C'tee recommends three 4G networks for Israel

Carriers will be allowed to cooperate on infrastructures.

Ministry of Communications director general Avi Berger, the chairman of the tenders committee for allocating 4G frequencies in Israel, has advised Minister of Communications Gilad Erdan to establish three 4G networks in Israel. On Sunday, Erdan met with top officials from the Ministry of Communications and the Ministry of Finance and was presented by the engineering department with one alternative of three shared networks at the level of frequencies, and an alternative of two networks.

No decision was taken, but it seems that, in view of the professional recommendation, the direction is clear: Israel will have three 4G networks, and carriers will be allowed almost unlimited cooperation at the level of sites (antennas).

The ball is now in Erdan's court, and after he decides, the frequencies committee will be able to resume the discussion on how to allocate frequencies and to whom. The importance of this decision, if it is made, is that the Ministry of Communications will not allow one of the mergers agreed by the carriers: Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and HOT Mobile Ltd.; or Pelephone Communications Ltd., Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and Golan Telecom Ltd.

The likeliest probability is that the second merger will not be approved, which means that Golan Telecom will apparently have to link up with either Pelephone or Cellcom, and that one of the latter will have to set up an independent 4G network.

The Antitrust Authority has not had its say on this matter, and it could impose conditions on either merger, or reject them. However, it seems that it will be difficult to prevent a merger between Partner and Hot Mobile, because it involves linking the network of a veteran carrier with a new carrier, neither of which has a market share which if combined would create a problem of competition. A merger of the networks of Pelephone and Cellcom is more complicated, because the two carriers would have a market share of over 60%.

The committee recommendation seeks to separate the frequencies level from the sites level, allowing carriers to cooperate at the level of infrastructures, while 4G frequencies will be allocated to three networks.

Top industry sources believe that the two networks model will offer a smooth transition from the current LTE generation to the next generation, known as LTE Advanced, which requires very high bandwidth of more than 100 Megahertz for each network.

In effect, the agreements signed between Partner and Hot Mobile, and between the other carriers in the industry - Pelephone, Cellcom, and Golan Telecom - reflect the model of two networks with five carriers. The carries that signed these agreements are strongly urging the Ministry of Communications and the Antitrust Authority to approve them.

The three networks model is liable to reopen the whole issue for the carriers, effectively cancelling the agreements that have already been signed, and greatly complicating the partnerships, because one carrier will be left without a partner. In addition, the three networks model reflects a short-term perspective, which will greatly hinder the transition to LTE Advanced because 300 Megahertz for three networks do not exist.

Published by Globes [online], Israel business news - www.globes-online.com - on February 3, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018