The Ministry of Communications and the Ministry of Finance are proposing to retreat from the requirement that Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) must deploy fiber-optic infrastructure in every part of Israel, and to allow Bezeq to decide for itself where it will roll out its fiber-optic network. In areas where Bezeq decides not to lay fiber-optic cables, one of the telecommunications carriers will be chosen by tender to do so, and will receive an incentive from an investment fund for universal deployment of fiber-optic infrastructure, to be financed by the carriers.
The new policy is designed to cope with the state's difficulty in obliging Bezeq to roll out fiber-optic cables throughout Israel. No such obligation applies in any other country, with regulators realizing that it is a completely unviable requirement from a financial point of view, and is almost impossible to fulfill.
The government ministries came to this conclusion after realizing that while Bezeq wants to roll out fiber-optic infrastructure, it cannot do so under conditions of universal deployment. The ministries became persuaded that more creative thinking was required in order to reach full deployment of fiber-optics throughout Israel, and so the new model was developed. It will be presented in a public hearing. The model includes Judea and Samaria.
HOT Telecommunication Systems Ltd. (TASE: HOT) will also be exempted from the universal deployment requirement in its license. The Ministry of Finance and the Ministry of Communications intend to amend Bezeq and Hot's licenses through the Economic Arrangements Bill that accompanies the state budget.
In the areas in which Bezeq chooses to roll out fiber-optic infrastructure, it will be subject to a tight timetable for doing so. It has already connected 60% of households in Israel to its fiber-optic network, but it has not started to operate the network because of the disagreement over the extent of the deployment requirement that will fall on it. For this purpose, Israel is divided into thousands of areas on the basis of Central Bureau of Statistics data, and so it could come about that within the same city some parts are connected to the network and some are not.
Once Bezeq decides which areas it is leaving out, it will not be able to lay fiber-optic cables in them at all. Bezeq will contribute to the fund for subsidizing deployment in those areas on the basis of its revenue as a proportion of aggregate revenue in the telecommunications market, while the other carriers will contribute about 0.5% of their annual revenue. Carriers that lay fiber-optic infrastructure in areas that Bezeq forgoes will receive exclusivity in those areas.
Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), which have already set up fiber-optic networks of their own, will not have to share them with competitors, but will be able to reach agreements with other carriers on their use.
Published by Globes, Israel business news - en.globes.co.il - on November 5, 2019
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