long distance calling and larger capacity for voice and data traffic over the next year.

The competitive drive to lower prices continued last week when TeleBermuda International Ltd. announced a new plan for frequent residential long-distance users that drives the cost of calls to the US down to as little as 49 cents a minute, and the UK at about 89 cents a minute.

The plan is designed to meet Cable & Wireless' 20/20 discount plan announced a few weeks ago for frequent callers. TeleBermuda International general manager James Fitzgerald said the company's "Best Rates'' plan only requires customers to sign up to the plan. Prices for calls are discounted on a scaled basis depending the more time the subscriber spends on the telephone going up to 22 percent off regular rates.

Mr. Fitzgerald said that to reach 49 cents a minute to the US a customer would have to make $400 worth of long distance calls a month.

Cable & Wireless' competing plan requires customers to spend $20 a month, dial an 800 number and enter a code before being able to take advantage of a scaled discount. Customers who used a minimum of $100 a month would reach 52 cents a minute to the US. The TeleBermuda plan does not require customers to dial any special numbers or a code.

The latest round of discount offerings by the two competitors looks set to be taken to another level. Cable & Wireless general manager Eddie Saints last week told an e-commerce conference in New York that the company is anticipating cutting rates by an estimated 45 percent over the next year.

Mr. Saints said he expects the price of a long distance call could reach about 40 cents a minute to the US by next year and perhaps even less.

"We are tightening margins and using new technology,'' he said. "This is what you have to do in a competitive market. We are just being a different company.'' He also revealed that Cable & Wireless is examining whether to build a new high-technology telecommunications link to the Island which would multiply by eight times the company's existing capacity to handle voice, data and video.

A decision would be taken soon on whether to install a new 4.75 terabit cable to operate alongside the existing network, he said.

"Competition brings out the best in us, doesn't it?'' Mr. Fitzgerald when told about Cable & Wireless' plans to further reduce costs. He noted that since competition was introduced in the Bermuda market long distance rates have fallen by as much as 57 percent.

Mr. Fitzgerald said TeleBermuda is currently gearing up to put in the second link in the company's network to Bermuda. The cable will run from the company's operations at Southside to Venezuela, Brazil, Florida and to New Jersey where it will close the loop with the current cable from Bermuda.

He said the company is currently negotiating to build a 30,000 square foot operations centre at Southside for the network. The new cable is due to be completed by October 2000. The company is also installing a 3,000 square foot building which will house servers for electronic commerce companies.

TeleBermuda will maintain the servers for the companies. The company currently rents 40,000 square feet of space at Southside.

Mr. Fitzgerald said TeleBermuda now has 35 percent of outgoing international calls in Bermuda. Mr. Saints said Cable & Wireless has 85 percent of incoming calls, and 90 percent of the data traffic.