Taking Stock / Strum's good and bad news
1. The good news is that Antitrust Commissioner Dror Strum is initiating a data card for bank customers. The banks will have to give one to anybody who wants it. It will detail the client's complete financial history - income, predilection to bounce checks, scope of business, everything that would help the card's reader evaluate the client's quality.
That is good news because the day any client can press a button and get his "personal bank card," he can change banks in the blink of an eye. One of the main obstacles today preventing clients from passing from one bank to another is that the new bank can't assess his quality, and probably won't offer anything particularly attractive.
The bad news is that Strum's initiative arose years and years after we celebrated another initiative: the "credit data law," which was supposed to have the same end result - to set up a central database regarding bank customers so as to facilitate their movement from one bank to another.
But by applying clever attrition tactics to the Knesset, the big banks managed to emasculate that law. They claimed its implementation would compromise privacy. The Knesset members were only too happy to adopt that excuse and help the banks out. The law has been around eight months now, but it's dead in the water.
2. The good news is that within a few months, Strum will be declaring Bank Hapoalim a monopoly over Isracard and Mastercard credit cards. He will then be able to intervene regarding the fees Isracard charges businesses.
Visa, Leumi Visa and Visa CAL are fiercely competitive, but Hapoalim rules Isracard, and every business in Israel feels its lash, especially the small businesses. Isracard's clearing charge is 0.5 percent above Visa's.
The bad news is that Strum already said years ago he'd declare Isracard to be a monopoly. He spent three years negotiating with Bank Hapoalim and the competing banks over terms to open the Isracard market to competition. The banks dithered and dawdled and dragged their feet; they puffed and huffed, and meanwhile piled up profits. No competition in Isracard has ensued from all that.
3. The good news is that Strum believes there is no real competition between Israel's cellular carriers for small clients. He believes small clients cannot feasibly compare the carriers' prices because of the complexity and irregularity of their offerings. They can't figure out which costs less or more.
The good news is that Strum thinks the cellular carriers should lower their charges for incoming calls (interconnection fees) to zero, so competition would focus on outgoing call charges, which are easy to compare.
The bad news is that Strum feels it will be very hard for the Antitrust Authority to force a more competitive model on the cellular carriers. The one who can is the Communications Ministry.
The even worse news is that the Communications Ministry folded like a wet napkin six months ago, when the cellular carriers objected to a substantial reduction in their interconnection charges. For its cries of victory, our cellular bills haven't dropped at all.
4. In short, the good news is that Israel has lots of regulators who are perfectly well aware that the markets they supervise have hardly any competition. Furthermore, they have ideas for introducing competition.
The bad news is that the ones winning the war over competition are the monopolies. They usually win by grinding down resistance at the ministries and local authorities, then assaulting any spines they see standing tall in Knesset. Sometimes the battle reaches the courts. Meanwhile, however, years pass, regulators move on and are replaced, ministers come and go, governments rise and fall, the composition of Knesset panels changes. The public has a short memory, but one thing it probably won't forget: The loser from all this is the consumer.
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