The Bermudian experiment with competition in local telecommunications all but came to a halt yesterday with the announcement that Quantum Communications is being offered for sale by its current shareholders.

Quantum yesterday gave its 16 employees, 12 of them Bermudians, notice that their employment will be terminated on April 12. Quantum was set up to compete with the Bermuda Telephone Company (BTC) in the supply of local telephone service. Only 50 customers, all corporate, had signed up with Quantum, however, as wrangling over the wording of the relevant legislation dragged on over an 18-month period.

A Quantum spokesman and the Minister of Telecommunications both blamed the wording of the legislation which had been set up to encourage competition and continued legal action by BTC to block moves by Quantum to establish its new business.

But the Minister stressed BTC had acted entirely within its rights as she blamed the drafting of the Telecommunications Act.

Spokesman Jim Sullivan of Quantum said that Bermuda Electric Light Company (Belco) and Cable & Wireless, holders of about 45 percent and about 35 percent of the equity of Quantum respectively, were "in discussions to provide support to employees in identifying alternative employment opportunities''.

"The process of competition which the Government attempted to establish in 1996 has altogether failed,'' said Mr. Sullivan.

Ms Webb agreed: "The regulatory framework has not, unfortunately, been established which would be conducive to the opening-up of the business.'' The announcement by Quantum came a day after Ms Webb had hosted a "Round Table'' of 45 telecommunications company representatives at which she sought their views on ways forward for the industry in Bermuda.

BTC yesterday denied that it was the villain of the piece. "We have worked hard to ensure that the competitive environment Government envisioned for Bermuda becomes a reality,'' BTC spokeswoman Carla Lacey-Minors told The Royal Gazette yesterday.

Mr. Sullivan revealed that, even if the legal actions mounted by BTC had been resolved quickly, several issues remained on the table which would have scuppered Quantum's attempts to compete.

These included number portability (a customer's ability to keep a telephone number when changing phone companies), the rate at which BTC charged for access to its network and `hubbing', the notion that all calls, even those on the Quantum network, have to go through BTC.

"Hubbing is not right,'' said Mr. Sullivan, who admitted that giving notice to all the Quantum employees had made yesterday one of the worst days of his life.

"BTC has delayed neither interconnection nor competition,'' said Ms Lacey-Minors yesterday. "No allegation of delay by BTC has been substantiated by either Quantum or the Government. Even so, it continues to be fashionable to blame BTC for all the ills being suffered by Bermuda's players in the telecommunications industry.'' Mr. Sullivan, however, was quite plain. "BTC still questions the licence issue,'' he said. "All the legal wrangling with respect to how the Telecommunications Act should function has kept Quantum out of the game.'' Ms Webb said one of her top priorities as Minister will be to amend the Act, a process which will come too late to save Quantum in its present format.

The Minister underlined her Government's desire to introduce competition to the local telecommunications sector.

She expressed the hope that "somebody will buy Quantum,'' although she acknowledged that "no-one is likely to buy it unless the issues are sorted out''.

Mr. Sullivan said Quantum was having discussions with "some interested parties'' about a possible acquisition. The company would be sold with a restructured balance sheet, the network equipment and its licence. The new balance sheet would be one with lower levels of debt and without the losses the present shareholders have incurred.

Ms Webb said her Ministry would not object to re-issuing the licence to a new company, providing it had suitable financial backing and otherwise met the requirements of the law.

Belco Holdings CEO Garry Madeiros, said yesterday evening: "We want competition to be successful. If we are able to sell Quantum so that its new owners are able to operate it with a lower investment than the current shareholders were required to make, the opportunities to compete might be very advantageous.

"Competition right now, however, will only succeed if the existing regulatory hurdles, and some of the existing practices and contracts which are anti-competitive, are replaced.''