Minister of Communications Moshe Kahlon yesterday signed the licensing regulations for mobile virtual network operators (MVNO). Companies will now be able to apply to the Ministry of Communications and obtain a license under the terms set. Kahlon's signature on the regulations was the final step in a process which took years of debate and argument, a period when the relevance of the MVNO model as a means to boost competition in the cellular market itself became disputed.
Kahlon said, "There is no doubt that the Israeli consumer will be the real beneficiary of this measure."
The Ministry of Communications added that competition among the new competitors would result in lower mobile rates than those charged by the mobile operators, because in the absence of an agreement with the infrastructures owners, the minister of communications will be the one to set the network use rates that virtual operators will pay mobile operators. The rates will be based on a reasonable cost-plus model, which should allow a margin in which virtual operators will set the cost to consumers. They will therefore be able to offer consumers lower prices.
However, entities who have expressed interest in the MVNO sector said that without knowing in advance the transmission fees that MVNOs will pay to mobile operators, they will not be able to know whether the business is worthwhile or not. The price will only be set in a few months, after the Ministry of Communications completes its review on connectivity costs and transmission fees. For this reason, publication of the licensing regulations is an important, but not the final, step on the road to expanding competition in the mobile market.
Published by Globes [online], Israel business news - www.globes-online.com - on January 20, 2010
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