A pair of long distance companies have dismissed their legal action against Government over its granting of telecommunications licenses involving the use of the Internet.

Cable & Wireless and TeleBermuda International dismissed the action against the Telecommunications Ministry this week.

C&W boss Eddie Saints said the action stemmed from changes to the local telecom landscape in June, 2000. At that time, the Ministry gave the go-ahead for voice-over-Internet, a move that allowed local Internet service providers (ISP), Northrock and Logic, into the long distance market.

Concurrent to that ruling, Telecommunications Minister Renee Webb also agreed to let the existing long distance carriers - C&W and TBI - offer Internet to business customers. Both companies have voiced dissatisfaction with being limited to the corporate market.

Speaking of the legal action that followed, Mr. Saints said: "The dispute was on the interpretation of the license. That was the basis of our objection, and the court process."

Mr. Saints said C&W's decision was a business one. "This was a long process. We looked at the circumstances and decided their was no commercial advantage to continue," he said.

TBI president James Fitzgerald, speaking of the case, said his company also took exception to the interpretation of their license.

"TBI's original license said we could provide Internet service - it did not specify residential or business." But, Mr. Fitzgerald added that subsequent to their being granted a license, the Ministry took the view that both C&W and TBI should be excluded from offering residential Internet access.

Mr. Fitzgerald said TBI dropped the legal action as a business decision. "You do not necessarily win with a protracted legal case," he said.

But Mr. Fitzgerald said the company is still petitioning Government to let it in to the residential market.

He predicted opening the market would push down Internet prices to North American levels.

Citing TBI's track record in the long distance market, Mr. Fitzgerald said when the company's cable was activated four years ago, the price of a long distance call to the US was $1.10 per minute. Now the best rate is 23 cents per minute.

Mr. Fitzgerald said: "It was the Ministry's view that (Internet) rates would be reduced, but basically this has not happened and certainly rates are not comparable to the US. We have seen (with long distance) what competition can do and we think we can do the same with Internet rates."

Meanwhile, the number of local ISP's may increase if two local companies have their way.

Fort Knox chief executive officer Troy Symonds said the company has a hearing with the Telecommunications Ministry on November 21.

Mr. Symonds said Fort Knox is initially looking at providing Internet for its clients, but if they see a business opportunity they could look at offering Internet access on a larger scale.

"The key issue for us is that we have to negotiate access rates for our customers. With a class C license (for Internet) we would be able to negotiate with the provider for capacity. And it would enable us to have our own IP address."

Mr. Symonds said their application was to offer Internet to businesses, but they are not ruling out residential.

And a new venture, iTech, is also looking to move in to the Internet market with a hearing set for November 20.

There was also a Telecommunications hearing yesterday with the Bermuda Land Development Company who are applying for a class B license to set up a neighbourhood fibre-optic network.

BLDC consultant Claude Bourque told The Royal Gazette last month that buildings were being fitted with cabling to allow new companies moving in to get started immediately but a license was needed to link up the network.

Telecommunications Director Greg Swan said with the number of applications before the Ministry, which also includes an application for BTC mobility to become separate from the Bermuda Telephone Company, while remaining under the Key Tech umbrella, it will be some weeks before decisions are made.