TeleBermuda International Ltd. is in negotiations with the Bermuda Telephone Co. Ltd. (BTC) to jointly develop services. The pairing could be a bid to counter moves made by the opposition in Bermuda's new competitive marketplace.

"We have had productive meetings,'' TeleBermuda spokesman Ken Spurling said.

"There are a number of initiatives being taken in order to improve services domestically and internationally.'' He refused to elaborate on what services were being discussed. However he said the companies were not currently talking about taking equity stakes in each other. BTC provides local telephone service on the Island.

The proposed joint venture could be a move to counter Cable & Wireless link-up with two other companies about to provide local telephone service in competition with BTC. Cable & Wireless has bought about 35 percent of startup Quantum Communications Ltd., which is due to go after BTC's lucrative voice and data services in Hamilton.

Cable & Wireless is awaiting Government approval of its proposed purchase of 27 percent in Bermuda Digital Communications Ltd., the company which will compete with BTC in the cellular telephone market.

Also this week Cable & Wireless general manager Colin Little told The Royal Gazette the company had asked Government to lift price control restrictions on the company. The relaxation of controls on a dominant carrier would allow the company to lower its prices in competition with TeleBermuda. Mr. Little said the international carrier should be despecified from being regulated as a dominant carrier as it had lost about 25 percent of its market to TeleBermuda.

TeleBermuda began operations last May by offering rates at 15 percent less than Cable & Wireless prices.

TeleBermuda's Mr. Spurling said yesterday the company opposed the request by Cable & Wireless to be despecified.

"Cable & Wireless's request suggests that TeleBermuda's success to date in signing up customers for international calling has crumbled Cable & Wireless's 100-year power hold over the Bermuda market,'' Mr. Spurling said in a press release. "Such an idea is absurd on its face...TeleBermuda strongly opposes any action that might result in the premature deregulation of the incumbent dominant international carrier, Cable & Wireless. The mere fact that TeleBermuda is having initial success in attracting long distance telephone customers that for a century had no choice, is hardly grounds for removing regulatory and pricing oversight of Cable & Wireless, part of a multi-billion dollar UK enterprise.'' Mr. Spurling said that in the US, even though incumbent carrier AT&T had lost around 40 percent of its market share since competition was introduced, the company was still subject to regulatory scrutiny and price controls.

"Experience the world over has demonstrated that monopoly carriers, when faced with competition, have the power and incentive to squash competition in its infancy if allowed through the absence of close regulatory scrutiny to do so, by subsidising short-term losses with profits from other non-competitive services or allocating income and expenses to other sources,'' he stated.

"Once the new competitor is eliminated, the incumbent reverts to its old ways and typically raises prices because there is then on viable alternative.'' Mr. Spurling said TeleBermuda still needed a "reasonable transition period'' to get on its feet as set out in Government's position paper on the industry.

"The mere sabre rattling from a new executive (Mr. Little) that has been parachuted into the Island by the parent company in the UK should not be allowed to force the hand of Government and create uncertainties in the marketplace,'' he stated.

He said the Telecommunications Commission should not consider any changes in Cable & Wireless prices until the company submitted a comprehensive rate plan which was asked for last July. "TeleBermuda will continue, as it has done since July, to object to any ad hoc price changes by Cable & Wireless until such time as they have complied with the Commission's request,'' he said.

Cable & Wireless general manager Colin Little told The Royal Gazette this week that the company had submitted the document as requested. Mr. Spurling said TeleBermuda was not aware any such plan had been submitted.

Minister of Telecommunications Minister Senator E.T. (Bob) Richards did not return phone calls from The Royal Gazette .

PRODUCTIVE MEETINGS -- Kenneth Spurling