The Ministry of Communications has set up a committee to review telephone rates of Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ), which could lead to lower rates in a few months. A rates decision is crucial for the telecommunications market as a whole, because it could affect the rates structures for cellular calls as well.
The rates committee should reach a decision in a few weeks, after a delay of over a year when the previous rates agreement with Bezeq expired. Bezeq asked the Ministry of Communications at the time not to set up a new rates committee because it understood that its government-controlled rates would be slashed following a thorough restructuring, which could lead to lower rates.
Bezeq's competitors could suffer from lower telephony rates, which would make it harder for them to compete against it. On the other hand, consumers will probably benefit from a rates cut at Bezeq, which raises the question why the Ministry of Communications delayed convening the rates committee until now. It also raises the question whether the delay contributed to Bezeq's higher profits.
Interestingly, for the first time the rates committee will be mandated to examine different rates models and allow a fixed payment for a fixed basket of services. In the cellular market, there is a clear global trend of operators establishing fixed rates for unlimited cellular calls and mobile Internet access. This trend also appears in the landline telephony market, and the question is whether the rates committee will have the authority to allow a fixed fee.
Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2009
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