The future development of Bermuda's telecommunications infrastructure could be at risk after KeyTech, the company that owns BTC, Logic Communication, BTC Mobility and part of CableVision, said a question hangs over whether it can continue to invest as much if competition in the sector continues to grow.

James King, chairman of the board at KeyTech, highlighted in his 2003 chairman's report in the company's annual report, the improvements to the infrastructure it had made during the past year - but he warned that continuing to do so might not be in the best interest of the company's shareholders.

"We are please to be in a position to support these improvements, however we must remain vigilant in ensuring that the future capital investments are likely to provide an adequate return for our shareholders," said Mr. King.

"Competition is healthy, though a finite market such as ours, it is questionable whether additional fragmentation can support continued capital investment at this level."

And he quoted the recently published E-commerce Green Paper from the Ministry of Telecommunications to back up his statements.

He quoted the following section of the document: "Another important and successful element of the policy of managed competition is the medium to long-term sustainability of services within Bermuda. With a population of just over 62,000 the market is clearly not large enough even with the ever-growing international business sector, for a multitude of carriers especially where there is significant infrastructure provision involved."

Minister of Tourism, Telecommunications and E-commerce, Renee Webb, said that Government had no say in these kinds of matters.

"While Government grants the licences and would like to see a robust infrastructure and reasonable prices, we cannot dictate a company's business plan and how they choose to make a profit."

She added that there was a moratorium on granting licences this year and there would be no more "fragmentation" due to new licences granted.

She added: "How a company chooses to grow and deal with economic pressure is up to that company."

KeyTech, as the owners of BTC have seen the telecommunications sector open up - much to their disadvantage. They had run a monopoly as the main telephone company and have fought tooth and nail against the liberalisation of the telecommunications market.

But the Government has seen the de-regulation of the market as an essential way for the price of telecommunications to come down and as an incentive for BTC as the incumbent to improve on a poor track record when it comes to customer service.

Quantum, which was set up to rival BTC in the provision of local telephone services, has taken a long time to get off the ground.

Many deadlines have come and gone in regard to the sale of Quantum over the past four years, and the long-awaited joint venture with a local company has taken a long time to come to fruition.

Quantum, when it was first set up, only signed 50 customers, all corporate in its first 18 months. After spluttering along for a year, it ceased operations on December 31, 1999.

But now it has offices in Hamilton and at least one member of staff - and is said to be gearing up for business - a move which could cost BTC a further slice of the telecommunications pie.

In the company's annual report, Mr. King pointed out that during the past year $25 million has been spent by KeyTech on capital improvements to "maintain existing plant and also support provision of new services".

This includes GSM - a mobile telephone technology which allows mobile owners to take their telephones abroad with them and use them as normal in the USA and Europe - and increased cover of high speed internet access to Bermuda via Asymmetrical Digital Subscriber Line (ADSL) technology which will allow Internet users higher speed access at home and work.