Fiber-optic Project Well-staffed With Little to Do

Israel Electric Corporation has hired connected administrators to run a nationwide fiber-optic network that does not yet exist.

Avi Bar-Eli
Avi Bar-Eli
Israel Electric Corporation's control center in Haifa.
Israel Electric Corporation's control center in Haifa. Credit: Tomer Neuberg
Avi Bar-Eli
Avi Bar-Eli

Long before the first cable has been laid for an ambitious nationwide fiber-optic network to provide super-fast Internet, Israel Electric Corporation has created and staffed a bureaucracy to administer the project.

The state-owned utility, which is under pressure to cut costs and contain wages that often exceed public sector norms, has created two divisions to oversee construction of the network. That has entailed creating posts for one deputy CEO, one division chief, three deputy division chiefs and seven department heads, plus two other employees given the status of department heads.

The new bureaucracy has little to do, since the network is supposed to be developed by a joint venture called IBC that IEC formed with Swedish company Viaeuropa almost two years ago. But as early as January 2013, six months after the accord was signed, IEC rushed to form the first division.

The fiber-optic project was launched with great fanfare four years ago, promising Israelis Internet speeds of one gigabit per second, or as much as 100 times what is currently available. The Communications Ministry says it will bring a range of advanced services and lower rates for users by breaking the Bezeq Hot telecom duopoly.

But the tender terms were badly structured, and it took years until a single bidder, Viaeuropa, which controls 60% of the IBC joint venture, emerged.

IEC said on Tuesday that the new staffing put into place is needed because IEC will be acting as chief planner and builder of the network as well as taking responsibility for maintenance and operation. Many of the jobs were not been subject to competitive tenders, although IEC promised they would be.

“In order to move ahead with the project as fast as possible, management decided, according to its standards and authority, to immediately staff positions defined as critical to the project by seconding internal manpower with the highest proven project management capabilities,” a spokesman said.

But observers say the growing bureaucracy has delayed rolling out the project as work is delayed by turf battles within IEC over power and jobs.

The new bureaucracy encompasses two parallel divisions. One is part of the utility’s customers unit and already has a division head and two department heads — one to cover Israel’s north and the other its south, all reporting to IEC Executive Vice President Yacov “Yasha” Hain.

The other division, called the Wide-Band Communications Project, appears to have much the same responsibilities. As well as having its own deputy CEO, a division chief and three deputy chiefs, each with two north and south department heads, the unit has its own finance and economics department.

The units will eventually employ somewhere between 150 and 200 people seconded from other parts of IEC on a temporary basis at a cost that will reach as much as 30,000 shekels ($8,610) a month per employee. The employees will also enjoy bonuses and other payments they are entitled to, like IEC’s other 13,000 employees.

At this point, however, they have little to do except overseas a pilot project in the northern town of Kiryat Shemona.

In addition, critics say there have been irregularities in the appointments. Many of the jobs have been filled without a competitive tender by people officially acting as temporary stand-ins, the critics say, but in fact, they were likely appointed because of their connections inside IEC and will retain their jobs even in a tender.

Onit Even, who is head of the newly created department for planning and deploying optic cable in the north, was previously was previous the personal assistant to Hain. A year ago, Even was brought up for a disciplinary hearing on charges she clocked in for more hours than she actually worked.

She was cleared, but IEC CEO Eli Glickman appealed the decision in labor court. Company rules bar promoting employees facing serious disciplinary charges. IEC management claims the process is over.

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