"Globes" recently compared offers from Israel's Internet service providers and Internet infrastructure companies.
The timing of the current campaign by the Internet service providers (ISPs) is no coincidence. In less than two months, it will be possible to transfer an e-mail address from one service provider to another, which will remove another barrier to competition. ISPs are not indifferent, and are offering plans to tempt users to abandon their current ISP and commit to them.
The amendment, which will enable e-mail address mobility via follow-me service, states that the service will be for free for six months. The Ministry of Communications says that this is the first measure toward the cancelation of exit fines in this industry as well, following similar measures on mobile carriers. Until then, except for Triple C Ltd. and 018 Xfone Communications Ltd., all plans include a 12-24 month commitment and therefore exit fines.
012 Smile Telecom Ltd. is offering an upgrade to 12 Mbps at no extra charge. Bezeq International Ltd. is offering access speeds of 10 mbps for an additional NIS 10 per month, NetVision Ltd. (TASE: NTSN) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) (Orange) are offering a fee of NIS 10 for part of the commitment period. The reduced rate is valid for a certain period, but the commitment will continue afterwards, at a different rate. It should be remembered that higher speeds raises the cost of the infrastructure.
Bottom line, the offers of Xfone and Triple C, followed by NetVision, are the cheapest rates for 2.5-5 Mbps. The offers of NetVision and Xfone are the cheapest rates for 10-12 Mbps, followed by Triple C, especially in view of the fact that the plan does not include a commitment.
Most of the offers apply to new customers, but in practice, most customers have plans with commitments that incur an exit fine.
ISPs: Xfone and Triple C - low price, no commitment
We received a different quote with almost every call to the call center, indicating that everything is open to bargaining, and that there is a good chance of lowering the offer.
New competitors are entering the ISP sector, and their share of subscribers is growing. Xfone and Orange are the oldest new competitors. Triple C and Internet Rimon Ltd. are the newest, and they offer added value: Triple C offers plans with no commitments, while Internet Rimon offers protection packages for safe Internet access.
The announcement about the upgrade to 12 Mbps "without adding a penny" is not enthusiastically backed by the sales reps. They, to their credit, try to check whether we need this speed, and explain that the infrastructure costs should be taken into account and added accordingly.
For people with Bezeq infrastructure, the upgrade is for 10 Mbps.
The offer for 2.5 and 5 Mbps involves an 18-month commitment, the first year of which subscribers pay half the list price, resulting in an average monthly bill of NIS 53 for 5 Mbps.
The offer is NIS 10 for six months on any plan with an 18-month commitment, resulting in cheaper prices compared with other ISPs: NIS 37 per month for 5 Mbps, and NIS 46.60 per month for 10 Mbps. The included e-mailbox has a capacity of only 10 megabytes.
The offer is an extra NIS 10 per month on the current rate for an upgrade to 10 Mbps on the separate Private NGN network. That is the rate for the first year. The rate in the second year is derived from the current rate. For example, a customer who pays NIS 50 a month, will pay NIS 70 a month in the second year, and a customer who pays NIS 40 a month, will pay NIS 80 a month in the second year.
The company's rate for 5 Mbps is the highest among these companies.
The offer is NIS 10 per month for 3/6 months for people who commit to 24 months. Notwithstanding the offer, the weighted price makes Orange's rates the most expensive, and the long commitment period must also be taken into account. The average monthly payment is NIS 52 for 5 Mbps, and NIS 61 for 10 Mbps. The e-mailbox has a capacity of 7 gigabytes.
What makes this ISP unique is its combination of access with customized security against unwanted content (ranging from "protected" to "hermetic"). The rates, including filtering are NIS 52 per month for 5 Mbps, and NIS 60 per month for 10 Mbps. The included e-mailbox has a capacity of 20 megabytes, which can be upgraded to one gigabyte for an extra NIS 5 per month.
The company, which entered the private sector six months ago, is offering good prices for use with no commitment period and no fines: NIS 40 per month for 5 Mbps, and NIS 55 per month for 10-12 Mbps. The package includes a one-gigabyte e-mailbox.
Xfone offers ISP access at all speeds with no commitment, or a plan with a six-month commitment, which includes a two-month free bonus, which lowers the monthly cost by 30%, making the offer the cheapest in the comparison.
For example, the price for 5 Mbps with no commitment is NIS 45 per month, and falls to NIS 30 per month with the commitment. Xfone does not offer an e-mailbox.
