The Bottom Line / Straight and shifty
The Knesset this week approved a reform that will make it possible for cellular phone clients to transfer to another provider while keeping their original phone number, including the dialing prefix.
The Knesset this week approved a reform that will make it possible for cellular phone clients to transfer to another provider while keeping their original phone number, including the dialing prefix. It will go into effect in September 2006. The easy transition will give clients more bargaining power so the providers will be forced to drop prices and improve their service to keep their customers.
The cellular providers were opposed to the reform and tried to pressure and entice the MKs not to vote for it. On the other hand, Benjamin Netanyahu and the treasury officials were in favor. Telecommunications Minister Dalia Itzik also came out in favor of the reform. She said: "We must consider the good of the consumer. If it is good for the consumer, it will also be good for the cellular companies." Straight talk.
This week Itzik also dealt with the question of privatizing Bezeq, the largest telecommunications company. It has a monopoly on land lines; it has complete control of Pelephone (cellular); it controls multi-channel TV (Yes); it is active in the international calls sector (Bezeq International) and controls the high-speed Internet market as well.
The problem is that Bezeq is sick. It has thousands of superfluous employees and managers. It's clumsy and bloated. The workers union controls the company. Bezeq will not be able to compete with the snappy private competitors when the land line sector is opened up to competition, and it will be possible to speak for almost nothing via the Internet.
That is why privatization is an existential need for Bezeq. It will make the company more efficient and bring down the price of services to the clients.
The head of the Government Companies Authority, Eyal Gabbai, plans to sell the controlling stake of Bezeq within two months, with the clear support of Netanyahu. But this week, Itzik suddenly declared: "Bezeq must not be sold at any price. One cannot go below a certain price."
On the face of it, Itzik is showing great concern for the country's coffers. But it is not her job. She does not have to be concerned with the price. That is the job of Gabbai. Itzik has to care about something else - regulatory clarity, so that the potential buyers can know exactly what they are getting and offer a fair price. But Itzik is not providing this regulatory clarity and is also speaking about a "minimum price." This is her way of frightening off the competitors and torpedoing the sale.
It is easy to raise Bezeq's price. For example, by a regulatory decision that it will remain a monopoly in the land-line sector. That will be wonderful for the price but bad for the competition and the consumer. Itzik does not want to privatize Bezeq because the company provides wide scope for political appointments. She dismissed the chairman, Miki Mazar, and now there is no point to finding a replacement because there are a mere four meetings until the privatization. She wants to make the maximum number of political appointments to the various departments and branches of Bezeq. The central committee members will remember her for this.
That is how things are done here, in the Third World.
All the other obstacles to privatization have been removed. The Shin Bet security service demanded that an Israeli body be part of the controlling stake, and so it will. Didi Lahman-Meser of the Justice Ministry has changed direction and become a driving force in finding solutions. The only problem now is Dalia Itzik, who says she favors privatization but in effect is trying to torpedo it. Therefore the question should be asked of the minister: What about us, the consumers? Only this week, after all, you said that our needs must be considered. If so, why are you undermining the privatization of Bezeq?
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