Most mobile carriers will oppose a tender that will allow more parties to acquire 4G frequencies and enter the market. The carriers are demanding that the frequencies be allotted only to mobile licensees for a fixed price set by the Ministry of Finance.
Mobile carriers told "Globes" that the tender, which will be published in a few weeks, could ignite a bitter struggle between them. The veteran carriers intend to demand that the Ministry of Communications allocate the 4G frequencies, rather than hold an open tender, in order to prevent a bidding war that will send the prices into the stratosphere because there are not enough frequencies. They also argue that it has already been decided to establish three 4G networks, so the frequencies should be allocated on the basis of considerations other than the price.
The carriers are especially worried that 018 Ltd. owner Hezi Bezalel or other parties, such as mobile virtual network operator (MVNO) YouPhone Ltd., will bid in the tender and buy frequencies, and that the government will give them preferences or incentives to purchase 5-megahertz frequencies in the 1800-Megahertz bandwidth, the preferred bandwidth by most carriers and which is being sold.
Industry executives say that if a carrier such as 018 or YouPhone acquires a package of frequencies, this will mean that the government is giving an asset to a carrier which has no intention of establishing a network, but is only seeking to sell the frequencies.
The carriers argue that if the frequencies are allotted, they should be allotted to current carriers that are establishing networks at an investment of hundreds of millions of shekels. They argue that the frequencies should not be allotted to a carrier with only limited ability to enter the market, and which has no intention of investing in establishing a network. They say that this means wasting limited state resources because it is obvious that the veteran carriers will best use the frequencies as they are bearing the cost of building the networks.
Behind closed doors, Golan Telecom Ltd. and Hot Mobile Ltd. say that they will bid in the tender. However, they too fear the entry of new carriers into the market and skyrocketing prices. There is real concern that neither carrier can handle the investment of hundreds of millions of shekels.
"Is there a lack of competition that the government wants to bring more carriers into the market?" asked an executive. "The government has brought about prices of NIS 40 for a mobile plan, the lowest price in the world. Has anyone thought about the investment needed for 4G, and how there will be a return on investment at these prices?"
Published by Globes [online], Israel business news - www.globes-online.com - on June 5, 2014
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