Phone users in five Eastern Caribbean states are set to see an overhaul of services, including introduction of competition and "pay-as-you-go" charging.

The long-awaited liberalisation of telecoms in Dominica, Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines was sealed on Monday in an agreement between the five countries' prime ministers and Cable & Wireless, the dominant carrier in the region.

Under the agreement, customers will by 1 June pay for each call, rather than the previous flat rate monthly fee of 45 East Caribbean dollars ($12), the Associated Press news agency reported.

Markets are also being opened to new operators.

Reduced rates?

Previously, UK-based Cable & Wireless held the sole rights to provide fixed-line telecoms services in the countries.

This lack of competition was "prohibitive and was a disincentive" to investors, AP quoted St Kitts and Nevis prime minister Denzil Douglas as saying.

St Kitts and Nevis has already awarded licences to two local companies - one for fixed-line and one for mobile phone services - and said it hopes this will result in reduced rates for consumers and more jobs for the local economy.