The Hayek committee report on the telecommunications market was submitted to Minister of Communications Moshe Kahlon today, after 18 months of work. After studying the report, Kahlon will decide whether to make changes to it.
The Hayek committee recommends overhauling Israel's fixed-line market to allow full competition: four telecommunications groups operating without restriction to offer services to consumers at fixed prices. The committee believes that this structure will lower prices because each group will have to prove that its services are better than its rivals.
The current market structure in which consumers have separate Internet service providers and Internet content providers will disappear, provided that Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and HOT Telecommunication Systems Ltd. (TASE: HOT) allow competitors to buy infrastructure services at low prices to enable the necessary competition. Government supervision of Bezeq's prices will also be abolished so it can offer services and compete on price.
It remains to be seen if Kahlon will accept the Hayek committee report in full, or amend it. On the basis of previous communications ministers to accept and then amend reports, the same fate awaits this one. Therefore, the question is what changes will Kahlon make, and most important, if the report's recommendations will be implemented at all.
Implementation depends on many factors that are not necessarily favorable: disputes within the Ministry of Communications, Israel's protracted and convoluted legislative procedures, and whether the Ministry of Finance will give the Ministry of Communications the financing it needs to implement the reform.
Published by Globes [online], Israel business news - www.globes-online.com - on October 4, 2011
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