the Bermuda Telephone Company in a deepening row over competition.

The British-based company claims Telco would be in breach of contracts if it connected calls for new international operator TeleBermuda International, according to a law firm's letter.

The letter, a copy of which has been obtained by The Royal Gazette also warns that Cable & Wireless will hold Telco responsible for any losses suffered as a result of TBI operating.

Any international calls must be routed to Cable & Wireless through Telco -- and a similar arrangement will have to exist for TBI.

Law firm Hallett, Whitney and Patton, which represents Cable & Wireless, wrote to Telco last Friday warning about a breach of contract and action over possible losses.

It also asks Telco not to link up with TBI for international calls until on-going legal disputes over telephone competition have been settled -- a move which could stall TBI's launch.

The letter says: "We and our clients take the view that it would be a breach of the contract between yourselves and our clients for you to transfer to or accept from TBI any international telephone communications whatsoever.'' According to the letter Cable & Wireless also believes "important arrangements are not in place to permit any proper or effective operation of TBI's service''.

It says there are concerns about billing and arrangements for customers to change international telephone companies.

"In the event that TBI begin operating without these matters being dealt with, our clients believe that the damage they will suffer will be considerable.'' Cable & Wireless threaten Telco "Accordingly we put you on notice that our clients will hold you responsible for all losses that may arise if you implement switching before these issues have been resolved,'' the letter warns.

Last night Telco's president Dr. James King was not available for comment and the company's vice-president Cummings Zuill said the matter would have to be examined by lawyers before he could comment.

The letter is the latest round of a legal fight over Government's decision to open up the Island's telephone business to competition, breaking the monopoly currently enjoyed by Telco and Cable & Wireless.

Last week Cable & Wireless filed a writ to prevent TBI from introducing competition in the overseas `phone call market claiming its licence is invalid.

The company has also started legal action against the Technology Minister John Barritt in an attempt to have TBI's licence quashed.

Cable & Wireless claim the terms of its operating licence, which require three years notice from Government of any competition, have not been complied with.

It says it should have been given the required notice or damages which could total millions of dollars. Cable & Wireless also believes the Constitution forbids Government from insisting that it share its network.

COURT CTS