international business calls from the present Telco/Cable & Wireless monopoly.

That was the view of Telco general manager Mr. Ernest Pacheco yesterday, at a hearing into whether four new phone services should get licences to operate.

The services say they can offer cheap international calls. They include Global Access Bermuda, which was closed down by the courts last year for not having a licence.

Mr. Pacheco blasted GAB for "fraudulent use of the telecommunications system''.

At yesterday's Telecommunications Commission hearing, GAB proprietor Mr. Mike Leverock and the company's lawyer Mr. Narinder Hargun were joined by Mr. Cliff Rees, president of Telegroup, the US firm working with GAB.

Mr. Rees said a one-minute GAB call to the US would cost 85 cents, compared to $1.15 with C&W.

C&W's attorney, Mr. David Cooper, said applicants such as GAB could not be legally allowed, because of acts of Parliament. But Mr. Hargun said the Minister could change that.

Mr. Cooper added Bermuda's small telecommunications system could not compete with American companies.

Mr. Pacheco told the meeting: "Allowing competitors to come cream-skimming the most profitable parts of our universal services will cause an imbalance between our obligations and our rights. It must be accepted that some services must subsidise others.

"Telco contends that allowing GAB to use our established lines is an unreasonable practice and a fraudulent use of the telecommunications system.'' GAB could endanger Telco jobs, he added. His company could reduce rates if it were not for Government's three percent tax.

Mr. Hargun said he was surprised by the "somewhat extravagant'' charge of fraud.

"Nothing in the operation of GAB is intended to infringe any laws, and we have always intended to pay, and have paid, any charges levied either by Telco or by C&W.

"GAB's application does not, in financial terms, impact on Telco as far as we understand it.'' Before GAB was closed down it had been financially successful, he said. An audience of about 75, mainly businessmen, heard from only two members of the public.

GAB customer Mr. Sutherland Madeiros, of the Sportseller store, said he believed GAB alone offered American 1-800 numbers, which were invaluable to small firms.

Telco employee Mr. Greg Falzone attacked C&W for "literally bleeding this Island of tens of millions of dollars a year for years and years''.

The second applicant for a licence, Mr. Kenny DeFontes of North Atlantic Telecommunications, was mostly tight-lipped about his plans.

His idea was to start with Hamilton business customers and expand from there.

"If I were Telco I would try to keep a monopoly as well,'' he said.

Commission member Mr. Charles Collis said NAT was proposing "considerable'' savings, but its suggested rate to the US seemed only five cents cheaper.

Mr. John Smith, a "pioneer'' of new phone services in Canada, spoke for Island Bell Ltd., the third applicant.

He said IBL wanted to offer a service to everyone in the Island.

He admitted there would be a charge for using 1-800 numbers. Telco would not suffer a substantial loss, he said, because the market would grow.

The firm is claiming discounts of up to 12 percent on rates published by Telco, the meeting heard.

Mr. Pacheco said there was a misunderstanding about international calls because Telco sent the bills out.

Telco only got 25 cents out of the $1.15 rate to the US, while C&W got 90 cents.

He said IBL, like NAT, would serve only a segment of the community. Telco was committed to the Island's well-being while IBL's only aim was monetary.

Bermuda International Telcom, the fourth applicant, brought in board member Mr. Parker Sund from the US.

He said that through links with AT&T, MCI and Sprint, BIT would offer new services to homes and businesses.

Mr. Collis said he found BIT's claims of 30 to 50 percent savings hard to accept.

But BIT board member Mr. Bill Hart, also from the US, said "tremendous savings'' would be offered.

Local backer Mr. John Casling said BIT could save hotels so much, they would become "marginally profitable''.

But Mr. Collis demanded to know what would happen to Bermuda's phone facilities, provided by C&W, if C&W lost virtually all of its long-distance business and decided to close that service.

Mr. Casling said AT&T had faced similar competition in the US, but had emerged stronger.

Mr. Pacheco said hotels made money on phone services by surcharging their guests.

TALKING BUSINESS -- GAB proprietor Mr. Michael Leverock (left) and Telegroup President Mr. Cliff Rees in discussion during yesterday's Commission hearing.