Infrastructure: Price differences between speeds are blurred
Upgrading access speeds "without paying a penny more" or for "just NIS 10" transgresses reality as far as consumers are concerned, because it is necessary to take into account the additional payment to the infrastructure company, either Bezeq or HOT Telecommunication Systems Ltd. (TASE: HOT).
Bezeq: It's worthwhile to be a new customer
The offer intended for new customers results in attractive prices: infrastructure for 5 Mbps or 10 Mbps at a weighted price of NIS 60 per month, with a one-year commitment. Current customers pay NIS 100 per month for these speeds, a higher rate than at HOT.
It is important to remember that a person who has a telephone line from another company (Orange, NetVision, or Smile) and chooses Bezeq's ADSL infrastructure, pays an additional NIS 25 per month for the line.
HOT: Internet discounts for Triple Play subscribers
HOT has reduced its choice of access speeds, and now offers 2.5, 5, 12, and 100 Mbps. The offer for 12 Mbps averages NIS 92 per month with an 18-month commitment. Triple Play customers are offered discounts on the Internet infrastructure.
In any event, upgrading access speeds by current customers resets the commitment period.
Exit fines: NIS 100-400
It is impossible without exit fines. HOT charges an exit fine of NIS 300 for leaving an Internet plan, plus an additional NIS 19 for month each month you were connected. At Bezeq, the model reduces the fine over time from NIS 400 to NIS 100.
Under the updated offers, a customer who chooses 2.5 Mbps access speed will pay NIS 80 for the infrastructure and ISP (if he chooses the cheaper alternative), and will pay NIS 100 per month for 5 Mbps in a good case.
Bundled packages: Bezeq's offer for new customers is the best
The talk in recent months has been about how the Hayek committee may result in changes in the telecommunications industry by consolidating ISPs and infrastructure providers. This combination, which exists nowhere in the world, has advantages and disadvantages in bargaining power, conduct toward two companies, and so forth.
For the ISPs, such a bundling is welcome. Bezeq and HOT are not so pleased. HOT, which received a license allowing it to offer services also as an ISP via HOT.net, will soon announce its rates, which will presumably give its competitors a run for their money through bundled plans.
The list price is much more expensive
Although the bundled plans now on offer include direct payment to the ISP or Bezeq, the consumer is connected to, and committed to, both companies separately. Note that when the period expires, the price paid to the ISP and the infrastructure provider jump to the list price, which is high.
Bundled plans should lower costs, but not always, and they are suitable for customers whose commitments to Bezeq or HOT have expired. For example, the bundled plan of Smile for 5 Mbps with Bezeq or HOT costs NIS 120 per month, whereas separating the two services, using Bezeq's infrastructure; the cost is NIS 100 per month (NIS 40 to Smile and NIS 60 for the infrastructure).
Conversely, Bezeq, which for the first time is allowed to offer bundled plans, is offering attractive monthly rates to new customers at reduced rates for the first six months with a 12-month commitment. For example, a 5 Mbps plan will cost NIS 81.50 per month (NIS 34 per month for the first six months and NIS 130 per month from the seventh month), compared with NIS 110-130 for bundled plans for 5 Mbps offered by ISPs.
10 things to know before hooking up to the Internet
1. Speed is not free. Upgrading access speeds means extra payment for the Internet infrastructure to Bezeq or HOT. Do not forget to check whether the infrastructure in your area supports the speed that you want.
2. Bargaining pays. Don’t be satisfied with the first offer you receive.
3. Quitting costs. Exit fines among ISPs equal the balance for the remaining time.
4. Quitting costs compounded: The exit fine at HOT inflates over time.
5. No price for freedom. Think twice before you commit and you are unable to take advantage of competitors' offers. Xfone and Triple C offer low rates with no commitments.
6. Low price for the initial period. The first six months go by fast, and then the price frequently jumps. Check the average price.
7. NetVision is attractive. Among the big three ISPs, NetVision is the cheapest - with an 18-month commitment.
8. Three cheers for competition. HOT will soon announce its prices as an ISP (HOT.net), which will further improve competition.
9. When is Bezeq worthwhile? Bezeq offers low bundled rates for new customers with one-year commitments.
10. Do bundled plans pay? Amazingly, bundled plans do not necessary result in lower rates. Compare all bundle plans of each company separately.
Published by Globes [online], Israel business news - www.globes-online.com - on January 19, 2011
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