calls abroad.

The businesses are using a system provided by International Discount Telecommunications, of Brooklyn, which bypasses the normal telephone network.

But the Bermuda Telephone Company is refusing to rise to the competition and has repeated its warning to customers to look carefully at any discount deal before getting involved.

IDT offered free phone calls for a month before introducing the companies to its cost-cutting system.

Vice president Mr. Mark Knoller said: "As a result of publicity in Bermuda we now have around two dozen customers.

"They are made up of two to three hotels and one or two financial institutions. They are all large compa nies who would normally phone the US six to eight times a day.

"People talk about lowering their prices to compete with us, but they just talk about it for a few years before they do anything.'' Earlier this year, IDT President Mr. Howard Jones claimed that Bermuda's TELCO "phone monopoly'' had been overcharging customers.

He said: "New technology and the falling dollar have combined to enable our company to undercut the state telephone monopoly of Bermuda on international telephone calling by 50 percent.

"The way we do this is simple. Any time a caller in Bermuda wants to make a long distance call they dial a special number in the USA and then hang up.

"Within seconds they are called back from America and receive an American dial tone which they can use to call anyplace in the world.

"But the best part is because the calls are now originating from the USA they only pay the low competitive American rates rather than the high monopolistic rates in effect from Bermuda.'' He said that the weak dollar made the situation even more attractive to Bermudian customers.

There is an additional charge for customers which makes it only really attractive to customers who make overseas calls on a regular basis.

Telco general manager Mr. Ernest Pacheco denied rumours that the company, along with a major US network, would be offering discounted international calls.

"We have no intention of trying to compete with IDT,'' he said. "I would just repeat what I said before, that any firms becoming involved with IDT should be aware of what they are getting into.''