Government this week released details of its proposals for reform of the telecommunications sector. The proposed reforms are the most far-reaching since the old duopoly of Cable & Wireless ? for overseas phone service ? and the Bermuda Telephone Company ? for domestic phone service ? was broken in the 1990s.

Few would dispute that that change was worthwhile, and consumers have benefited from greater choice and lower costs as a result of adding new overseas and domestic phone providers to the mix. The new reforms would now further open the playing field.

What has happened since deregulation in the 1990s is the plethora of telecommunications choices now available. Where fixed line phone service was virtually the only option available until the 1990s, now consumers have access to Internet phone services, wireless phones and Internet service, wireless and fixed line cable TV and so on.

The current structure requires that telecom providers gain different licences for different technologies and restricts long distance phone providers from entering the domestic market in a meaningful way. There are also restrictions, particularly for Internet Service Providers, from having more than 40 percent foreign ownership.

Under the new proposals, local service providers have unlimited licences, meaning they can offer whatever services they wish, except for overseas fixed line calling. The proposals would also allow the current overseas providers ? Cable & Wireless and TeleBermuda International ? to enter the local market, along with, potentially, a third long distance provider.

The reason for protecting the overseas providers seems to be two-fold. Bermuda desperately needs more long distance capacity as the current submarine cables age and as demand increases.

But the cost of a new line would be huge, so providers will apparently be given some protection in return for the risk they are taking, and for the competition they will presumably be adding.

In spite of that, local providers have questioned why they are being exposed to more competition without the opportunity to fight back on a level playing field.

There is a valid argument that all the telecommunications providers would benefit from increasing their size and the range of products they can offer, and that Bermuda may be suffering from an excess of competition which keeps prices low, but restricts the providers? ability to make capital improvements. As capital demands for introducing improved services grow, smaller operators may well struggle.

On the other hand, there is a risk that consolidation in the sector will see Bermuda return to the ?bad old days? of a monopoly or duopoly, which could ultimately see the consumer end up with inferior service and high costs. This should be avoided. Certainly, one would expect a wave of mergers and consolidation, including the departure of some of the weaker licence holders.

It is ironic that the proposals now being made by Government contradict its decision last year to oppose the proposed merger of Cable & Wireless and KeyTech Ltd. on the basis that it would create a monopolistic situation.

If Government?s current proposals were already in place, there would be no barriers to that merger, assuming the two parties could agree on price.

Perhaps the most surprising element of the proposals concerns the recommendation to waive the 60:40 ownership restriction for all telecommunications providers. The argument seems to be that the Island currently has at least two tiers of ownership within the sector, with multinationals like C&W at one end, and Bermudian-owned companies like the smaller ISPs at the other.

It can also be argued that local telecommunications providers in the new regime need greater sources of capital than the local market could provide. But there is a clear risk that the entire telecommunications sector could end up in foreign hands under the current proposals and that may not be in Bermuda?s best interests given the importance of this sector, both to private individuals and to companies. Certainly one can see multinationals coming into the market at the expense of local entrepreneurs.

There are no easy decisions to be made here: Bermuda needs a sophisticated and up to date telecommunications infrastructure, and it needs it at prices that are broadly competitive with other developed countries. What?s needed now is an open and honest debate on whether Government?s proposed reforms will achieve that.