Hot is demanding that the Ministry of Communications allow it to acquire shares in the Unlimited fiber optic venture. Following yesterday's report in "Globes" that the Ministry of Communications had decided to allow Unlimited to deploy its infrastructure for only 40% of households in Israel, instead of 100%, Hot is demanding that a halt in the proceedings before a deal is approved allowing Cellcom to acquire Unlimited. Cellcom made the request to change Unlimited's license as a condition for the deal.
Hot sent a letter to the Ministry of Communications asking it to halt the process and refrain from approving the deal. Hot said that a public hearing was currently taking place concerned the reduction in Unlimited's deployment obligation with respect to an acquisition of a controlling interest in the company. According to Hot, dictates made by Cellcom and supported by the plan proposed by the Ministry of Communications in the middle of the hearing are liable to detract from the propriety of the process and the administrative authority's obligation to consider the various positions presented to it in good faith.
Hot is insisting that it has the right to invest and acquire shares in the fiber optic venture, and that clear rules be established in matter as soon as possible. Alternatively, if the controlling interest in Unlimited is transferred to a communications company legally obligated to comply with reciprocity in free access to infrastructure, something that breaches the terms of Unlimited's license, it should at least undertake to change the discriminatory policy practiced up until now, with the reciprocity obligation applying to Unlimited with respect to the use of IEC facilities, in contrast to the exemption from the obligation that Unlimited currently enjoys.
If Cellcom is allowed to acquire a controlling interest in Unlimited and its deployment obligation is reduced, Hot is also demanding an exemption from the completion of its landline infrastructure for the 8% of Israeli households for whom it is not deployed. Hot is also demanding that Hot Telecom be allowed reciprocal use of the passive infrastructure used by Unlimited and held by IEC.
It is believed very likely that Hot's letter is another stage in its plan to petition the High Court of Justice against the concessions to Cellcom. A letter like the one sent by Hot, which is similar to what it wrote in response to the hearing, usually indicates that the company is trying to take advantage of the situation in order to obtain benefits from the Ministry of Communications.
There is no chance that the Ministry of Communications will accede to Hot's request to buy shares in Unlimited. The Ministry of Communications realizes that the letter is a last-second effort to delay the deal and does not intend to go along with it. Senior ministry sources said explicitly that there was no possibility that the Ministry of Communications would allow a communications infrastructure company to acquire a competing communications infrastructure company, and in any case, the Antitrust Authority would never agree to such a thing. The idea behind the concessions to Unlimited is to facilitate the founding of a third communications infrastructure company in competition with Bezeq and Hot; there is no chance that the state will act contrary to its interests.
At the same time, the Ministry of Communications is considering the reciprocity issue, but it appears that the issue is impractical because IEC absolutely opposes anyone besides itself using its infrastructure. Whenever someone tried to bring up the subject of reciprocity, IEC immediately objected strongly, so it is difficult to envision this happening. Keep in mind that Hot is demanding reciprocity, but that reciprocity does not apply to Hot. Competitors cannot use Hot's network because its network is built so that it can sell communications services to third parties, but cannot allow competitors to enter into it and physically use its infrastructure, meaning that Hot's reciprocity is not true reciprocity.
As for Hot's demand for an exemption from universal deployment of its network simultaneously with the exemption to be granted to Unlimited, this argument is well-based, like other arguments that it has presented, and raise a very strong legal challenge if Hot petitions the High Court of Justice. What is certain is that Hot will never miss an opportunity to obtain a benefit or concession from the Ministry of Communications in such situation.
Published by Globes [online], Israel business news - www.globes-online.com - on August 2, 2018
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