HOT Telecommunication Systems Ltd. (TASE: HOT) is upgrading its network and launching 500 Mbps Internet speeds, sources inform "Globes". For the first time in Israel, Hot will launch an upgraded Internet speed with full national deployment, which will mean much fiercer competition in the Internet and communications infrastructure market.
"Globes" has learned that Hot will provide a modem-router that will support the new speed, at a price competitive with Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), which sell 1 Gbps packages at around NIS 100 monthly.
Hot decided to launch the new speed more than a year ago, but the company delayed the move and waited for the right timing for the launch. Hot offers a 500 Mbps speed to business customers, and so from an engineering point of view its latest move Is not complicated. An upgrade to 500 Mbps is, however, the maximum that Hot can do with it current network configuration, and when it wants to upgrade to 1 Gbps it will probably need a new fiber-optic network, which is a much more complicated and expensive proposition.
Hot's decision to go ahead with the move is directly connected to the degree of competition that has developed in the Internet and television markets. Hot finds itself in a delicate situation, since Cellcom and Partner, with which it competes head-to-head, are offering 1 Gbps speeds with ever widening deployment and taking bites out of its market share. The most effective competitive weapon Hot has is an upgrade of its offering to half that speed, 500 Mbps, if only to try to reduce its churn rate. Hot is also the only provider offering a 200 Mbps speed, but that has apparently not made a significant difference.
Hot's move will have a large impact on the entire market, and particularly on relations between Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and the Ministry of Communications. It will be interesting to see how the ministry responds to Hot's move and its impact on the wholesale market. It will also be interesting to see how Partner and Cellcom react. The upgraded speed will be offered to both new and existing customers for NIS 99 monthly, rising to NIS 129 after three months.
Hot CEO Tal Granot-Goldstein said, "This is the first time that a telecommunications group is offering a high speed of 500 Mbps with nationwide deployment. Hot invests large resources in providing high-quality solutions, and already offers the highest average surfing speed in Israel. Hot will continued to be one step ahead of the competition both in surfing speed and network stability."
Published by Globes, Israel business news - en.globes.co.il - on May 13, 2019
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