The dispute concerning Bezeq Israeli Telecommunication Co. Ltd.'s (TASE: BEZQ) reverse bundling has taken a sharp turn. The Ministry of Communications has notified Bezeq that it had found faults in the way Bezeq had managed its service, and is demanding that it make the necessary corrections independently; otherwise the Ministry of Communications will have to intervene and order Bezeq to do so. Bezeq has 300,000 reverse bundling customers.
Bezeq's reverse bundling is a service that the company is allowed to provide, in which it markets the Internet providers to the customer. In other words, Internet customers can ask Bezeq to connect them to the Internet through a specific providers instead of in the usual way, in which the Internet customer contacts the Internet provider and selects the infrastructure he wants to use (Bezeq or Hot Telecommunication Systems Ltd. (TASE: HOT.B1)).
Since the line telephony reform (the wholesale market) got underway in early 2015, Bezeq has stiffened its requirements and conditions that it imposes on the Internet providers for marketing them in the framework of reserve bundling. The Internet providers felt that Bezeq was discriminating against some of them, and they complained about it to the Ministry of Communications a number of times.
Bezeq asserts that the Internet providers are using it and exploiting its marketing setup to recruit subscribers, but after doing so, they simply contact the customer and offer him new plans in the framework of the reform. Bezeq thereby became a marketer of the providers, in contrast to the original purpose of reverse bundling, and the company consequently decided to pose conditions and demands for the providers for continuing their marketing.
Internet providers Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) protested against the new conditions demanded by Bezeq. In the wholesale market track, the customer becomes a customer of the providers, thereby ceasing to be a Bezeq customer, Partner and Cellcom asserted that Bezeq had undertaken not to discriminate among the providers in reverse bundling, and was obligated to provide them with the full particulars of any customer recruited in reverse bundling; otherwise, they would violating the Ministry of Communications' orders requiring them to provide the customer with complete service.
In the bottom line, the result was that following the dispute between the parties, the main beneficiaries of Bezeq continuing to promote reserve bundling was Bezeq subsidiary Bezeq International Ltd., for which Bezeq continued to recruit tens of thousands of customers. In addition, Bezeq very strongly pushed marginal providers in the market, such as 099 and 011 (some assert that these are fictitious), with whom it works in order to recruit new customers.
In the end, the Ministry of Communications concluded that the demand made by Bezeq to Partner and Cellcom as a condition for continuing to market them in reverse bundling were creating unacceptable discrimination, and ordered Bezeq to toe the line.
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2016
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