A BATTLE to revolutionise British television viewing with more channels, high quality pictures and CD quality sound began yesterday when two new groups applied to run Britain's key digital terrestrial television services.

Leading heavyweights BSkyB, Carlton Communications and Granada Group are teaming up to create a formidable new company - British Digital Broadcasting.

It plans to offer an initial 15 channels including subscription channels from the BBC.

The group faces competition from Britain's third largest cable operator CableTel, which is wholly owned by US cable company International CableTel, and which also owns NTL, one of two major British transmission companies.

This group, which plans to offer about 20 channels, interactive services such as home shopping and home banking, and information services, is called Digital Terrestrial Network (DTN).

"This is the most exciting development in broadcasting since the introduction of colour," said DTN's chief executive, Mr Jeremy Thorp. "We are on the brink of a revolution in entertainment, information and telecommunications."

Mr Thorp gave away few clues about where the group is planning to get its programmes from, saying only that it had the best sources in Britain and US. "Its investment plans are also still subject to confidentiality agreements, although the group says they will be obviously substantial."

If the BSkyB camp is successful in winning the licences, the shareholders have agreed to meet a peak funding requirement of up to £300 million. The company is expected to be profitable within five years.

The Independent Television Commission watchdog will award the licences. The service is expected to begin by mid 1998.