Cable firm Telewest has unveiled the UK's first mass-market "next generation" internet access service.

The firm is initially launching its broadband service, called Blueyonder, in homes its cables pass in the south-east of England.

Digital broadband, with connection speeds 10 times faster than existing internet use, will be competing head on with ADSL, which vastly expands the capabilities of copper telephone wires.

Both services promise always-on connections to the internet and, among other things, allow phone calls to be made while users are online.

The quality of net-based video and audio will also be dramatically improved by this next generation of internet use.

The service connects computers to the internet via the broadband cable which is normally used to provide cable TV services, rather than the secondary, less powerful cable used for phone services.

�50 per month

Telewest appears to have beaten BT's much delayed ADSL to launch, although BT says its high-speed network will be available to the vast majority of UK households by the end of the year.

Hull-based telecoms firm Kingston Communications has been trialling ADSL in its home area.

BT has been criticised for dragging its feet in upgrading its exchanges to allow ADSL, announcing detailed plans at the end of last year following criticism and threats from politicians and regulators.

The cable launch came the day after European competition chiefs said they were to investigate Microsoft's proposed purchase of a one third of stake in Telewest.

The other main owner of what is the UK's second largest cable firm, is Liberty Media Group, an indirect subsidiary of AT&T.

Telewest chief executive Tony Illsley said the February launch of an unmetered dial-up internet access package for a charge of �10 a month had led to a doubling of its internet customer base.

But that service is now set to be superceded by Blueyonder which, he said, "addresses the consumer's need for speed, providing permanent always-on connections".

Mr Illsley said: "This will change the very nature of internet use in the home, providing rich multi-media content and ending the frustrations inherent in slow dial up internet services."

Digital customers

Blueyonder customers - who can start to use the service next week - will pay �50 a month for the unmetered access at 512 kbits per second.

Telewest said it will roll out the service to its other British franchise areas during the rest of this year.

It expects to have 40,000 subscribers by the end of 2000 and 200,000 users by the end of the next year.

The company is also hoping for rapid growth in sales from electronic commerce, reaching �10-�15 per month per subscriber by the middle of 2002.

Telewest is also involved in trials with ADSL technology, so that it can offer a high-speed internet service outside the areas where it has laid its broadband cables.

The announcement came as Telewest reported its results for 1999, during which its revenues rose to �792.5m, up from �539.2m, helped by the takeover of Cable London.

The group said it had notched up 110,000 customers for its new digital service in six months, adding that it would launch "true video on demand" in early 2001.

Earnings before interest, tax, depreciation and amortisation - the measure preferred by analysts for heavily investing companies - were up 52% to �222m on the year.

Pre-tax losses were �529.9m against �313.6m in 1998. An exceptional charge of �49m served further to widen the deficit.