Communications Ministry cancels split Internet service

Yoaz Hendel / Photo: Eyal Margolin

From March 2022, customers will have to deal with one provider only, instead of separate infrastructure company and ISP.

Minister of Communications Yoaz Hendel has completed the reform he started, and next year Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and HOT Telecommunication Systems Ltd. (TASE: HOT) will be able to obtain Internet licenses. The reform cancelling the split between Internet infrastructure provider and Internet service provider (ISP) was held up by the delay in forming a government. Hendel initiated the reform and promoted it in his first term as communications minister, out of the understanding that the split was one of the worst problems in the Internet market.

Under the reform, Bezeq and Hot will be able to act as ISPs from March 20, 2022, in accordance with conditions stipulated by the Ministry of Communications. The infrastructure companies will present to the ministry an agreement with the ISPs, to be called "shelf agreements". These will contain results metrics and compensation mechanisms defined and agreed in advance. The ministry will then either accept the agreement or require changes to it.

Thus will come to an end one of the biggest distortions in the telecommunications market, a distortion that exists nowhere else in the world. The aim of the split between infrastructure provider and ISP was to introduce competition into the market when Bezeq was privatized in the 1990s. Services such as international calls and Internet were hived off to its subsidiaries, with structural separation between them and the parent company. The result was that subscribers had to juggle between two providers, not always understanding which was responsible for what.

The reform will have painful consequences as well as benefits for Bezeq. On the one hand, it will be able to provide Internet services to subscribers directly; on the other hand subsidiary Bezeq International, the largest ISP in Israel, will be broken up.

For consumers, the result of the reform will be an end to the confusion and difficulty of choice that have prevailed for over two decades. Once the reform comes into effect, any player in the telecommunications market will be able to provide Internet as a single product, and each subscriber will only have to deal with one company, and will not need to know who is the ISP and who is the infrastructure provider.

This will be a huge benefit. Another benefit is that the mess of duplicate bills will also end. One of the unfortunate consequences of the split Internet market is that customers end up paying to several ISPs at the same time without understanding what is happening on their accounts. Hundreds of thousands of customers have paid an aggregate of hundreds of millions of shekels for Internet service they don’t use.

Published by Globes, Israel business news - en.globes.co.il - on June 21, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Yoaz Hendel / Photo: Eyal Margolin
Yoaz Hendel / Photo: Eyal Margolin
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