With its new $17.75 per minute charge on overseas calls, Digicel drops to 25 cents per minute below the competition. The rates become effective today.

Cable and Wire-less (C&W) had reduced international call rates from $21 to $18 in November, boasting in advertisements Sunday that with its new per second billing, it was $2 cheaper than Digicel. Centennial offers $19 per minute on its MiPhone service.

With last night's announcement, Digicel has signalled that it is well prepared to go head to head with C&W in a price war.

The reduction in rates at this time is to maintain the company's position as the cheapest way to make overseas calls from Jamaica, said marketing manager, Harry Smith, in a late evening press release. "With these new rates, the consumers continue to see the benefits of competition."

The company currently has a customer base of over 600,000 and is considered the largest cellular service provider in the market, with C&W coming in second.

Digicel described its main competitor's change in billing policy as "half-hearted", on the basis that the company has made no reference to its fixed line business in the new billing structure.

Contacted for comment on the developments, C&W manager for corporate communications, Errol Miller, said his company had no comment.

Last night, Mr. Smith told The Gleaner that, following meetings yesterday, the company was reviewing its rates for calls to fixed lines to move more in line with the main competition - and that the rates should take effect in a few weeks. MiPhone's fixed line rate is $9; C&W's is $7; while Digicel is $12.

"We are reviewing that. The first thing we had to do was respond to the international rates, but we are going to respond to the entire rate profile," said Mr. Smith.

"The position we take is that, we are going to have the best valued product, so it means that if we are going to match either of them to maintain that position, then that's what we're going to do."

The company points to its recent partnership with a World Bank subsidiary as a sign of confidence in its strength. It also pointed to emerging news of C&W Plc being downgraded to junk bond status, and the crisis the rating has put it in with its bankers who have demanded that the company put £1.5 billion in escrow of the $2.2 billion in cash that they now have, as safeguard.

The price war meantime seems to be achieving the rate decrease that the Office of Utilities Regulation (OUR) has been pushing Digicel to implement. OUR has told the company to reduce rates to $8 - the lower end of the rate band it operates in - but Digicel is challenging the decision in court on the basis that rates ought to be determined by the market, and not its regulator.

The case comes up for hearing in January.

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