Cable television and telephony company Hot Cable Systems Media Ltd. (TASE: HOT) has made a strategic decision to oppose the entry of the Israel Electric Corporation (IEC) into telecommunications services infrastructure. CEO Herzl Ozer has approached Prime Minister Benjamin Netanyahu and the ministers concerned, and asked them to avoid making decisions on the matter without a thorough, in-depth investigation of the effects of the move. Ozer warned of far-reaching implications for Hot and the communications market.
In a detailed letter, Ozer calls on Netanyahu (who supports the move)to halt the move and carry out an in-depth examination. This is in the light of the fact that IEC is about to receive a license for a technological trial in Kiryat Shmona, in its final stages of preparation at the Communications Ministry. The trial, which Hot learned about from the press, is fundamentally improper in its opinion, because it should not be carried out before hearings and an examination of its financial implications for investments made by Hot are held.
"Competition is not required"
In his letter, Ozer writes that there is a problem with a monopolistic government company entering a private market and competing with two private companies that have made heavy investments in infrastructure. According to Ozer, there is no market failure in communications infrastructure due to the fact that the two companies compete in providing high-speed Internet access services throughout the country.
"There is no basis for a decision to allocate public resources, huge sums of money estimated at billions of shekels, to build a network, for the sake of creating competition where none is required. "On the face of it, it seems that this decision was made casually, without a hearing as required, and without a proper comprehensive professional examination, in a procedure not consistent with rules of proper administration," Ozer writes, adding that "the setting up of a competitor financed with state funds, particularly through IEC, a monopoly in its field, to compete in the private sector, is liable to lead to grim consequences, and the collapse of the private firms."
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2010
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