Bottom Dollar / We stand fooled
Communications Minister Ariel Atias is not implementing the Grunau Commission's recommendations for communication sector reforms.
Communications Minister Ariel Atias fooled us all. He has built himself a positive public image even though he is not implementing the Grunau Commission's recommendations for communication sector reforms. It turns out that two or three small improvements are enough to earn consumer esteem. What about the really big issues? What about the high price we pay for communication services?
The average Israeli household spends NIS 620 a month on communication - 5% of a family's monthly expenses. We spend less on electricity - about NIS 400 a month - and far less on water. The reforms in the communication sector are therefore all the more important. Lower costs will raise the standard of living for everyone.
Prof. Reuven Grunau submitted his recommendations for comprehensive reforms at the beginning of March, but Atias is taking his time and seems to be ignoring the report. The ministers prefers listening to tycoons like Haim Saban (who owns Bezeq) and Nochi Dankner (who owns Cellcom), rather than to Grunau, who represents "only" 2 million Israeli households.
The most burning issue is the cellular communication sector, which is consuming a growing chunk of a family's monthly expenses. Even today it accounts for NIS 300 of the abovementioned NIS 620. There is no sophisticated competition in this industry, but rather competition between three and a half operators who do not compete over the (excessive) price, but rather for value-added services and sponsored public entertainment events.
In order to increase competition, Grunau suggests bringing in virtual operators - because today it neither possible nor feasible to build another infrastructure. It costs billions and the environmentalists would not allow it. A virtual operator would purchase huge parcels of air minutes from the existing companies and sell that air time to the public at competitive prices. This practice already exists in many western countries and would result in lower prices, as happened in the international telephone service sector.
This option has already been legislated, but Shas' Atias is doing everything to avoid implementing it, citing the need for further study and new technology - and in the meantime the cellular companies are raking in the profits at our expense.
One wintry evening last January, Atias was spied dining at a Tel Aviv restaurant with Dankner, whose holdings include Cellcom and Netvision-Barak. The two men were accompanied by their wives. Has the ultra-Orthodox Mrs. Atias befriended Mrs. Dankner, or was the scene a classic example of a money and power relationship.
We could also use some changes in the multi-channel television sector (Yes and HOT). Today 1.5 million of Israel's 2 million households are connected to either cable or satellite TV. The Knesset recently passed a reform allowing the public to purchase a digital converter for NIS 500, that would offer viewers the five public channels - 1, 2, 10, 23 and 99, without a subscription to Yes or HOT. This is a solution of sorts, but the construction of the appropriate digital infrastructure will take time, and this solution is not suitable for all consumers or all parts of the country.
The proper solution would be to force HOT and Yes to offer a genuine basic package and to stop selling an inflated, expensive "basic" package. Most people do not want to have to pay NIS 200 a month for 40 channels, when 10 would be quite sufficient. A genuine basic package could have 15 channels and cost NIS 100. Atias is dragging his feet on this one, too, setting up committees, but not doing anything concrete.
The third major communication issue is broadband Internet. Somehow Israel fell behind the rest of the world. The broadband connection provided by Bezeq and HOT is much slower than in the rest of the western world, hampering our conversations via Skype and making it impossible to view movies or TV broadcasts via the Internet with the same quality as available elsewhere.
Bezeq and HOT, however, are abstaining from investing in more infrastructure. They are happy with the current situation. This will improve only if a new player is brought in, who can work with the existing infrastructure and will upgrade the bandwidth. Here, too, however, Atias is holding onto his cards and is not promoting the issue. It is not enough to make a few small changes in the consumer arena. Reducing consumer contracts with cellular providers to 18 months is nice, and so is receiving a free warning before being transferred to someone's voice mailbox, but these are definitely not the main issues.