Government?s proposal to allow complete foreign ownership of any telecommunications company operating in Bermuda has sent shock waves through some predominantly locally-owned companies.

Now heads of those businesses have requested a meeting with Neletha Butterfield, Minister of the Environment, Telecommunications and E-Commerce (METEC) to discuss their concerns.

There are fears in the industry that small-scale internet service providers (ISPs), in particular, could be wiped out by foreign-owned giants if the proposal becomes policy.

One ISP has told Government that dropping the 60-40 rule, which requires majority local ownership, ?flies in the face of Bermudianisation policy?.

And another company said it believes the suggested new licensing regulations would lead to either a monopoly or duopoly in the industry.

Government is proposing an overhaul of the licensing system and an independent regulatory authority for telecommunications.

METEC believes the end result will be more competition across all sectors of the industry, bringing improved products and lower prices for consumers.

The public is being invited to comment on the proposed reforms which are outlined in a consultation document that was published this week. A public meeting, yet to be organised, will be held to discuss the issues.

None of the ISPs we contacted yesterday were willing to discuss their reaction to the Government proposals.

Chris Barker, marketing manager for North Rock Communications Ltd., explained: ?We are still in the process of responding to the document.

?We have asked for a meeting with the Minister (Ms Butterfield) and we don?t want to say anything before we meet with her.?

It is hoped that meeting can be held as soon as today.

Some companies? views can be gauged from comments published in the Government?s review of industry responses to their proposals.

All the Island?s ISPs are subject to the 60-40 rule, which requires majority local ownership, unlike international service providers which can already be 100 percent foreign-owned.

Giving its views to METEC, ISP Fort Knox said that getting rid of the 60-40 rule was ?irrational? and ?flies in the face of the Government?s Bermudianisation policy?.

It would be impossible for smaller local companies to compete with the international service providers, Cable & Wireless (C&W) and TeleBermuda International (TBI), in attracting investment as ?lower-cost capital will always be easier for large international firms to obtain?, Fort Knox argued.

North Rock told METEC that there was no demonstrable need for foreign capital in the Island?s telecommunications industry and so the 60-40 rule should stay.

And if 60-40 was to be abandoned in the telecom industry, then it should be reviewed for other industries too, North Rock added.

TBI and cell phone operator Digicel supported the dropping of all restrictions on foreign investment.

C&W would also like to see the end of the 60-40 rule, but expressed general support for a scheme to encourage ?Bermudianisation?, with credit being given to companies who employ more local staff (especially in leading positions) and who invest in community projects.

One of the METEC proposals is that firms with a higher proportion of foreign ownership should pay higher licensing fees to encourage local ownership.

METEC is suggesting that the current licensing structure be dismantled so that companies get a single Unified Domestic Licence (UDL) permitting them to provide a full range of services. This is seen as necessary because of the growth of convergence technologies.

North Rock told METEC that ?under the proposed licensing regime, market forces will cause consolidation between service providers resulting in either a monopoly or a duopoly serving Bermuda?.

A similar concern, over one company having too much power in the market, was the reason Government publicly opposed a $205-million bid from Cable & Wireless for KeyTech, owner of BTC, in September last year.

?Such an acquisition would not be in the best interest of Bermuda and would severely limit a sustainable, competitive environment,? the then Minister of Telecommunications Michael Scott said at the time.

?Such an acquisition would create a telecommunications service provider that would have significant market power and the potential for negative effects on a telecommunications industry that has benefited from diversity.?

Fort Knox suggested to METEC that ?Bermudian companies?, which it classed as those with at least 60 percent local ownership, should get the first opportunity to work with a UDL.

?Fort Knox proposes that ?non-Bermudian? companies be allowed to operate within their current market segments only and that these firms not be offered a UDL until after Bermudian companies have had a grace period in which to build out their businesses,? the consultation review stated.

Digicel, C&W and TBI expressed broad support for the UDL concept.

The proposed independent regulatory authority would be headed by a three-person commission and staffed by between seven and nine full-time professionals.

The proposed reforms are outlined in a document entitled ?Telecommunications Regulatory Reform in Bermuda?, which can be downloaded from the Government portal at www.gov.bm.