Government continues to encourage competition in the telecommunications market, Minister of Telecommunications and E-Commerce Renee Webb told the House of Assembly on Friday.

The aim is to meet consumers' desires for choice and lower prices, she continued, and Government was doing this by relying on market forces.

But Opposition Leader Pamela Gordon warned that Bermuda risked being left behind in the e-commerce industry if the cost of overseas calls did not come down.

Ms Webb was speaking during the debate on the budget for the Ministry of Telecommunications and E-Commerce in the House of Assembly.

She pointed out: "Competition and deregulation do not happen without challenges.'' The two have to be balanced carefully and to do this, collaboration and consultation with players in the market were key.

It had not always worked, she admitted, as a number of court cases had been filed against Government by telecommunications firms.

And this had cost valuable time in the race to bring about a competitive market. But Government remained committed to that goal as it believed it would benefit Bermuda as a whole.

These cases stemmed from licensing issues and the introduction of new services in particular, noted Ms Webb. Licensing under the Telecommunications Act was being reviewed with the aim of being amended and policies regarding the introduction of new services were being developed.

"I am saying all this to say that although there are challenges, we recognise that competition is the way to go but unmanaged competition is not the way to go as it can have an adverse effect on the economy,'' said Ms Webb.

Ms Gordon warned that the cost of calling overseas and accessing the Internet must come down if the Island was to be an effective player in the growing e-commerce industry.

She noted that jurisdictions wishing to compete successfully in e-commerce recognised they had to be able to generate high industry traffic and keep the cost of its services low.

"That removes Bermuda as a jurisdiction in this area,'' she said. "If we are not able to be competitive from a pricing perspective then we are just whistling Dixie. People will not come here if the rates are too high.'' Ms Webb had admitted earlier that Bermuda was more expensive than other jurisdictions when it came to long distance calling and Internet access.

"I still believe that services' costs need to come down,'' she said. "I think we all agree on that.'' She pointed out that the Ministry was talking with carriers to find ways to offer cheaper rates to the Bermudian community.

And she noted that there had been some success with costs for long distance phone call being reduced by between 35 and 50 percent last year, with more reductions set to come.

"This is a direct benefit of relying on market forces to dictate fair and reasonable competition,'' said the Minister.

Meanwhile Internet rates have been slashed by ten percent.

"A ten percent drop may not seem like much but it is a step in the right direction and it will continue. We expect further reductions later this year,'' she said.

"You can see that by sitting down and asking people to come up with ways to reduce their rates that the efforts of the Ministry are not in vain,'' she added.

But Ms Gordon said the reductions were not enough and still left Bermuda out-priced in comparison to its competitors.

"This is a barrier to entry when we try to entice people to come to Bermuda.''