Shlomo Filber, the director general of the Communications Ministry, is pushing forward with a plan that would save Hot Telecom 1 billion shekels ($260 million) of capital spending by exempting it from a requirement to extend its telecommunications network to Israel’s far north and south.
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Under the emerging plan, Hot would offer its services over Bezeq’s network, piggybacking on Internet lines as the mobile provider Cellcom Israel now does to provide television service. Hot would then be able to offer its package of landline telephony service, television and Internet to communities in the so-called periphery at the same rates as it does elsewhere to communities served by its own network.
Closely-held Hot is controlled by French billionaire Patrick Drahi’s Netherlands-based telecommunications holding company Altice and competes with Bezeq in landline telephone and Internet service as well as in television, offering cable in competition to Bezeq’s Yes satellite service
Filber’s plan marks a retreat from ministry policy before he took over as director general, reporting to Prime Minister Benjamin Netanyahu, who also holds the communications portfolio. Officials held that competition based on competing infrastructure, in this case between Hot and Bezeq, was preferable to competition based on services. But Filber prefers the emerging compromise because it would mean that Hot can roll out its services to the periphery faster.
“We’re looking for a solution that is low-cost, rapid and creative. Residents of the periphery will get Hot services at the same prices at those in the center of the country” explained a ministry official, who asked not to be identified.
To go forward with the change, the ministry will have to hold hearings in which other companies in the industry, such as Cellcom, as well as public interest groups can make known their opposition.
Hot is required under its license to provide nationwide service as does Bezeq. But unlike Bezeq it has long been in violation, building its network on where it could operate it profitably while kibbutzim, Arab municipalities and even medium-sized cities were excluded. Hot also failed to extend infrastructure to ultra-Orthodox neighborhoods and towns where cable viewership is very low.
Hot’s failure was the subject of a 2011 government committee, which discovered to its surprise that the company was not providing service to 224 communities with a combined population of 390,000. In those localities residents have no choice but to buy Internet and television service from Bezeq.
Thirteen months ago, the panel concluded that Hot had to fulfil its obligations, which it estimated would cost it 1 billion shekels. Gilad Erdan, the communications minister at the time, backed the committee’s recommendations.