US communications company AT&T has informed Bezeq International of the cancellation of the settlement tariff agreement the two companies signed on July 1, with retroactive effect from January 1, 1997. The consequence is that AT&T will pay Bezeq International only $0.59 per minute for the excess of incoming calls to Israel from the USA, retroactively from the beginning of the year, which will cause Bezeq International to lose over $50 million in revenue for the year to date.
Under the agreement signed in July, the settlement tariff between Israel and the US, which was $1.18 per minute, was reduced, retroactively from May 1, by 19% to $0.96 per minute, and from July 1 to $0.95 per minute. A further stage was supposed to come on September 1 - a 41% reduction to $0.70. The agreement provided that on January 1,1998, the settlement fee would be lowered to $0.59, 50% less than the original $1.18.
The Ministry of Communications approved the first reduction, but not the subsequent stages, and so AT&T unilaterally cancelled the whole agreement. Under the terms of the tender for selecting competitors in the international communications market, any reduction of more than 15% required Ministry of Communications approval, and so the agreement was conditional on such approval.
Bezeq International general manager Uri Yogev confirmed the report, and said in response: "The cancellation of the agreement is a serious problem for Bezeq International. We don’t understand the Ministry of Communications’ position. It can cause Bezeq International, and the entire economy, damage running to tens of millions of shekels."
Ministry of Communications director-general David Rosenne said in response to what Yogev had to say: "The damage to the Israeli economy is not caused by the Ministry of Communications’ decision, but by the cancellation of the agreement by AT&T. It’s a pity this happened. W agreed on rules in the context of the international tender, and we will abide by them."
"The dramatic growth in call traffic from Israel to the USA, and the narrowing of the gap between it and incoming traffic, are causing considerable cost reductions for US operators in all aspects of communications with Israel. We would have liked to see AT&T both contribute to and benefit from competition in Israel, and not act against it."