Olmert vs. the Citizens

After repeated delays and procrastination, the government decided in March of 2003 to open the international dialing market to full competition on January 1, 2004. But there are decisions and then there is reality, especially if Ehud Olmert is involved.

Up until 1979, we were afraid to call overseas. If once in a million years, we dared pick up the phone, the conversation lasted seconds: "Hello. How are you? Bye." The price was terrifying.

But then the market opened up to competition; and instead of Bezeq's monopoly, there were three companies that began to compete with each other. The result was a 70 percent (!) drop in prices, a quadrupling of the number of phone calls and significant improvement in the service.

But nothing lasts forever. After penetrating the market, the companies have in recent years begun lowering their quality of service and raising their prices - particularly to households.

There's only one solution to something like this: Increase competition.

According to the original tender, the three companies - Bezeq, Barak and Golden Lines - had the rights to exclusivity for 3.5 years; so in January 2001, the market was supposed to open up to full competition. But the companies pressed the politicians and the market did not open.

After repeated delays and procrastination, the government decided in March of 2003 to tell the director general of the Communications Ministry to prepare everything necessary to open the market to full competition on January 1, 2004. But there are decisions and then there is reality, especially if Ehud Olmert is involved.

In August 2003, Olmert was appointed communications minister, in addition to all his other jobs; and in October, his director-general, Uri Olnik, submitted the plans for opening the international dialing market to full competition. Olmert took one look and broke up laughing. Was he going to let Nochi Dankner and Eliezer Fishman lose out?

Immediately, a notice went out to the public that Olmert was opposed to "crazed competition" - the term used by the money men when they want to preserve their huge profits. Olmert meant competition from the cellular phone companies, Cellcom, Pelephone and Partner, which want to get into the international calling market. This would have dramatically dropped prices - good for the public and bad for Olmert's friends.

Another baseless argument used by Olmert was that the three companies in the international dialing market had lost so much money in the past that now they should be allowed to profit. How merciful and compassionate he is when it comes to the large and powerful. It should be noted that the three companies earned some NIS 450 million in the last two years (2002-2003). And that's not enough?

There are many advantages to opening the market. As soon as the three cellular companies enter the market, prices will drop by 30 percent. This means Israelis will pay NIS 600 million less a year for their international calls. Opening the market will also create a complete revolution in the overall communications market because it will encourage the formation of large communications enterprises that will provide customers with a variety of services - domestic cellular competition with Bezeq, Internet services, data communications, television content. All this would raise the level of the communications market by several degrees, up to a par with the West.

Finance Minister Benjamin Netanyahu is interested in the complete opening of the communications market to competition, from the basic position of war against monopolies and increasing competition for the sake of the public. He proposes two stages to opening the market. The first stage, starting in April 2004, would grant licenses to provide international calling to anyone who wants to do so - except the cellular companies. The second stage, starting in January of 2005, would grant licenses to cellular companies and thus significant competition would begin and the prices would go down.

Olmert is only prepared to accept the first stage, which is insignificant, because without the cellular companies there's nobody to seriously compete against the existing companies. The problem is that the decision is entirely in his hands.

This situation once again raises the need to shut down the Communications Ministry and turn it into a statutory agency that is free of political interests, doesn't sway in the wind with each new minister, and operates in this important arena for the benefit of the public alone.

But apparently, under Olmert, the ministry won't be closed so quickly; the important statutory authority won't be established; and we will keep on paying outrageously over-inflated prices for our international calls.