Israeli communication ministry details MTR reduction proposals

5 May 2010

The Israeli Ministry of Communications (MoC) has given the country’s mobile operators just one month to respond to proposals that have been put forward with a view to significantly reducing interconnection fees, Haaretz reports. Moshe Kahlon, the Israeli communications minister, has unveiled a raft of proposals that will see mobile termination rates (MTRs) fall by 84%, from ILS0.251 (USD0.067) per minute to ILS0.0414 per minute, with the regulator hoping to have ratified the new legislation by the end of the year, and introduced the initial cuts by that date. The proposals also call for further cuts to termination rates, with the MoC looking to reduce the charge to 0.0311 per minute from 1 January 2012; to ILS0.0280 per minute from 1 January 2013; and to ILS0.0257 from 1 January 2014. Alongside the reduction in fees associated with voice calls, the ministry has also revealed that it will reduce the maximum interconnect tariff payable by mobile operators for sending an SMS message to another cellular network from the existing rate of ILS0.0285 to ILS0.0019 from 1 August 2010, with the rate to further drop in stages to ILS0.0013 from 1 January 2014. Commenting on the proposals, Kahlon said: ‘Reducing the interconnectivity charges is of great significance to the public in two ways: first, every person paying for a fixed phone line will feel the reduction immediately, and second, we are making it easier for new cellular operators to enter the market.’

Should the reforms be passed those that stand to benefit the most are fixed line voice users, who at present pay the full ILS0.251 per minute rate for fixed line to mobile calls; in comparison fees for calls from mobile numbers to landlines are currently priced at ILS0.04 per minute. The MoC has claimed that the change to the fees could save the country’s households a total of up to ILS800 million per annum.

Unsurprisingly, the country’s mobile network operators have reacted unfavourably to the proposals, due in part to the fact that it is believed that the trio of Pelephone, Cellcom and Partner Communications combined generate more than ILS3 billion in revenue per year from MTRs. Partner was the first to respond to the plan, claiming that the move would damage both revenues and profits, while Cellcom has also voiced its concerns, stating that, if the new charges are implemented then it would expect to have an adverse effect on monthly EBITDA by around ILS35 million. Cellcom has also stated that it ‘intends to object strongly to the proposed changes’.