February 1, 2000 Web posted at: 8:51 a.m. EST (1351 GMT) by Martyn Williams

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TOKYO (IDG) -- Sega Enterprises has formed agreements with 30 cable network operators across Japan on the rollout of a high-speed cable Internet service using the company's Dreamcast home gaming console, the company announced Monday.

Tests of the service will be launched this week and a commercial service is planned to begin around mid-year, spokeswoman Miyako Shimizu said.

Among the companies Sega is teaming up with to launch the service are Titus Telecommunications and Jupiter Communications, the largest two cable MSOs (multiple system operators) in Japan. The tie with Titus will give Sega a strong tie with Microsoft should the U.S.-based company succeed in its current plans to acquire a majority stake in the cable operator.

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Sega's Dreamcast is based on the Windows CE operating system.

Under the deals reached between Sega and the cable network operators, the company will offer its Dreamcast machine with a local area network adapter to allow for connection to the cable Internet service.

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The new service gives Sega a boost in its ongoing battle against Sony Computer Entertainment Inc. (SCEI). While Sega beat SCEI out of the gate with its 128-bit Dreamcast machine, which was launched in Japan in late 1998, SCEI is poised to hit back in a big way with the PlayStation 2, the company's own 128-bit games machine that will be launched on March 4 in Japan.

Like Dreamcast, PlayStation 2 includes an analog modem for basic Internet gaming and access although it comes with several other features, including the ability to play DVD Video disks and a PC Card interface for connection to high-speed networks, which are sure to give Sega some tough competition.

In Japan, Sony has already discounted the idea of using cable networks for its PlayStation 2, citing the low penetration of cable TV and the large number of old systems which require expensive upgrading before such services can be launched. Instead, it has obtained a nationwide wireless license and is building its own network to offer high-speed connections to console owners. However, the company is considering the use of digital cable networks in Europe and North America through which to deliver the service.

In addition to Internet connections, both companies are also considering delivering other services via the connections, such as video on demand and sales of digital audio.