Michael Golan - Daniel Bar-On - May 15, 2012
Globile Telecome owner Michael Golan. Photo by Daniel Bar-On
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Two new cellular service providers jumped into the market yesterday at prices that are substantially lower than the prevailing average price in Israel.

The two are Golan Telecom and HOT Mobile, each of which owns a portion of its own cellular network infrastructure and leases the rest, because their own networks do not currently provide full national coverage. Golan Telecom struck a deal with Cellcom to use its infrastructure while HOT Mobile, a division of the HOT cable operator, is relying in part on Pelephone to provide service to its own customers. HOT merged with the existing cellular firm Mirs and is now marketing services as HOT Mobile.

The new developments come a day after Alon Holdings Blue Square Israel, which operates the Mega supermarket chain and Dor Alon service stations, launched its cut-rate YouPhone mobile phone service in conjunction with Mega's "You" customer club. YouPhone is a so-called virtual mobile network operator, meaning that it leases all its infrastructure from another mobile firm.

Golan Telecom is owned by Michael Golan, who made aliyah after a successful career in France. His company took the industry by surprise yesterday with the timing of the company's launch sooner than initially expected. Golan Telecom's pricing is different from the long-time players in the field, in that it is offering unlimited talk time and text messaging for a flat fee of NIS 99 per month.

As soon as the firm wrapped up its launch, HOT Mobile entered the fray with an NIS 89 monthly package, which includes unlimited talk time, unlimited text and multimedia messaging. Golan Telecom's plan includes 2 gigabytes a month of Internet access, but reserves the right beyond 2 gigabytes to slow network access. Golan Telecom is also offering its customers free overseas calling to landline phone numbers in 29 countries.

At yesterday's news conference, Michael Golan called his company's pricing "the new standard to which everyone will have to lower their prices." The firm is also offering a plan for light users at NIS 10 a month, which provides 60 minutes of talk time, 60 text messages and 10 megabytes of Internet access.

For its part, HOT Mobile has a plan for light users with no monthly fee. Users pay 10 agorot per minute of talk time and 10 agorot per text message and per megabyte of Internet access. The firm is offering overseas calling at one shekel a minute. It will also sell cellphones at its network of sales offices, which at first will consist of 19 locations,

Golan Telecom has no sales offices. Instead it offers its services through its website. Customers sign up online and are sent a cellphone SIM card, the memory card through which cellphones operate. The company has no plans to actually sell cellphones.

In an echo of the protest movement that erupted last summer and the concern over the concentration of economic power in Israel in the hands of a small group of corporate consortiums, the company presented a video that decries monopolistic corporations. "We have no tycoons with debt, interest and dividends that need to be returned," Golan told the news conference.

For his part, the CEO of Mirs and HOT Mobile, Yaakov Nadborny, said Golan Telecom's launch did not steal his own company's thunder, boasting that his firm already has the benefit of an advanced network and a clear, simple pricing structure. "The cellular market has been transformed from a complicated and vague one to a simple market," he said.

The shake-up in the cellular market has also rattled share prices in the industry. For coverage, see the market report below.