Is the Bermuda Telephone Co. Ltd. (BTC) being left behind in the telecommunications market? With Government's commitment to introducing competition and lower telecommunications costs, BTC's lucrative core areas are under attack from aggressive newcomers. Gone are the glory days, now comes the real fight.

The company has responded by attempting to change its spotty history of poor service. By some accounts it's not succeeding very well so far in that area.

It's also being coy about how it's going to leverage its technological expertise into other revenue producing areas now it's not the only kid on the block.

My first encounter with BTC was in 1994 when I attempted to get the company to connect a telephone line to my apartment. Three months and one missed appointment later, BTC was finally able to make the connection.

That was the kind of service I expected from a Third World company, not one which had to live up to the standards of a modern society like Bermuda's. A look into how the company dealt with small businesses didn't yield any saving graces. One small startup operation had to wait an extra two weeks before opening because BTC had failed to connect the telephone and fax lines properly.

At the Bermuda Sun, where I worked for about two years before coming to The Royal Gazette , we were constantly having problems with the phone system, which had been newly installed when I arrived. Sometimes the phones would be off for half the day, not good for a business dependent on them for soliciting customers and talking to contacts.

Problems with the system was the explanation. Finally after more than two years of frustration the company installed a new system. During this period BTC was in the process of a costly reorganisation and was talking about improving customer service.

Still the $6.2 million reorganisation has not done much to dispel that scepticism among the local population it seems. The company has tried to emphasise its commitment to "customer focus'' and training staff to "deal with the technological changes''. All that sounds like borrowed corporatespeak from the management consultants who earned a healthy $2.3 million of the reorganisation costs to give it to them.

It doesn't seem that the service aspect has changed much, not a good sign for a company that should have a healthy dose of panic coursing through its wires.

A colleague recently tried to get two lines connected to his business, and after a tussle with the company finally got one line after a month of waiting.

Two months later he is still waiting for the other line to be connected.

"Problems with the pole'' he was told. That explanation is not much of a consolation to him when he is trying to run his business.

Other than whine about how government's opening up of competition in a previously monopolistic market has not given it a "level playing field'', BTC has been remarkably evasive in its most recent annual report about what it's going do to counter the sharks ready to grab a chunk or two of its market.

Targeting BTC's most lucrative markets are Bermuda Digital Communications Ltd., which is going after the cellular telephone segment, and North Atlantic Telecommunications Ltd., which is going after the business segment. In the provision of cellular services BTC has teamed up with the Globalstar satellite network which will enable its customers to use their portable telephones from anywhere in the world. That service should give it a competitive advantage over Bermuda Digital, unless that company can respond in kind.

On the attack for its business customers is North Atlantic, which is currently constructing a fibre optic cable system in Hamilton using Bermuda Electric Light Co. Ltd.'s underground network. The electric utility's parent, Belco Holdings Ltd, recently bought into North Atlantic in a diversification bid to expand its revenue sources. Cable & Wireless Plc is also part of the venture.

Providing businesses with a secure telecommunications network for transferring data is a key segment of this market.

BTC currently has a fully functional fibre optic network in place around Hamilton and is in the process of deciding what connections and what services it is going to provide.

BTC's own attempt at diversification, by buying a 51 percent stake in Bermuda Cablevision Ltd., has so far been a failure of foresight. BTC appears set for a continuing lengthy court battle over the ownership provisions in Cablevision's structure which sends 60 percent of the profits to a US shareholder. The dispute is set for a hearing before the Privy Council in London. If BTC wins it could get a decent boost to its revenue from Cablevision. Last financial year it received nothing from its investment.

Now comes real fight for BTC BTC's other strategy has been to apply for a licence to compete in the long distance market. BTC previously held the monopoly on the provision of local service, while Cable & Wireless held the monopoly on the long distance service.

If BTC is granted a licence, it will have to compete not only with Cable & Wireless, but also with new entrant TeleBermuda International Ltd., which is currently laying its own undersea fibre optic connection to the US. Until that cable is connected TeleBermuda is using satellite to make the international connection. In entering the international market, BTC will have to be more aggressive than it has so far shown itself to be. Local analysts don't hold out much hope BTC will be able to compete effectively against the two companies.

The company has branched out into computer related services as well, and has entered a partnership with Onlines Systems Ltd., which has set up an electronic data interchange (EDI) system for the Customs Department.

Once in full operation the system will allow Customs and commercial shippers to electronically clear all goods coming into Bermuda. Whether EDI will turn out to be an important revenue stream, and an entry into servicing the growing market for electronic commerce, remains to be seen. The company is also talking about providing a full data networking service, and an Internet connection.

With the potential for BTC's money sources to be eaten away by the competition, BTC is in an extremely vulnerable position, perhaps even to the point of losing 30 percent of its revenue.

Taking away the effects of the $1.6 million restructuring costs charged against revenues in the past financial year, the company would have registered a $6.1 million loss instead of a potential profit of $13.3 million.

With relatively fixed costs and a workers union that could cause problems, new chief executive and operating officer Lorraine Lyle will have her hands full in the next few years fending off just such a revenue loss if it works out to be that big.

The company could still increase its revenues from the provision of cellular service if BTC can hold on to its market when Bermuda Digital finally gets going. Local analysts say there is still lots of room for growth in the residential telephone market as well, since many customers are now getting additional lines to connect their computers up to the Internet.

Now that competition has come to the telecommunications sector in Bermuda it has the potential to become an aggressive, high-growth area like everywhere else where new entrants are penetrating the domains the telephone companies once held to themselves.

It's not an unusual situation for a telephone company to be in these days as Europe and North America continue down the path of opening up to competition.

One sign of a changing marketplace is that telecoms purchasers spent $11.6 billion on mergers and acquisitions in the industry in the first half of 1997, a 186 percent increase over the same period last year. Analysts say the transactions were driven by increasing deregulation and the cost of keeping up with advances in technology.

That could be another strategy BTC is considering -- getting an infusion of cash from some outside source who is willing to buy into a company with a healthy cash flow. But it still needs to have a direction into how it's going to use that money.

Perhaps, to be optimistic, BTC has been a little too modest about what it's going to do. Now it needs to send some noise down the line.

Tech Tattle is a weekly column which focuses on technological developments and computer industry issues. If you have any ideas for topics or a business you would like to discuss, please call Mr. ElAmin at 295-5881, ext. 248, or at home 238-3854.

LORRAINE LYLE -- New CEO is in the hot seat.