Israel finalises wholesale market reforms

19 Nov 2014

Israel’s outgoing communications minister Gilad Erdan has approved long-awaited reforms to the country’s telecoms market that will enable alternative operators to rent space on fixed line incumbent Bezeq’s infrastructure, allowing them to offer fixed voice, internet and television services to both private and business customers. According to Haaretz, the Ministry of Communications (MoC) believes that the reform of the wholesale segment could reduce prices for consumers by up to 20%. The MoC noted: ‘The undertaking led by the communications minister will enable other companies to supply the full range of telecommunications services under one roof. It will enable other groups, which lack the [network] infrastructure, to compete and offer lower prices for a complete basket of services.’

Alongside the cost benefits for consumers, the reform will also mean an end to the need for subscribers to contract a company for web infrastructure and a separate internet service provider (ISP). ‘The initiative will make life easier for the consumer, creating a single address to turn to and put an end to the annoying where the infrastructure providers and the service provider blame each other when there’s a connectivity problem,’ the ministry noted.

Bezeq, however, is expected to challenge the changes, with it said to both dispute the MoC’s estimates for how much business it stands to lose as a result of the market changes, while also claiming that there were irregularities in the decision-making process. Indeed, the fixed line incumbent had previously turned to the High Court of Justice with regards to the matter, with that body six months ago ordering the MoC to respond to the telco’s demand for clarifications on how it was making its decisions and estimating their market impact. An unnamed source at Bezeq was cited as saying: ‘The company has never opposed the idea of a wholesale market but we are certainly against the way decisions have been made, especially given the surprise attack launched today … Nevertheless, Bezeq will be able to cope with all regulatory changes.’

According to the MoC’s estimate, it expects Bezeq to shed around 600,000 subscribers by the end of 2018, losing it around ILS1.3 billion (USD342 million) in annual fixed line revenues. As per the new regulations, the operator will be required to lease space on its network to companies at a rate of ILS42 a month, exclusive of value-added tax (VAT), for an internet service with transmission speeds of 20Mbps.