The Council for Cable TV and Satellite Broadcasting, headed by chairman Dr. Yifat Ben-Hay-Segev, has decided to halt all the bargains offered by Hot Telecommunication Systems Ltd. (TASE: HOT.B1) and DBS Satellite Services (1998) Ltd. (YES) in order to prevent what it calls "discrimination between customers, deception, and harm to competition."
The decision was based on a report submitted to the Council by Numerics Economic & Financial Consulting, represented by Dr. Roy Shalem, which found that an allegedly discriminatory pricing method that was misleading consumers had taken root in the commercial television market.
The report's interim recommendations include both the duty of disclosure and transparency of prices and a requirement to restrict bargains to limited periods, with a ban on raising the price within the bargain period. As of now, according to the report, the cable and satellite companies have "thousands" of different bargain tracks tailored individually to each customer. Ben-Hay-Segev also announced that the Council would not approve an increase in the price of packages.
According to the Council's announcement, it intends to set a "pricing policy in the television market that will be fair to all consumers and will require full disclosure from the companies about the thousands of current bargains."
Last month, the two companies asked the Council at almost the same time to approve higher prices for their services. Ben-Hay-Segev decided not to approve the requests, and to bring them before the Council. Hot Telecommunication submitted 162 different requests for raising the prices of its channels.
The inquiry revealed that "The pricing method used by the companies also included an offer of bargains to customers according to their bargaining power, without these bargains being transparent and known to all the customers, while transparency is an extremely important element in promoting competition, removing barriers, and ensuring equality. Without it, customers are being misled"
According to the Council, there are currently "thousands of bargains in the supervised companies, while various prices are being offered to different customers for exactly the same products in the framework of these bargains."
The inquiry arouses concern that "Customers with poor bargaining power are paying far more than those who know how to insist on getting a fair deal." The Council asserts, "The thousands of bargains now offered in the market are not visible to the customer - a practice that appears to border on consumer deception."
The Council also accuses Hot Telecommunication of taking advantage of the VAT reduction, saying, "The vast majority of the requested price hikes utilize the government's VAT cut, so that instead of making it cheaper to the consumer, the money will go to Hot Telecommunication. In effect, the request 'confiscates' the benefit for the consumer decreed by the government for the purpose of reducing the cost of living, and gives it to Hot Telecommunication.
Hot Telecommunication did not respond to the statement. Yes said, "All the bargains offered by the company are completely clear to the Council, and each of them was reported to it, and is under full supervision, and is fully compliant with the broadcast license rules. The decision is therefore surprising. When the Council sees fit to send us the report, which for some reason has been given only to reporters, we will gladly comment on it in detail."
Published by Globes [online], Israel business news - www.globes-online.com - on December 27, 2015
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