State Comptroller Joseph Shapira has instructed Minister Tzachi Hanegbi not make any decisions at this stage on cancellation of the structural separation in the Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) group or any substantial changes in the group.
Hanegbi is the minister responsible for matters to do with Bezeq in the Ministry of Communications. He was appointed because Prime Minister Benjamin Netanyahu, who is also minister of communications, has a conflict of interests because of his ties with Bezeq controlling shareholder Shaul Elovitch.
Shapira says in his letter to Hanegbi that the State Comptroller's Office has been carrying out an audit of the reform in the fixed-line telephony market. His decision not to allow Hanegbi to make changes concerning Bezeq will have a substantial effect on the market. A draft of the audit report is due to be circulated in two weeks' time.
The audit is viewed with trepidation in the Ministry of Communications, as it is clear beyond doubt that the telephony market reform suffers from shortcomings in many of its aspects, and the findings are so severe that the State Comptroller had no option but to intervene and prevent Hanegbi taking decisions about Bezeq.
The reform, known as the wholesale market, began during Gilad Erdan's term as minister of communications. Its aim is to allow all players to use Bezeq's infrastructure freely on the basis of prices set by the ministry. The reform has three elements. One is Bezeq's Internet, that is, allowing competitors to use Bezeq's infrastructure to provide Internet service to their customers at prices set by the Ministry of Communications. The idea is to abolish the separation between Internet service providers and infrastructure providers, so that the Internet service provider can sell a package that includes both infrastructure and connectivity.
The second element is the sale of Bezeq's telephony service to its competitors. This is a model whereby the subscriber makes a telephone call on Bezeq infrastructure, but the line is used by a competitor that pays Bezeq for the using its network.
The third element is the use of Bezeq's physical infrastructure: conduits etc.
Of these three elements, only the first has been implemented. Implementation of the other two has been delayed because of Bezeq's objections and because the Ministry of Communications has cooperated with Bezeq and prevented implementation using various excuses.
The result is that the telecommunications market reform is greatly weakened, and instead of helping the competitor companies, the Ministry of Communications is piling up difficulties in their way and thereby helping Bezeq.
Published by Globes [online], Israel business news - www.globes-online.com - on November 1, 2016
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