Now it's official: Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) has submitted to the Ministry of Communications a detailed document that the ministry demanded on the company's intention to "switch on" its fiber-optic network. As "Globes" reported last week, the company has decided to proceed with the project, while trying once more to reach understandings with the Ministry of Communications on certain relaxations it seeks to obtain in exchange.
Bezeq is no longer making operation of the fiber-optic network conditional on cancellation of the structural separation that applies to the company, and is thereby signaling that it is drawing a line under the past and trying to turn a new leaf in its conduct towards the Ministry of Communications.
In a letter to the ministry, Bezeq proposes a protection mechanism that will enable it to carry out the heavy investment required, whereby its competitors will pay it a higher price for using its new infrastructure. Bezeq proposes a mechanism of retail minus 15%, meaning that if it sells a customer Internet service on its new network for NIS 100 monthly, Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) or Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) will pay it NIS 85.
The alternative is to set a grace period in which only Bezeq will be able to sell the service, but it is doubtful whether the ministry is enthusiastic about this idea, and it will probably prefer the first option, although it is hard to be categorical about this. Bezeq is also examining various technologies for operating the fiber-optic network.
Under the Ministry of Communications' current policy, known as the wholesale market policy, Bezeq leases its infrastructure to its competitors at lower prices, and the policy does not discriminate between technologies, so that it covers fiber-optics as well. Bezeq is not the only company in the world demanding a higher price for use of fiber-optics, and regulators are providing various kinds of incentives to carriers to carry out the investment.
At stake for Bezeq is very heavy investment, that could reach NIS 1 billion or more. The company cannot agree to its competitors using the network as soon as it is ready at prices that do not justify the investment.
Published by Globes [online], Israel business news - www.globes-online.com - on April 2, 2018
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