in telephony increased to 21.5 per cent as British Telecom lured back customers.