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The Knesset Foreign Affairs and Defense Committee on Thursday unanimously rejected a Finance Ministry plan to force telephone companies to pay for infrastructure work requested by by the Shin Bet security service, the Mossad, the Israel Defense Forces or the police for purposes of national security or public safety.

The cellular telephone companies estimated that this work would cost them tens of millions of shekels a year apiece. Sources connected to the cellular companies said much of the work would relate to surveillance, wiretaps and searches for missing persons.

The Finance Ministry's controversial demand was first reported yesterday in Haaretz. It was included in a provision of the Economic Arrangements Bill accompanying the 2011-12 budget, and would have required Israel's cellular and landline telephone service providers to fund any infrastructure work requested by the security services.

Treasury officials argued during Thursday's debate that the issue has budgetary implications, and should therefore be part of the Arrangements Bill. The telephone companies, for their part, voiced vehement opposition to the proposal.

Committee chairman Shaul Mofaz said that legislation of this sort has implications that go far beyond the budget, and it should therefore be separated from the Arrangements Bill. He also said the issue could not be dealt with casually, so the committee will hold talks over the next two weeks aimed at finding some arrangement acceptable to all the parties concerned.

The Arrangements Bill states that the provision's purpose is to prevent holders of communications licenses from making alterations in existing facilities that could affect technology installed by the security services, without informing the authorities. To date, the Finance Ministry said, companies have generally not informed the authorities about changes that the defense establishment, which initially approved these facilities, might have opposed, and therefore, they ought to pay to fix the problem.

Yacov Gelbard, CEO of cellular operator Partner Communications, sent a letter to committee members explaining his objections to the proposal. "There is no difference," he wrote, "between this bill and a bill that would require food retailers to open their supermarkets to the security forces at no charge [or] gasoline retailers to supply gasoline to the security forces at no charge."