NERA Economic Consulting, hired by the Ministry of Communications to determine reciprocal cellular connectivity rates, has begun its work. NERA representatives met ministry officials yesterday and will meet managers from the cellular operators tomorrow to discuss work procedures and the material to be handed over.
Cellular subscribers pay reciprocal cellular connectivity rates for making calls to another network. The Ministry of Communications has gradually cut the connectivity rates to NIS 0.22, plus VAT. The ministry believes that the current rate is too high, and that it should be cut further.
When the previous mandated connectivity rate cuts came into effect, the cellular operators responded by raising their rates for calls, negating the Ministry of Communications' goal of reducing overall cellular rates. One way to achieve the goal is to implement a new connectivity rate cut when a new cellular operator enters the market, to deter the current operators from raising their rates - at least this is what the ministry hopes.
The Ministry of Communications will therefore likely cut connectivity rates when the new cellular operators enter the market.
The Ministry of Communications intends to use NERA to set the price that the new Mobile Virtual Network Operators (MNVNOs) will pay to use the infrastructures of the current cellular operators. The ministry wants to set the rates if the parties cannot reach agreements and the ministry has to intervene.
Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2009
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