Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) has begun a move to bring about comprehensive regulatory change in the affirmative discrimination of HOT Telecommunication Systems Ltd. (TASE: HOT). Sources inform “Globes” that during an Antitrust Authority meeting, and just before submitting an official complaint against HOT following its recent sale offer, Cellcom raised a new major concern over regulations that enable HOT to sell its triple package at set rates with which no other market players can compete.
”HOT has become like Goliath,” a source close to the case said.
Cellcom is in effect requesting that the Antitrust Authority and the Ministry of Communications order the triple package be disqualified, as it did with Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ). The result of the disqualification would be that the infrastructure owner would be obliged to sell each of the services in the triple package individually. In other words, if HOT’s triple package costs NIS 329, then HOT would be required to sell cable TV, telephone, and Internet services separately at the same price that it is sold as part of the triple package.
Discount Investment Corp. president Ami Arel, Cellcom CEO Nir Sztern, Adv. David Tadmor, and economist Menachem Perlman participated in the meeting. Cellcom is interested in leading a move that is more extensive than just dealing with a specific event. It is trying to bring about a change in the way the regulator views and protects HOT, as well as assisting it in ways that cannot be explained.
Therefore, from Cellcom’s point of view, the most important change that needs to be made is to stop treating HOT like a company that needs constant regulatory protection, and that a change needs to be made so that HOT, along with Bezeq, no longer need to be the only two communications entities in Israel that have the capability of providing customers with telecommunications services, since this situation narrows the chances that other companies could compete with them.
In reaction to HOT’s triple special, which threw the telecom market for a loop, Cellcom said that in actuality, HOT is subsidizing its subsidiary, HOTnet, in sharp contrast with structural separation rules and license conditions that it is meant to abide. Cellcom explained that it is not economically sound to offer 100MB for only NIS 20, and that what HOT did is to cross-subsidize between the parent company and its subsidiary.
Cellcom found that according to the infrastructure usage agreement that requires it to pay HOT, through its subsidiary, Netvision, according to volume of use, the cost of 100MB to an outside supplier is NIS 50 per month, and therefore there is no way that HOT can supply this service without cross-subsidizing between it and its parent company, which is a declared TV monopoly.
Cellcom declined to comment.
Published by Globes, Israel business news - www.globes-online.com - on March 11, 2012
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