Minister of Telecommunications Renee Webb yesterday endorsed recommendations that could lead to a significant cut in the cost of long distance calls in Bermuda.

Local telephone providers are now required to cut the fees charged to long distance companies to 15 cents a minute by January 1, and to 10 cents a minute by July.

Local provider Quantum Communications Ltd. moved quickly by announcing it was lowering its interconnection rate by two cents to 15 cents.

Meanwhile Bermuda Telephone Co. Ltd. (BTC) president Lorraine Lyle said the company was still studying the issue and would make a statement later. Ms Webb said she was meeting with BTC representatives today.

Quantum, which competes in the local telephone market with BTC, was complying with recommendations issued last week by the Telecommunications Commission.

The lower interconnect charge will allow Cable & Wireless Plc and TeleBermuda International Ltd. to in turn reduce long distance rates. Cable & Wireless and TeleBermuda currently pay Quantum 17 cents for making the connection. BTC charges 27 cents.

In a report made public last week the Telecommunications Commission recommended the charge be lowered to 15 cents on January 1, and to 10 cents by July.

Quantum is currently testing its interconnection with BTC so it can offer voice service in the Hamilton market early next year.

"It has always been Quantum's intention to offer lower interconnect rates to the international carriers, and we see no need to raise local rates to compensate,'' president and chief executive officer Jim Sullivan stated in a press release yesterday.

The timing is of importance because the US Federal Communications Commission has stated its international telephone companies can only pay up to 15 cents a minute to Bermuda's overseas telephone companies for making a connection.

Without the reduced charges from the local telephone companies the international carriers would have been losing revenue.

In a statement last week BTC warned it would have to raise the costs of local service to make up the shortfall in revenues received for international calls.

The company acknowledged the need for the interconnection fees to fall.

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

"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.'' BTC collected about $27 million a year in revenues from international interconnection fees paid by long distance companies and $42 million from residents and businesses for local service 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.

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.

Renee Webb