Bermuda's telephone price war shows no signs of letting up.

Yesterday Cable and Wireless sounded a tone of defiance after rival TeleBermuda slashed its rate.

C&W vowed to "respond accordingly'' as the Island's long distance service carriers continued their fight to attract customers.

The conflict stems from the decision three years ago to grant newcomer TeleBermuda a licence to operate.

Longtime provider Cable & Wireless was prevented from slashing its rates for several months as TeleBermuda got a chance to take root in the Island. But today the two companies are on equal footing legally and the price war is well underway.

Fuelling the fight is the go-ahead for others to also offer long distance service. This summer Telecommunications Minister Renee Webb sanctioned Internet service providers (ISPs) to provide long distance calls in voice over the Internet service (VOIP).

The opportunity was quickly grabbed by ISP, Logic Communications who immediately instituted Logic Phone with rates of 44 cents a minute to anywhere in the world.

Both TeleBermuda and Cable & Wireless were forced to compete with this new low rate.

TeleBermuda was the first to respond. In September it presented its new Simply the Best Club membership programme which saw a low 39 cents a minute rate offered to members who paid a $4.99 monthly membership fee.

At the beginning of October Cable & Wireless fired its gun with the announcement of its membership programme with rates as low as 32 cents a minute for a monthly charge of $5.

Barely a month has passed and TeleBermuda on Tuesday unveiled yet another rate cut, offering their residential members calls for a low as 29 cents a minute.

Acting quickly so as not to lose customers Cable & Wireless yesterday issued a Press release saying it expected TBI's action.

"We anticipated that TBI would react accordingly,,'' said Cable and Wireless general manager Eddie Saints. "We will evaluate the situation and respond accordingly.'' Phone price war "Cable & Wireless customers can rest assured that we are committed to constantly improving the range, quality and value of services to our customers and providing the best value for money,'' he continued.

In April 1997 when TeleBermuda began operations its lowest long distance rate to the US was $1.15. The company have succeeded in reducing prices 70 percent since that time and its president James Fitzgerald on Tuesday promised more specials over the next three months.