yesterday morning, blocking telephone calls from 9:30 a.m.-12:15 p.m. with busy signals.

Computer problems at the Bermuda Telephone Company Ltd. blocked communication between the western half of Bermuda and the eastern half. Overseas calls in the eastern half -- which included Hamilton -- were also interrupted.

Telco general manager Mr. Ernest Pacheco promised a thorough investigation into the incident, which originated in computerised switching equipment at the Hamilton station on Washington Street.

"Some calls were able to get through but the majority were not,'' Mr. Pacheco said.

Mr. Pacheco said the problem started in the Hamilton switching centre, in the old Telco headquarters off Washington Street, about 9:30 a.m.. Engineers worked through to 12:15 p.m. before full service was restored.

"We were able to restore service, but we aren't absolutely sure whether it was the software or hardware,'' Mr. Pacheco said. "We have got it back to normal, and a full investigation as to the cause of the problem will take place over the next few days.'' The problem shut off the primary switching system in Hamilton, Mr. Pacheco said, but allowed some calls through on a secondary system.

"If you were in Hamilton and calling within Hamilton or the eastern end of the Island, you had no problem,'' he said.

"If you were in Paget, where the other switching centre is, and were calling the western end of the Island, you had no problem.

"But you could experience the problems if you were calling from the western end to the eastern end, or vice versa.'' Anyone calling from the western areas -- with telephone numbers beginning 236, 234 or 238 had no problems making overseas telephone calls. But those in Hamilton and the east faced big problems.

For the Bank of Bermuda, by far the largest telephone customer in Bermuda, the impact was serious -- even though many of its most important financial work is done on international computer networks that were unaffected.

"I can't tell you what the real bottom line impact is, but I do know that it was fairly serious and we were impacted,'' said the bank's telecommunications manager Mr. Roland Lines.

"I certainly contacted telephone company management regarding it, and we are going to make a point of meeting with the telephone company to review procedures.'' But new telephone equipment the bank plans to install later this year would have allowed it to escape many of yesterday's problems, Mr. Lines said.

The bank's wire payment system, computerised financial information and stock quotation services and foreign exchange trading operations were not affected.

And the bank's overseas offices remained in touch with Bermuda through computers and an electronic mail system.

"The real problem was just with regular long-distance dialling,'' Mr. Lines said. "I know this is a very serious concern to us, and we are going to follow it up with the telephone company. I know there are some systems we can implement with the telephone company to avoid or reduce the impact.''