probing the use of callback services here.

But an American company extending cut-price phone calls to customers in Bermuda say threats of a Government investigation into their activities are just a ploy to frighten people off.

NewWorld Telecommunications spokesman Steve Hicks said Governments often talk of legal action to stop companies such as theirs, merely to discourage residents from using them for fear of breaking the law.

NewWorld, one of a multitude of telecom resellers based in the US or Europe, offers overseas long distance calls at rates of more than half price for some destinations. They use a callback system which hooks the customer up with a carrier from the US.

Senator Richards told The Royal Gazette it was likely the company would require a licence for the service and added that they would probably not get one, if they applied here.

"Anybody who operates a callback service is probably in breach of the law,'' he said. "The last operator who tried to do that, a judge said he needed a licence.

"Cable and Wireless and TeleBermuda are licensed to provide an overseas telephone service.

"Callback is a service, a service that a company needs a licence to provide.'' But Mr. Hicks said NewWorld was just offering callers -- mainly expatriates -- an alternative service and was not about to set up shop in Bermuda.

Resellers such as NewWorld promise calls up to 85 percent cheaper than normal.

For example, Bermuda to Canada would cost 42 cents a minute with NewWorld -- compared to a high of approximately 85 cents with traditional carriers.

Phoning the UK would set you back 40 cents a minute -- compared to an after hours rate with TBI of $1.06 or around $1.45 with Cable and Wireless during normal hours.

Mr. Hicks said NewWorld did not specifically target the Island but did tend to attract expatriates who were looking for a cheaper way of calling friends and relatives.

Most of their business, he added, was in Asia and Germany.

Callback users access the system by dialing a personalised number and hanging up. A few seconds later the system calls the customer back and they can then dial their international number.

One NewWorld customer said: "I went looking for them and found it on the Internet. Is buying a service on the Internet illegal in Bermuda?'' Cable and Wireless marketing communications manager John Instone said they were aware of such companies and blocked calls whenever the situation arose.

"There are so many of them,'' he said. "There is not much you can about it.

Whether the Government can do something remains to be seen.

"The reason the calls are expensive is the interconnecting charges from BTC that we have to pay are very high, but the reason they are high is because they subsidise the local network.'' TeleBermuda are also bidding to stop the company infringing on their business.

General manager Jeff Conyers said: "The bottom line is that callback is illegal in Bermuda. Some are easy to police and others are difficult.

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