A month after the late-night press conference at which the finance minister announced Bezeq had been sold, the deal remains open.
It was only a week after Benjamin Netanyahu announced the sale of the national phone company to a consortium headed by Haim Saban, the Apax fund and Mori Arkin that the Trojan horse scandal exploded. It appears that a host of top-tier Israeli companies wanting information on rivals had hired detectives, who planted spyware on target companies' computers, and the consortium announced it wanted indemnification from the state against related future claims.
There is no doubt that the Trojan horse affair could lead to lawsuits by Bezeq's competitors. Bezeq International, Pelephone and mainly the Yes satellite TV company have been intensely aggressive fighters in their areas, and the competition wouldn't miss a golden opportunity like that to attack.
But the real threat to the Saban-Apax-Arkin group is not the computerized espionage affair. It's the price the group agreed to pay.
Haim Saban and Mori Arkin have a reputation as astute businessmen, with a penchant for buying cheap and selling dear, of taking advantage of every sliver of opportunity. Apax, as a private equity fund, expects its investments to generate extremely high returns of 15 to 20 percent a year.
At the price they agreed to pay for Bezeq, it is tough to see the buyers achieving anything like that.
Horse gone wild
Bezeq's powerful workers union, Yes' debts, and Pelephone's inferior profitability - the buyers knew all of that. The entire business community does, in fact, and their economic impact can be calculated.
The threat that's harder to calculate, and the buyers know it, is that slippery Trojan horse that everybody knows is cozily nesting in the kishkas of all the big telecommunications companies the world over. But nobody has a clue when it will start to gallop, trampling everything in its path.
Professional argots call the horse IP, which stands for Internet Protocol. It is the method by which data is transmitted over the Internet.
Each computer has at least one unique IP address, by which other online computers identify it. When a given computer sends information or data, for instance an e-mail or a Web page, the data is divided into small packets, each of which goes through the Internet separately.
Each of these packets contains the Internet address of the sender's computer and that of the addressee. Each packet is sent from the sender's computer to a gateway, which interprets the packet.
The gateway computer reads the target address and transfers the packet to the nearest gateway. That gateway reads the address and transfers the packet to the nearest gateway to it, and so on, until one gateway recognizes the address as a computer in its domain. And that gateway computer sends the information to the final recipient computer.
The great advantage of IP
The great advantage of Internet Protocol, the thing that makes it so efficient, is the absence of links. There is no constant link between communicating end points. Each packet traveling through the Internet is treated as an independent package of data, irrespective of others.
Seven years back it had become clear that Internet Protocol, which today serves mainly to transfer Web pages between computers, could enter every area of communications and change them.
Five years ago, at the height of the tech bubble, IP was thought to possess tremendous promise. Any company affiliated with IP automatically became worth a billion dollars.
Three years ago, IP was considered a promise that went sour. People predicted it would take years for its potential to develop into anything substantial.
By now it is clear that it is just a matter of time before IP becomes the main way all types of information are exchanged - data, voice, video and music.
The commercial significance to companies and consumers is also becoming clearer. All forms of communications we use are fated to adopt gradually a model similar to that of high-speed Internet. Consumers will pay a fixed monthly price for bandwidth. The wider the bandwidth, the faster transmission will be.
Communications will prove any prophet a fool, but there's a good chance the IP attack will go like this:
The first ones inundated by the Internet wave will be the long-distance carriers. Services such as Skype and its ilk, which enable voice communications over the Internet, will erode the number of people using regular phone service to call overseas.
Next in line will be the landline companies, followed by the cellular operators. Communications packages where price is based on bandwidth will compete with charges based on airtime, and cause them to erode.
Last will be the multichannel TV companies, as soon as IP-based television becomes available, with quality equaling that of the cable or satellite networks.
All that could happen in three years, if it's fast, or seven if it's slow, but the direction is clear enough. IP is a tsunami that will swamp the telecommunications world and the only question is, how fast it will advance.
Bezeq is a powerful company with great business potential, and it could be enormously improved by financial and operative steps. The three-headed game the company now controls - cellular, TV and telephony - is the hottest combination in the world telecommunications market, and is considered to have great potential in the information era. But Saban, Apax and Arkin, and the shareholders at all the telecom companies, know they have only a few more years to milk their milch cows, before they have to change model to one based on IP.
Those companies' main comfort is that technological advance is constantly increasing the consumer's use of information. Take this column, which was written on a laptop, sent to the paper via a high-speed cellular modem, and appears today in three Internet sites and will also be disseminated by e-mail newsletters.
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