Taking Stock / Olmert Does Good

Here's an Ehud Olmert you didn't know. This is a politician who's sold us out to big business, who's trampled on the attorney general's directives, who left us to the untrammeled mercies of the long-distance carriers.

Here's an Ehud Olmert you didn't know.

This is a politician who's sold us out to big business, who's trampled on the attorney general's directives, who left us to the untrammeled mercies of the long-distance carriers, who torpedoed the establishment of an independent communications authority, who has contempt for the public's interests, and who has consistently demonstrated that his real purpose is to help the big companies, not the little man.

Yet last week the communications minister, and industry and trade minister and acting prime minister in Ariel Sharon's absence, surprised the nation - and how.

You might call it Machiavellian or cynical. You might think he understood it was time to give the public a pat on its aching head, that he realized that he had gone too far, and that he made his announcement in order to get some positive PR in the weekend papers.

But whatever his reasons were, on Thursday Ehud Olmert did the right thing, and he deserves our gratitude. Even if his grounds were to curry favor among the population of cellphone users, which is almost the entire population of Israel, so be it: that's what he's there for. To protect our interests - those of the consumers.

On Thursday Olmert announced he'd adopted the recommendations of the British consultancy firm Analysys, and ordered the cellular companies to reduce their interconnection fees by 40 percent in January 2005, and by a total of 60 percent come January 2006.

Interconnection fees are what the cellular carriers charge us for calling one of their subscribers. Unlike other fees, which we choose to incur, this one is mandatory and we can't avoid it. We can't dictate what cellular communications provider our friends, families, colleagues and the world choose.

The interconnection market is not competitive. All the companies charge the same: 52 agorot a minute, which generates NIS 4 billion a year for Israel's three companies, Pele-Phone Communications, Cellcom and Partner Communications.

The rabbit in Olmert's hat

When Olmert made his announcement, our initial reaction was to suspect he'd made one of his convoluted deals with the cellular companies, and that given time, we would figure out the trick.

But when the cellular companies started to tear our their hair and squeal, we started to relax. We were particularly soothed by the wails of one of the cellular managements, which told a Haaretz reporter that the entire cellular market had been thrown into chaos, that the "balance" had been destroyed, and that we would all do well to remember what happened when the regulator intervened in the cable market.

Aha! The moment we heard that tired old slogan, we understood that this time, Olmert had done well by us. Every time "unbridled competition" gets married with "chaos" and "balance," we know the consumers won one.

As for that usual wailing about "regulation" and how market forces should be left strictly alone, let us remind the cellular managements about that rock-solid principle of the free market, which Adam Smith coined back in the 17th century: The government must intervene in the market to prevent businessmen from conspiring against the consumer and fixing prices.

The cellular companies rebutted that they'd have no choice but to raise the fees on outgoing calls, so if anything the public would wind up paying more than ever.

Fascinating! If the cellular companies think they can compensate themselves for their vanishing interconnection fees by baldly raising the tariffs on outgoing calls, then why all their bellyaching?

Maybe it's because the cellular companies know perfectly well that interconnection fees may not be competitive, but the tariffs on outgoing calls are? And the rules of the game are different?

That attack on interconnection fees should be the regulators' first step toward keeping a closer eye on the cellular industry. It is entirely possible that to render the sector completely competitive, the interconnection fees should be abolished entirely.

Because otherwise, one morning we're likely to wake up and find that alongside that old monopoly we all hate, Bezeq, a no-less-frightening oligopoly has risen to its feet. It may be sexily branded, cleverly marketed and wrapped beautifully, with second, third and fourth generation offerings, too, but it will gradually become just another powerful monopoly. The only difference is that it is stronger and scarier, because it is mostly held by private hands.