The Bottom Line / Yes, Minister
Ehud Olmert began his reign at the Communications Ministry on the wrong foot. Initially, he gave too much consideration to the interests of the fat cats and too little to the public welfare.
Ehud Olmert began his reign at the Communications Ministry on the wrong foot. Initially, he gave too much consideration to the interests of the fat cats and too little to the public welfare. In October 2003, when ministry director general Uri Olenik presented him with a plan for opening the international long distance phone call market to full competition, Olmert announced he was opposed to "unbridled competition." Later, he agreed to a limited opening of the market, but excluded the three cellular telephone operators - which are the main potential source of competition. Nohi Dankner and Eliezer Fishman smiled in relief. The public gritted its teeth.
After that, Olmert blocked a plan to close the ministry and replace it with an independent, apolitical communications authority - despite the cabinet's approval of this plan. He wanted more power and more influence, and therefore, caused great harm to the general public. Now, the ministry will be transfered to one of the Labor ministers, and political considerations will start playing an even greater role in its management - because Olmert recently changed direction by lowering interconnection fees for the cell phone operators. He thereby proved that he was capable of properly representing the public interest.
Now, Olmert is on the verge of making an important decision about the relationship between Bezeq and satellite broadcaster Yes. In May 2001, the Knesset Economics Committee decided to allow the state-owned telecommunications firm to increase its stake in Yes to 50 percent. The cable television companies complained bitterly, since they want to see Yes close down as soon as possible.
We have no sympathy for the cable firms. We have not yet forgotten how they abused us before Yes appeared, back when they had a monopoly on multichannel television. At that time, they supplied a miserable selection of channels at an inflated price, refused to connect communities in outlying areas, and did not even bother to send us a bill in the mail. But everything changed when Yes entered the market, and therefore, it is important that Yes continue to exist.
The problem is that the Finance and Communication Ministries suspect that Bezeq's goal is not merely to invest in Yes, but to hurt the cable companies - because every customer who switches to Yes reduces the cable firms' cash flow. Bezeq wants the cable firms to lack the resources needed to compete against it in its main arena: landline communications (i.e. home telephone service). And we, of course, want to see competition in this field.
Bezeq is fighting the cable companies in various ways. For instance, it offers business customers equipment such as switchboards at significant discounts on condition that they increase their use of Bezeq's landlines - thereby deterring them from switching to the cable firms' telephony service. That is how a predatory monopoly works.
Now, Bezeq wants to invest an additional NIS 440 million in Yes, without demanding that the satellite company obtain commensurate sums from its other owners, or from the banks. That raises suspicions about its motives. Olmert, therefore, must find the golden mean. On one hand, he must prevent Yes' closure (one option might be to sell the company, debt-free, to a new owner). But on the other hand, he must not allow Bezeq to use Yes to destroy the cable companies. And he does not have much longer to decide.
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