The news that Atlantic Tele-Networks (ATN), the American telecommunications company, has agreed a deal to take a controlling interest in KeyTech represents something of a vote of confidence in the Island’s economy.

The Nasdaq stock exchange-listed company paid out $42 million and transferred its large stake in CellOne to KeyTech as part of the deal to acquire a 51 per cent stake in the Bermuda telecommunications group.

Time will tell whether this turns out to be a positive development for Bermuda, but one would expect it to be so for consumers. The liberalisation of the telecoms sector was set in motion by the previous Progressive Labour Party government with the aim of improving the Island’s telecommunications infrastructure, improving service to consumers and generating competition to ensure fairer prices.

Bermuda has made progress but there remains room for improvement on all counts. The KeyTech deal will hopefully be another step in the right direction toward achieving those objectives.

The Bermuda telecoms market is close to being a duopoly. If the deal gets the approval of regulators, then the duopoly will comprise two foreign-controlled participants, with KeyTech majority-owned by ATN and privately held Digicel owned by its Irish billionaire founder Denis O’Brien.

There will be unease among those opposed to seeing key segments of the Island’s economy under foreign ownership. Fears of ruthless efficiency drives dictated from far away by numbers-focused executives with little understanding of Bermuda may be the scenario haunting some. But in this case, it should be stressed that ATN has a better appreciation of the Island than the average foreign investor, especially since it has been a stakeholder in Bermuda Digital Communications since the late 1990s. In other words, they know the market in which they are investing, which lends weight to the idea that this is truly a vote of confidence in the Bermuda economy.

Also, realistically speaking, if Bermuda wants its telecommunications services to befit those of the modern international business centre we purport to be, then the scale of investment necessary to continually update our networks to keep up with technological advance requires owners with deep pockets. ATN and Digicel fit the bill.

The hope for the future must be that these two companies compete vigorously on quality and price. In order to survive, the remaining stand-alone operators like TeleBermuda International, LinkBermuda and World on Wireless will need to match or better the duopoly’s offerings on quality, price, or both. This would produce a favourable outcome for Bermuda consumers.

The weakness of a market with only two dominant players is that competition may wane over time, but the Regulatory Authority will be charged with keeping a close eye on things to ensure no semblance of even tacit collusion.

Bermuda has a need for foreign capital in other areas of the domestic economy, in both the public and private sectors. The Electricity Act envisions a future in which we will have a utility-scale solar power project and, potentially, a change of principal generating fuel from oil to natural gas.

Whatever options the country chooses, the infrastructure costs will run well into the hundreds of millions of dollars and Ascendant Group, the owner of the energy utility Belco, will have little choice but to tap the overseas capital markets.

If the Island wants a new airport terminal, it cannot afford to fund it from the debt-burdened public purse, as the Government has made clear. The option it has chosen will give the foreign investors rights to run the airport for an extended time period in return for building it.

While the Island has been relatively comfortable living with huge-scale overseas investment in exempt international companies, Bermudians are far less accustomed to seeing areas of the domestic economy open up to foreign participants. Protectionist instincts remain strong.

However, in today’s interconnected and globalised world, protectionism is both less relevant and increasingly difficult to enforce. The rise of e-commerce means consumers can quite easily access goods and some services from overseas, meaning many Bermuda businesses already have overseas competitors, even if the 60-40 rule prevents them from being in the building next door.

Bermuda should not dread the prospect of seeing more foreign equity in the domestic economy, especially in capital-intensive sectors like telecommunications and energy, where it is needed. It is indicative of a gradually modernising Bermuda economy and heartening to see that outsiders have confidence our economic future.