Sources inform ''Globes'' that NERA Economic Consulting, hired by the Ministry of Communications to analyze Israel's cellular telecommunications market, advises that reciprocal cellular connectivity rates should be less than NIS 0.05 per minute. NERA is now completing its final recommendations, which will be published in a few weeks.
The recommended inter-connectivity rates are a fraction of the prevailing rate of NIS 0.22 plus VAT. If the ministry adopts the recommendation, it will massive blow to the mobile operators' revenue, amounting to hundreds of millions of shekels each.
Market sources believed that the inter-connectivity rates will be cut to NIS 0.10-0.15, so NERA's recommendation is a surprise.
The sources added that discussions are underway whether to cut the inter-connectivity rates in a single move or gradually, as was the case in the previous reduction. A single reduction appears to be the prevailing plan.
While a one-time reduction will probably lead to price hikes, they will not be by the same amount as the reduction. In contrast, the concern is that the mobile operators will again exploit a gradual reduction in inter-connectivity rates to find ways to raise prices.
Published by Globes [online], Israel business news - www.globes-online.com - on April 8, 2010
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