Communications minister can't rest on his laurels

Many ministers talk; very few actually do anything. Minister of Communications Moshe Kahlon, however, talks little, but gets an "Outstanding" score for performance. Last month, he achieved a medal-deserving record in announcements of competition for the good of the consumer. We all know who he has annoyed, and we remember his predecessors, who talked to no end.

Below is a synopsis of Kahlon's results, and a reminder of why he cannot rest on his laurels:

1. He had cut international call fees on mobile telephones. There is no more double billing on these calls, one to the mobile carrier and another to the international carrier. Now, there is just one charge by the international carrier. When the inter-network connective fees falls, international calls charges will go down even more. The test: interconnectivity fees actually have to fall.
2. mobile virtual network operator (MVNO) licenses. In the wake of New Hamashbir Lazarchan Ltd. (TASE:MSZB) unit Telecom 365 Ltd. and Free Telecom Ltd., Ituran Location and Control Ltd. (Nasdaq:ITRN); TASE:ITRN) subsidiary Ituran Cellular Communication Ltd. received a license last month. Kahlon and the Ministry of Finance are also making progress on the tender for a new mobile operator.

   The test: to ensure the competitive entry of MVNOs and the new mobile operator. Kahlon should ensure that transition fees and interconnectivity fees for the MVNOs and new mobile operator will low from the first day.

3. HOT Telecommunication Systems Ltd. (TASE: HOT) and DBS Satellite Services (1998) Ltd. (YES) capitulated to offering the narrow channels package. When Kahlon threatened to institute legislation on the issue, the cable and satellite broadcaster came up with a narrow channels package all by themselves.
4. Interconnectivity fees: NERA Economic Consulting now recommends reducing the fee from the current NIS 0.25 per minute to NIS 0.05 gradually over three years. The test: after a transparent and organized hearing, it is necessary to make sure that the minister actually implements the recommendation.
5. The ministerial legislation committee this week approved Kahlon's amendments ahead of the reform in the mobile and fixed-line infrastructures: abolishing of exit fines, network neutrality, a third fixed-line infrastructure, opening the market to the import of mobile devices, joint cellular sites, and periodic reports for comparing mobile prices and services.
6. Kahlon obtained a NIS 22 million budget supplement for additional positions at the ministry for matters pertaining to competition and the establishment of a Communications Authority, which will replace the ministry.
7. Establishment of the Communications Authority. There hasn’t been a communications minister in 20 years who hasn’t spoken about setting this agency up to replace the ministry, which is still here. The test: to close the Ministry of Communications in Kahlon's term and transfer its authority to the new agency, and then to resign as minister.

Matters still outstanding: increase telephony competition, create a wholesale internet and telephony infrastructures market without creating a tyrannical duopoly of Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and Israel Electric Corporation (IEC) (TASE: ELEC.B22). Kahlon must be alert to the shticks and tricks of the communications providers. To put it another way, the communications tycoons will try to get back the billions of shekels they've lost to Kahlon's reforms, and he will have to stop the tycoons at the starting gate.

Published by Globes [online], Israel business news - www.globes-online.com - on August 5, 2010

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