Local residents should benefit from lower overseas telephone rates soon after Government and telecommunications giant Cable & Wireless settled their differences yesterday.

The two parties signed a new pact yesterday morning that provides C&W with a new 15-year licence, opening the door for C&W to go head-to-head with newcomer TeleBermuda International. As part of the agreement, C&W will drop its $100 million lawsuit against Government.

The two sides actually reached agreement a week ago and both agree it will translate into further reductions in the cost of services for telecommunications users.

It marks an end to the temporary rate protection provided to TeleBermuda, to avoid the possibility that C&W would slash rates to drive their competitor out of business.

TeleBermuda vice chairman and general manager Jeff Conyers admitted he was disappointed that the start-up company had lost its protection just 15 months after it began operating.

It also marks the first bit of clear sailing for authorities since their controversial reform of telecommunications was launched.

Officials believe the new pact with an old partner heralds in a new era of competitive pricing and better products and services in telecommunications.

The new deal, first reported by The Royal Gazette last week, will also end C&W's troubling lawsuit against Government.

Telecommunications Minister E.T. (Bob) Richards said yesterday: "The dispute which has recently caused friction between Cable & Wireless and the Bermuda Government has been resolved.'' He said the agreement will set the stage for "a new and improved relationship'' between the two parties, providing continued competition in telecommunications.

"In the near future, we expect that Cable & Wireless will receive permission from the Telecommunications Commission to put a series of rate reductions into effect, so that both business and individual customers will benefit from this agreement.

"Also Cable & Wireless will be restructured so that it will be able to operate in Bermuda on exactly the same basis as does TeleBermuda International Ltd. I am delighted that this difficult period is at an end and I look forward to a fruitful new relationship with Cable & Wireless.'' Mr. Conyers said: "The most important thing is that the threat of legal action has been eliminated. We may be a little disappointed in how soon there is so-called unfettered competition.

"We do accept that the lawsuit was a black cloud over everybody. We never felt it had merit, but it was there and we are well served to have it lifted.

In return, C&W is granted a licence that puts them on comparable footing with ourselves and compete more freely in the market place.

"We are confident that we can continue to compete effectively. We've got high quality, competitively priced telecommunications services. We think that we can continue to offer first class services to the community, and that's what we are going to do.'' Mr. Conyers said C&W will still have to face certain controls and Government will be monitoring its costs.

"Neither one of us will be able to engage in predatory pricing. So there is some mechanisms in there. The Minister is saying he wants sustained competition. You don't want to put people out of business. And we want rate reductions passed on to the community.'' Reforms back underway: Business, Page 33