Bermuda residents could see a significant cut in the cost of their long distance calls next year if recommendations issued by the Telecommunications Commission are implemented.

However the Island's largest local service provider has moved swiftly to squash hopes that residents will see reductions in their overall telepone bill.

Bermuda Telephone Co. Ltd. yesterday said the Commission's recommendations meant the company would have to charge an extra $20 a month to gain back revenue lost by a reduction in the fees it receives from long distance carriers.

Residents currently pay BTC local access charges of $16 a month while businesses pay $22.

In its report, the Telecommunications Commission recommended that local carriers BTC and Quantum Communications Ltd. should cut the fees charged to Cable & Wireless Plc and TeleBermuda International Ltd. down to a flat 15 cents a minute next month for connecting international calls.

The fee is known as an interconnection charge and has been a bone of contention between local providers and the two international providers Cable & Wireless and TeleBermuda.

The Telecommunications Commmission has also recommended the fee be cut by another five cents down to ten cents a minute on July 1, a reduction of about 63 percent from current interconnection fees.

Telecommunications Minister Renee Webb is now studying the report and has not yet stated whether or not Government will implement the recommendations. The timing is of importance because the US Federal Communications Commission mandate on January 1 that US telephone companies can only pay Bermuda's international telephone companies 15 cents a minute for interconnection.

A Cable & Wireless spokesman yesterday said implementing the recommendations could end up in much lower long distance rates.

"We are cautiously positive about the recommendations,'' spokesman John Instone said. "But we would like to wait for the Minister's response.

Bermuda's interconnection rates are among the highest in the world. The rates had the result of inflating the cost of international calls beyond reasonable expectations.'' The big loser in the equation could be BTC. The company collected about $27 million a year in revenues from international interconnection fees and $42 million from local calls in 1998.

It's estimated that BTC would lose about $13 million a year, wiping out its net operating revenue, if the interconnection charge falls to 15 cents a minute.

In a statement, BTC warned it would have to raise the costs of local service to make up the shortfall and keep the publicly listed company profitable. The company acknowledged the need for the interconnection fees to fall.

"BTC's interconnection fee is a bundled rate for which we provide a number of services including billing,'' the company stated. "The interconnection fee also subsidises local access service, for which Bermuda's residents pay one of the lowest rates in the Western Hemisphere... If the recoup of revenues were dependent upon increases in the local access rate alone, it would equate to an estimated additional charge of $20 a month per access line for business and residential customers.'' However the amount of lost revenue BTC will be able to recoup by raising local service costs will rest in the hands of the Telecommunications Commission. The company has to submit its proposals for rate increases to the Telecommunications Commission.

No-one from Quantum Communications was available for comment yesterday.