Next Monday, when Fort Knox Bermuda introduces FKBnet, its Internet service, the market for Internet service providers (ISPs) will be nearly saturated, according to Telecommunications and E-Commerce Minister Renee Webb.

Her claim, made at a press conference yesterday to announce FKBnet's launch, almost seems absurd given the perennial griping of many residential Internet users, who have not seen substantial price decreases since the Internet arrived in Bermuda in the mid-nineties. But in just six months, the residential Internet market has grown from two players to four, and the total number of Internet service providers stands at six (TeleBermuda International and Cable & Wireless are restricted to serving the business market).

In February, telecommunications officials granted a communications licence to Fort Knox, a three-year-old company whose primary business is data storage and protection and disaster recovery. That month, Bermuda Computer Services, the local IBM agent, launched Transact, its Internet access service.

Although Transact's presence has not forced its competitors to lower their residential rates, Troy Symonds, Fort Knox's chief executive officer, expects his company's presence to shake up the sector.

"I think eventually there will be a price war," Mr. Symonds said, envisioning a scenario similar to the long-distance market, where prices have dropped substantially as more competitors were introduced.

Ms Webb also said she was confident FKBnet would increase the service and lower costs for Internet access over "the next several months."

Transact entered the market with substantially cheaper Internet packages than North Rock and Logic, but the latter two ISPs have yet to respond by decreasing their prices. Transact's six residential packages average $1.36 for each hour of Internet access, while North Rock charges an average $1.80 per hour and Logic, $1.89 per hour. But Transact's excess hour charges, which consumers pay when they use more time than their package includes, are higher than the other two's.

Ms Webb said there were no other companies approved to offer Internet service or pending applications. She said that although both Cable & Wireless and TeleBermuda want to enter the residential Internet market, their applications are "not being entertained at the moment" to allow smaller companies to get a foothold in the market.

Mr. Symonds is hoping that FKBnet's prices, which were not released yesterday, will lure customers away from the established ISPs, and added that they can use forwarding services to keep the same e-mail address temporarily or even indefinitely. But Mr. Simons also believes there is room for growth in the residential market. According to Government's e-business consultant, Nigel Hickson, 67 percent of households have access to the Internet already; Mr. Symonds predicts that in two to three years, that penetration rate could rise to 80 percent.

Fort Knox will market its services to families by promoting the options for restricting access to sites and virus protection. And the company is hoping that the various domain names it has registered, which will allow customers to have e-mail addresses ending with blessed.bm, hotsuff.bm and other suffixes, will attract customers.

The company, which operates in St. David's, has teamed with Gateway Systems, which will sell Internet access at its Queen Street store and bundle packages with the new computers it sells.

FKBnet will also be available to commercial customers, but Mr. Symonds said that at the moment, the more-developed commercial Internet market is less interesting because it has more competitors than the residential market.

FKBnet will use Cable & Wireless's undersea cables to connect to the Internet backbone in three different locations in the United States. If that connection ever goes down, the company has a satellite dish atop its Southside building to re-route Internet traffic to the Internet backbone in Virginia.

Mr. Symonds said the satellite connection is "more cost effective" than the undersea fibre connection because Fort Knox manages it, but the latency of satellite transmissions - the delay between a user's request for information and a remote computer's response - limits its potential as a primary gateway to the Internet.

In about a month, Fort Knox plans to introduce a service compatible with the Bermuda Telephone Company's (BTC's) digital subscriber lines, which are faster than regular phone lines, in about a month. Mr. Symonds also hopes to offer wireless Internet access, as North Rock has done, and bypass BTC's infrastructure.