Bermuda's telephone wars took a new twist last night when Government launched an inquiry into the relationship between BELCO and Quantum.

Telecommunications Minister E.T. (Bob) Richards has ordered an investigation amid complaints from the Bermuda Telephone Company.

BELCO, which holds a 47 percent majority stake in Quantum, owns a fibre-optic cable underneath Hamilton.

But Quantum runs services off the cable -- and rivals have questioned how the arrangement works.

Quantum was given a licence to provide telecommunications services on the condition that it developed its own facilities.

But Quantum does not own the cable. And BELCO has no licence to run telecommunications services from its own cable.

Now the matter has been referred to the Telecommunications Commission for a full inquiry.

Cable and Wireless is already suing Government for $100 million, having lost about 25 percent of its market share last year.

The firm is now a direct rival with TeleBermuda International as an international call provider.

But TBI can offer cheaper calls because of Government protection to ease the company into the market.

C&W is already preparing to cut 25 jobs, through voluntary redundancies.

Now the Island's new, competitive communications industry is being hit by a fresh controversy.

BELCO's cable, which will help relay CCTV surveillance pictures from 30 anti-crime cameras in Hamilton, has been leased to Quantum Communications.

Government and the Corporation of Hamilton have rented the system from BELCO and will pay an annual maintenance fee to Quantum.

Quantum also provides data communication services and will offer a local voice service later this year.

BELCO also plans to use the cable for automated meter-reading and to link substations and other electricity installations.

The Bermuda Telephone Company is Quantum's main competitor for fibre-optic services -- and has set aside $3 million for improvements to the ring in Hamilton.

Sen. Richards demanded the inquiry in a letter to Telecommunications Commission Chairman Robert Stewart.

He said lawyers for BTC had questioned the relationship between BELCO and Quantum, and "how that relationship impacts on the licence granted to Quantum Communications Ltd''.

Sen. Richards added: "I hereby refer this matter to the Commission for your investigation and report and ask that you hold, as a matter of urgency, such inquiry as you see fit and report thereon to me.'' Commission Secretary Ted Pitman told The Royal Gazette : "The inquiry will surround whether BELCO should in fact have a licence to provide services, considering it is their cable.

"Quantum have the licence. The question, according to the Telecommunications Act of 1986, is whether they are obliged to provide facilities.'' He said Quantum was required to set up its own technical facilities under the terms of its operating licence.

Mr. Pitman added: "BTC's lawyers, Diel and Myers, have raised an issue and the Minister wants us to investigate.'' A spokeswoman for BELCO added: "This has come up in a letter from the Minister to the Commission and it's really not our place to comment on this.''