Israel's fixed line sector gets a shake-up as wholesale market reforms take effect

18 Feb 2015

Israel’s wholesale market reforms have come into effect, Haaretz reports, with the shake-up of the nation’s telecoms sector expected to boost competition in the fixed line voice and broadband sector.

As previously reported by CommsUpdate, in November 2014 the country’s outgoing communications minister Gilad Erdan approved long-awaited reforms that would 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. At the time the Ministry of Communications (MoC) said it believed that the reform of the wholesale segment could reduce prices for consumers by up to 20%, noting: ‘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 reforms notably mean an end to the need for subscribers to contract a company for web infrastructure and a separate ISP, while as per the new regulations Bezeq will be required to lease space on its network to companies at a rate of ILS42 (USD10.93) a month, exclusive of value-added tax (VAT), for an internet service with transmission speeds of 20Mbps.

Two companies have moved swiftly to take advantage of the ability to offer an expanded range of services, the first of those being Smile 012, the internet service provider (ISP) subsidiary of mobile network operator Partner Communications, which has unveiled its ‘Internet One’ package, offering downlink speeds of up to 100Mbps for ILS100 per month (rising to ILS120 per month after a year), while a 40Mbps connections costs ILS89 per month. Partner, meanwhile, is reportedly promising to introduce packages including fixed voice service, among other things, in the future. Another company, 018 Xphone, has also launched its own 100Mbps fixed line broadband plan, priced marginally below Smile 012’s at ILS99 per month.

For Bezeq the reforms are expected to have a notable impact, with the MoC having previously suggested that the fixed line incumbent will shed around 600,000 subscribers by the end of 2018, losing around ILS1.3 billion in annual fixed line revenues. In response to the reforms coming into force, Bezeq CEO Stella Handler was cited by Haaretz as saying: ‘Bezeq has invested over many years in its infrastructure, which is among the best in the world … I’m certain that this investment, together with the principles of fairness and transparency guiding Bezeq, will enable us to compete successfully in the new era of increased competition.’