Ariel Schreiber, CEO of Alon Israel Oil Company Ltd. subsidiary YouPhone, said today, "The cellular reform, which was supposed to generate healthy competition of five companies with independent infrastructure, in addition to the virtual operators, has ended in failure."
He added, "The Ministry of Communications retrospectively changed the tender terms to grant unfair and disproportionate advantages to Golan Telecom Ltd. and HOT Mobile Ltd., which caused market failure. The networks unification agreement must not be approved in its present form if we want to maintain competition and prices for the consumer's benefit."
Schreiber commented today in his speech at the Go Mobile 2015 Conference on the cellular revolution and the structure of the communications market, noting that the cellular sector is now in absolute chaos. He said that consumers were benefiting from the aggressive price war in the short term, but the market would undergo a process of mergers and acquisitions in the medium term, with the market reverting to its original structure of three cellular companies with infrastructure. He explained that this would significantly slow competition, raise prices, detract from service, and reduce investments in technology, all under the auspices of the Ministry of Communications.
Schreiber went on to say, "We all want to see beneficial competition in the cellular market continue, but this competition is unbalanced and artificial. The cellular reform was designed to generate healthy competition between five companies with independent infrastructure, in addition to the virtual operators, but the attempt to introduce new players with infrastructure has ended in failure. The Ministry of Communications granted unfair and disproportionate advantages to Golan Telecom and HOT Mobile, which caused market failure and unbalanced competition, and there is therefore a real and concrete risk of a return to a triopoly.
"Consumers in Israel are currently benefiting from very cheap prices, which may not continue in the long term. The Ministry of Communications must not approve the networks unification agreement. The virtual operators must be strengthened, so that a competitive cellular market in Israel with a high level of services will continue.
"Like virtual operators all over the world, who have obtained high market shares, the virtual operators here will continue to be the babysitters of competition. The entire world has realized the importance of these operators for sustained competition."
Schreiber also commented on the global mobile virtual network operator (MVNO) market, in which the virtual operators are scoring high penetration rates and maintaining competition, for example Germany, where the virtual operators have a 19% market share, and the UK, where their share is 13%. Virtual companies have 120 million subscribers worldwide, projected to reach 300 million in 2017.
Schreiber added that he expected the virtual model to spread to other communications sectors in Israel besides the cellular market, and that it could not be ruled out that YouPhone would also become active in other sectors, such as home Internet and television.
Published by Globes [online], Israel business news - www.globes-online.com - on January 21, 2015
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