Cambridge should build a cable television system capable of allowing viewer participation and "interaction," a city council study group recommended yesterday.

The committee, which began researching the cable television last year, called on the city to install two 40 channel cable systems, one for residential use and the other for "institutional" purposes.

Though recommending that the operation of the system be licensed out to private contractors, the committee urged the council to retain ownership, at least in part to guarantee public access to many of the channels.

The interactive system, much like the QUBE system used in Columbus, Ohio, would allow city officials to poll residents on local issues, and even permit the network to be used for burglar and fire alarms and to monitor energy use, the committee says.

The City Council sent the report to its public service subcommittee.

"Cable could provide a general interface between town and gown at many levels," the report states, suggesting the creation of a joint task force with representatives from the city and the universities. "Their theater and musical productions, film series, computer services and data bases might all be more generally available," the report suggests.

Funding for the access channels could come from revenues obtained by leasing other channels for entertainment purposes, as well as from foundation grants, the report states, adding that construction of the system could cost as much as $100,000 per mile of cable.

To protect viewers' privacy, the report advises that "educated consent" be required of subscribers. The viewing habits of customers, as well as the opinions they offer in polls, present a "potential for abuse."