In 2002, the high cost of Internet access in Bermuda finally came down with two new entrants to the market.

In February, Bermuda Computer Services broke the duopoly enjoyed by Logic Communications and North Rock Communications in the residential Internet access market when it launched the island's third Internet service provider licensed to serve non-business customers. Transact, as the new ISP was called, offered pricing much lower than the other ISPs.

The market was further fragmented in July, when Fort Knox Bermuda Ltd. launched FKBnet, and for the first time, residential Internet subscribers were able to purchase unmetered access to the Internet.

At the press conference announcing FKBnet's launch in July, Telecommunications Minister Renee Webb said that the Ministry would put a moratorium on new Internet licenses because the market had become saturated.

But the presence of new ISPs has not forced Logic or North Rock to lower their rates outright, at least not for traditional "dial-up" customers

Logic did not significantly change its rates for dial-up access. North Rock introduced new "no-frills" Internet packages with prices comparable to FKBnet's soon after the new ISP was launched. Unlike North Rock's regular Internet service, services such as spam filtering and anti-virus protection were not included in the cheaper packages. And customers who wanted to switch to the new pricing structure also had to change their e-mail address - which many considered a ploy by North Rock to prevent customers from switching to cheaper plans while retaining those customers that were willing to give up their e-mail address and switch to a cheaper ISP.

But while competition may have been imperfect for dial-up customers - who comprise the majority of Internet users in Bermuda - the price of high-speed broadband access came down significantly during the year. Many of the ISPs are offering incentives for customers to upgrade to broadband using high-speed telephone lines offered by the Bermuda Telephone Companies. Logic has tried to incite customers to upgrade to DSL by offering a $200 credit on their accounts or providing two months of service for free.

The monthly cost of a DSL connection has also come down in recent months. Before FKBnet introduced DSL service, the cost of a 256 kilobyte-per-second connection to the Internet ran customers about $200 a month, not including the cost of renting a high-speed line from BTC. Now, North Rock, Logic and FKB net charge between $129 and $139. Transact charges $89.95 a month for the same speed, but limits customers to 1,500 megabytes - approximately the amount of data which can be stored in 1,000 floppy disks - of downloads each month. Customers who download large amounts of music or video would have to pay 50 cents per additional megabyte once they used up their monthly allotment.

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In the voice communications sector, long distance rates continued to fall. James Fitzgerald, the president of TeleBermuda International, said that talks about the sale of the carrier had entered their final days, although the details of the transaction remain unconfirmed. TeleBemuda's parent company, 360networks, was forced to sell subsidiaries after filing for bankruptcy. Last month, Telecommunications Minister Renee Webb said that TBI's buyer was "not what we might have wished for."

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The mobile telecommunications industry also underwent substantial transformation in 2001.

BTC Mobility, a subsidiary of KeyTech and the sister company to BTC, became known simply as "Mobility." The company launched a new mobile network using the GSM standard, the most popular standard in the world, which is also used by Telecom. Mobility's network will allow customers to send photos between phones and download e-mail messages to their handset - so-called third-generation services.

In September, Bermuda Digital Communications, the company which owns and operates the Cellular One mobile network, announced plans to perform a similar upgrade to its network by next March. However, the network will use a different standard from Mobility and Telecom - the company opted for CDMA2000, which offers faster data speeds than GSM, but is not commonly used outside the United States. Because of the differing standards, customers will not be able to switch to or from Cellular One without buying a new telephone.

In October, BDC entered negotiations to sell the entire company to Atlantic Tele-Network (ATN) of the US Virgin Islands. ATN already owns 42 percent of the capital stock of BDC.

Telecom has also gone overseas in search of new capital. In November, the company announced that 60 percent of its shares had been acquired by AT&T, the American telecommunications giant. AT&T plans to upgrade Telecom's network so it can start offering third generation services to customers by next year.

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After the disastrous implementation of mandatory cable boxes last year, CableVision's run-ins with the government continued this year.

Dissatisfied with CableVision's service after being inundated with consumer complaints, the Telecommunications Ministry decided to renew CableVision's licence for only one year, instead of the 15 years CableVision wanted. Renewal would depend on the company's ability to improve service, but CableVision said that accepting such a short-term licence would be commercial suicide considering the amount it had invested in upgrading its system.

When negotiations failed, the company shut down its system and Bermudians were left without cable television for two days.

Television was turned back on after Government officials agreed to grant CableVision an 11-year licence, with service-related conditions, including credits for missed service calls and lost signals.

CableVision has since improved its phone system in response to customer complaints that they could never get through to speak to anyone at the company. It has also continued making improvements to its network so it can offer more channels and interactive services. In December, the company said it had settled long-standing copyright disputes with Hollywood studios, which will make it easier for the company to carry more stations.

Despite these advances, the Government figures that the best way to get CableVision to improve its service is to introduce competition to the market, and telecommunications officials are currently considering licence applications from two companies which plan to provide television service using wireless technology.

World on Wireless (WOW!), a company backed by CableVision co-founders Gavin Wilson and William Craig, along with Troy Symonds, Shaun Davis and accountant Craig Christensen, proposed a system that would provide customers with up to 310 channels transmitted over the air to one-foot dishes mounted on customer homes.

SGC Ventures Ltd. proposed a 90-channel system. The company was represented by president Crystal Todd and management head David Price.

CableVision has resisted both applications by questioning whether the ventures have adequate funding and whether the Telecommunications Commission has authority to grant licences to companies that use wireless television technologies.