It's lucky that the latest report published by the OECD on communications prices, in its member countries is updated only through August 2010. This way, Minister of Communications Moshe Kahlon can explain why Israel was ranked at such an unflattering spot in the OECD report, by the fact that the reforms he implemented in Israel's communications sector have not yet had an impact on the market, and that we will only be able to feel their effect next year.
The only thing left to do is to cross our fingers and hope that next year we are ranked lower, because if prices do not fall significantly, then that will mean that all these reforms looked good only on paper, which would be a shame.
According to the OECD report, which sheds light on prices in the cellular, internet, telephony and television sectors, the situation in Israel is not encouraging, excluding fixed-line telephony. Maybe it's not so bad, but it's certainly not happy.
Expenditure on mobile telephony is the largest and the most important item in the media basket, and according to the report, Israel charges the fourth highest prices for cell calls in the world, after the Czech Republic, Portugal and Holland. The price in Israel for a package including 300 minutes is about $103, whereas in the UK it is less than $20. The most expensive country is the Czech Republic, where the price for a package of 300 minutes is $140 (adjusted for purchase power).
However, it appears that the data that the OECD published are not complete. The package in question considers calls only, whereas average revenue per user in Israel is actually much lower: about NIS 140 a month. Therefore, the packages need to be broken down into categories in order to compare apples to apples, as a way to discover how much we are really paying in comparison with the rest of the world. Apparently it is less than the OECD depicts.
Waiting for the competition
The important question is whether, following the lowering of connectivity rates at the beginning of the year, and exit fees being cancelled, we are seeing a decrease in prices in Israel. The answer is apparently that we are, but since no research has been done on the subject, it is still hard to know which was the more important factor in the downward trend in prices - the lowering of connectivity rates, or the cancellation of exit fees. This, of course, does not interest the public, which just wants to see a decrease in prices. Period.
Published by Globes [online], Israel business news - www.globes-online.com - on June 27, 2011
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