Long-distance telephone rates in Bermuda will continue to "come down significantly'', declared TeleBermuda general manager James Fitzgerald yesterday, following claims by rival Cable & Wireless (C&W) that rates are to drop further.

But Mr. Fitzgerald would not be drawn on specifics at this point about any immediate plans TBI may have to counter C&W's latest rate reductions.

On Wednesday, C&W's Bermuda general manager Eddie Saints said that business international rates had dropped by 33 percent since the company received a new licence in November, while residential rates had fallen by 45 percent, with more to follow.

When TeleBermuda started two years ago, its promise was to undercut C&W rates by 15 percent. Mr. Fitzgerald confirmed that, for Bermudians, the trend will be to cheaper and cheaper long-distance calls in the next year or two. A key element of TeleBermuda and C&W's costs is the expense of connecting through the Bermuda Telephone Company (BTC). Until January of this year, BTC charged the long-distance suppliers 27 cents a minute per call.

The charge applied to incoming and outgoing calls equally.

In January, that figure was reduced, following a review by the Telecommunications Commission, to 15 cents a minute. In July this year, it was dropped to 10 cents a minute.

It has been these reductions that have enabled the long-distance suppliers to reduce charges to the customer.

"We are fully expecting the Telecommunications Commission to look at eight cents a minute by year's end,'' said Mr. Fitzgerald, presaging further cost reductions to Bermuda consumers prior to the year 2000.

By late next year, TeleBermuda will have completed its bi-directional, fully redundant fibre optic ring to South America from Bermuda, via New York, which will have a capacity for 15 million simultaneous voice and/or data calls.

"When we put that service in, rates will fall a further 40 percent, or a percentage in that ballpark,'' said Mr. Fitzgerald. "When you put all the pieces together, rates will fall, and fall substantially, for Bermudians.'' Rates in Bermuda have a long way to go before they begin to approach rates being charged in other developed countries. Indeed, many observers are forecasting that long distance will be free before too long, elsewhere in the world.

"But someone has to pay for the calls,'' explained Mr. Fitzgerald. "Whether that is advertisers, or customers, remains to be seen.'' One local telecommunications expert, who asked to remain anonymous, said the cost of fibre optic telephone calls had fallen so far that the true cost of a one-minute call to Chicago, say, from Bermuda, is one-40,000th of a cent.

"In other words, 40,000 one-minute calls from Bermuda cost about a cent to make,'' said the source. "Compare that with the 27 cents a minute BTC used to charge, and you can see how Bermuda long distance rates have a long, long way to fall before they begin to approach an area anyone would consider as reasonable.'' In Scandinavia, Mr. Fitzgerald said, a system is being tried out whereby callers willing to listen to a 15- or 30-second advertisement on their telephone could then proceed to make free calls. The system will work, Mr.

Fitzgerald said, "so long as there is an advertiser willing to pay for customers to listen to their messages.'' He had not heard of anyone in Bermuda being willing to pay for such a service.

COSTS OF A CALL TO US Cost of a call to the US TBI -- 89 cents a minute peak (up to 6 p.m.) and 63 cents a minute after 9 p.m.

C&W -- 95 cents a minute peak (up to 6 p.m.) and 65 cents a minute after 9 p.m.

* 52 cents a minute with C&W's new $20-a-month service Source: BTC