competing international phone service.

Calls could be more than a third cheaper than they are now, the company said.

Access to 800 numbers in the US was also in the pipeline, it revealed.

The Telco plan to go it alone would shatter the deal it now has with C & W, the only firm now allowed to handle international calls.

Yesterday Telco made an application to the Telecommunications Commission for an international licence.

It is one of 11 companies applying for permission to offer new phone services.

A decision from Government on the applications is expected before the end of the summer.

Telco says it can be in operation by the start of 1996.

General manager Mr. Ernest Pacheco told the commission that costs would be cut by charging for every six seconds, instead of every minute as now.

Discounts could also be offered depending on volume of calls or time of day.

Savings plans like those offered by Sprint and AT&T could be arranged too, he said.

A family with a $52 monthly bill could cut it to $37. And peak rates to the US could be cut from $1.15 now to 85 cents.

With two or three competing international phone services on the Island, Bermudians would get new developments more quickly, Mr. Pacheco said.

He stressed Telco's record as a Bermudian-owned and staffed company, providing a "state of the art'' local service.

A satellite dish would be built, "as inconspicuous as possible'' and only 60 feet across, compared to C & W's 100 foot dish.

He said customers would be asked which overseas company they would like to carry their calls.

Mr. Pacheco said Telco had been working with C & W to get Bermudians access to 800 numbers, and would continue to do this.

But he warned US companies had the right to block calls from Bermuda.

Goods ordered using such numbers were often banned from export, the hearing was told.

Mr. Pacheco added Telco was in favour of "protection'' to back up the firm's pledge not to subsidise international calls with profits from the local service.

Mr. Gary Edwards, Telco assistant general manager, said the local service was not making a profit, and was not capable of subsidising an international service.

Telco chairman Dr. James King said the company could build a better service than C & W. It would be appropriate if Independence came, he said.

He added his firm's arrangement with C & W had been tested under the "cash crunch''.

He slammed C & W for not disclosing its financial position -- something Telco had to do as a local public company.

C & W's lawyer Mr. David Cooper said the firm objected to the Telco proposal because it would not be fair competition.

Telco would end up with an unfair subsidy, he said.

Telco had already subsidised its local service with income from international calls routed through C & W.

This had enabled Telco to build its quality local network, he said.

C & W had made six reductions in the price of international calls since 1982, but Telco had only agreed to share the cost of the last reduction.

Prices lower than those now proposed by Telco would have been possible if Telco had borne more of the burden, he said.

The Telco proposal was also slammed by one of the new firms hoping to get a licence, TeleBermuda. The company's Mr. Michael Kedar told the hearing that allowing Telco to keep its local service would give it an unfair advantage.

Local and international networks had been separated by law in the US, he said, increasing competition.

Telecommunications Commission chairman the Hon. John Stubbs said Telco's was the most "far-reaching'' application.

In deciding how to advise Government, the commission had to consider Bermuda's best interests. And this had to include the "integrity'' of the "excellent'' phone system now in place.

But prices did seem "somewhat excessive'', he said. C & W and Telco had an "effective monopoly'', and the lower rates now being proposed were "striking'' compared to present rates.

It was up to Telco and C & W to answer the charge that they had treated their monopoly on international calls as a "cash cow''.

He said competition had had a "magical effect'' in larger countries, but could cause harm in smaller places.

The commission also heard an application from Bermuda Computer Services, which wants to hook up local businesses to the IBM International Network -- an information and trading system now serving 98 countries.

The proposal would make Bermuda more attractive as an international business centre, the company said.