The New Cell-phone Landscape - a Guide for the Perplexed

A comparison between companies, to help the befuddled consumer choose between a rash of new plans.

Home Cellular, the new wireless communications operator belonging to the do-it-yourself chain Home Center, opened for business last week by offering customers rates of just 19 agorot per minute. The mobile virtual network operator, or MVNO, piggybacks on Cellcom Israel's infrastructure. This hosting arrangement provides it with chunks of air time for resale to customers under its own brand at slim margins.

Although the opening lacked the hoopla that accompanied the launch of cell-phone service by the Rami Levi Hashikma Marketing supermarket chain five months earlier, the entry of another service provider into the fray left consumers a bit more befuddled. "Great: Now instead of too many calling plans we have too many companies. Are they dependable?" wondered a message received by our news desk.

The Apple iPhone 4.

Cell-phone services from department stores like Walmart, and supermarkets like Carrefour or Tesco, have long been commonplace in other parts of the world, but Israeli consumers are still wary of operators who don't boast well-appointed service centers, professional-looking customer service reps and extensive advertising. The profusion of calling plans, negotiable benefits, rebate programs, hidden costs and complex forms to fill out when dealing with Pelephone, Cellcom, and Partner Communications (Orange ) seems have led customers to equate the cell-phone business with something akin to financial or mortgage planning.

Now, following a rash of regulations in the local cell-phone market, users have never had it so good: switching companies while keeping the same number; handsets usable through any provider; reduced exit fines that have prodded companies into offering plans void of any customer commitment; and now two strong MVNOs with familiar names - Rami Levi and Home Center - already up and running.

And there's more to come. Alon Holdings Blue Square subsidiary Alon Cellular is set to launch its YouPhone service, while Mirs Communications and Golan Telecom will be launching new networks with their own infrastructures.

The cellular market is getting crowded, which in itself isn't bad news. The question for consumers is how to choose between all the new plans. We prepared a comparison between offerings for different types of users, to get an idea of how they really stack up against each other.

Like nailing jelly to a tree

Trying to compare costs between the three large companies is like trying to nail jelly to a tree. All three present high starting prices, but with a cornucopia of enticements. Cellcom offers a special deal to customers switching from another company, but only for the first 12 months. Partner gives a discount to anyone showing a receipt for the purchase of a mobile telephone of any make or cost bought from Partner or another company. Pelephone tests customers' reading comprehension, offering a three-year NIS 20 to NIS 50 monthly rebate for transferring a number to the company - but only if the customer actually speaks for at least 250 minutes - as well as certain benefits from purchasing a device from the company or elsewhere.

The new virtual companies offer simple and easily calculated plans based on actual usage, as opposed to the older companies that sell blocks of air time in varying odd shapes and sizes. While one sells a package of 120 call minutes and 120 text messages with 250 megabytes of Internet surfing, another provides 150 minutes and 150 messages with 100 megabyte surfing capacity. Going over the limits could cost dearly, but not making full use of the package could prove a big waste of money over time.

To examine the plans in a fairer way we devised a list of usage patterns that don't exactly fit the set packages sold - similar to the actual situation in which customers would likely find themselves - and calculated the cost at each company. By the way, a simple comparison between companies and plans based on usage for anyone unconcerned with limited discounts, special rebates, or other gimmicks can be viewed, in Hebrew, at - which we found to be reliable.

Rami Levi and Home Cellular present the only worthwhile plans for light users. For example, talking 100 minutes per month and sending out 50 text messages costs about NIS 44 at these virtual service providers, but several times that amount at the traditional cell-phone operators. Light users debating between the two virtual companies should take into account that Home Cellular connects through Cellcom's grid, while Rami Levi works through the Pelephone network - which is only compatible with third-generation devices. Anyone who doesn't have such a phone and is looking to switch to a virtual operator can save the expense - NIS 350 for a simple 3G handset - by choosing Home Cellular.

Only Partner geared up to compete

The virtual companies are also fitting alternatives for average users. A typical usage pattern of 300 minutes, 120 messages and 250 megabytes of Internet fits Home Cellular best of all: Just NIS 124. Rami Levi and Partner offer plans at only a few shekels higher, while the others are at least 50% more.

Cellcom and Pelephone have clearly abandoned the light and medium-use segment and refocused their efforts exclusively on smartphone owners and heavy users. But even here their offerings are nothing to write home about, considering that Cellcom's celebrated deal is limited to a 12-month period and Pelephone's requires the customer to use up 250 minutes of talking time.

Partner is apparently the only one of the big three that did its homework in preparing for the new competitive terrain. With Orange Clear, a new range of straightforward calling plans launched four months ago, the company exhibits the basic understanding that simplicity is now the way to go. It also stopped discriminating between handset devices and pegging price perks according to their value. New customers presenting a receipt on any new phone bought within the past two years are given a set discount with no expiration date.

Consumers even report that if they forgot to show a receipt, Partner reps keep calling to remind them to fax one in so they can start enjoying the fat discount.