'Aggressive Regulator Should Force Competition on the Cellular Market'

Of all his more than 200 businesses spanning tourism to media to environment to stem-cell research and healthcare, Richard Branson is probably best known for his airline, Virgin Atlantic, and his cellular phone service. Though almost 60 years old, Branson seems to have the same keen appetite for life - be it water-skiing with a nude supermodel on his back or building his empire.

He doesn't plan to do much empire-building here, it seems, though he repeatedly says during his interview with TheMarker that he's open to ideas. "We've had some approaches from businesses, and we're certainly open to talk. And I'm sure that in future years we'll do a lot more in Israel. But there's no other major project in planning in the immediate future," Branson says. The thought of buying El Al leaves him clammy, but one possibility that does intrigue the billionaire businessman is creating competition in Israel's insular cellular industry.

Israel has three big cellular service providers: Pelephone, Cellcom and Partner Communications, each of which controls roughly a third of the market. There's a fourth, small player - MIRS, which the three are contending to buy from Motorola. The prices the trio charge consumers are similar and their profits are sky-high.

A fourth operator is not the way to turn the cellular sector competitive, in Branson's view. "I think the regulator has to force competition as they've done in places like France, well, pretty much every other country in the world," he says. And the way to go is MVNOs: mobile virtual network operators.

That's how to bring in competition fast, he explains.

"There's no need for the MVNO to build a new network. They can piggyback on networks already created. I would suggest that the regulator should quickly get three new MVNOs, and that would bring about new competition and lower prices," he says. "We've set up MVNOs in America, France, England - quite a few countries around the world. In each occasion it's brought the prices and the cost of calls down a lot."

Israelis, who adore their cellphones, would presumably appreciate that. So would the provider: All the MVNOs in which Virgin is involved have made money, Branson says. Some it owns, in some it gets brand royalties, but in all instances it's involved. In any case, key to the idea is a regulator with teeth, ensuring that Big Cellular doesn't hamstring the minnow MVNOs. And if the Israeli regulator opened up the Israeli cellular sector, says Branson, then, "We may well be interested."

In any case, Branson isn't here to do business. "We're here basically supporting The Elders. The Elders is an organization that was set up by Nelson Mandela and Graca Machel. They're 12 wise women and men who have high moral authority, who care about the world, who are not affiliated with any countries or any political organizations, and who want to see if they can use their moral authority to try to help resolve conflicts," he says.

Three of the Elders, Kofi Annan, Machel and archbishop Desmond Tutu helped resolve the conflict in Kenya last year before it could spiral out of control following an election dispute, says Branson. They were involved in forging a coalition government in Zimbabwe, and over here, they hope to bring fresh energy to the peace process.

"They will see if they can nudge the process forward into hopefully a situation in which Israel can be around in 500 years' time, and Palestine can be around in 500 years' time, and people can be living in harmony. That's what they would like to see," Branson says.

This is Branson's first visit to Israel, though his fellow traveler, eBay founder Jeff Skoll, a fellow backer of the Elders and a Jew, has been here many times.

Mandela may have credit for founding the Elders, but actually it was the brainchild of Branson with singer-songwriter Peter Gabriel, Skoll says. "[They] felt the world was lacking the opportunity to tap into the wisdom of senior people who had accumulated a lot of wisdom and could share that wisdom in ways to deal with some of the most pressing and important issues of the world," Skoll says.

The Elders, in a word, care. They care nuclear weapons, climate change and the Middle East.

As for Skoll, he's been interested in the region since childhood. "I was a Jewish kid growing up in the suburbs of Montreal, Canada. At 8 years old, I went around collecting money for Israel in a largely Jewish neighborhood. This was after the Yom Kippur War." At the time he says he did not really know "that there was another perspective on this. I would knock on some doors and get them slammed in my face, and later I learned that they were Palestinians, or Jordanians, or Egyptians."

Now the question is how to help "these cousins" live together, Skoll says, for the greater good of all. "Richard and I are here to support the Elders, to listen and learn, and hopefully to follow up later on with some concrete things that we learn along the way," he explains. Branson feels he's visiting in a supporting role: The Elders should do the talking on the conflict. That said, he shares his opinion anyway.

"But as human beings, and all of us wish to see a resolution. Because if you don't have a resolution, I think something ghastly could happen one day. And apart from something ghastly happening one day, for the sake of individual human beings and children and mothers, etc, there must be a resolution to this problem.

"Talking to young people in Israel, and young Palestinians, they obviously want to see the same. So I think the older politicians have got to compromise. And there's got to be give and take. And I think that two states almost definitely need to be created. And I think there's an enormous opportunity over the next 18 months for resolution. I know that's been said for the last 40 or 50 years, but there is a great chance right now, and I think most everybody's got to try to grasp that chance."

Branson takes heart from the fact that the seemingly hopeless Irish conflict was finally resolved after sputtering on for decades. George Mitchell, Washington's envoy to the Middle East process, was involved in brokering peace there. Now he's involved here.

"The idea that Ian Paisley is now best friends with somebody that was viewed as a terrorist. They all drink together, they laugh together, they - I don't know if they play golf," Branson laughs. "But if they played golf they'd be playing golf together. It just shows what is possible."

One thing in which Branson famously excels, aside from business, is public relations. He's a master. And in his expert opinion, on a PR basis, the endless Israeli-Palestinian feud has not been good - "zero out of 10," as he delicately puts it. He notes a story from last week, of Palestinian families evicted from their homes. He doesn't know the details of the story "at all," Branson says - but he does think he read that the families were in the middle of their dinner. "Can you think of a worse PR story for Israel?" he asks.

"The best way of sorting out getting good PR is by action. Virgin as a company, as a brand - we're only as strong as what we do. If we don't behave in an ethical way, if we don't behave in a way that we can sleep at night, then the brand will be damaged, and our PR will be damaged," he explains.

Skoll agrees that Israel doesn't do the best job it could with public relations. "We live in such an interconnected world now. And there are many things that actually go right here. Many things go well. Israeli hospitals see sick Palestinians. Israeli ambulances go into dangerous areas to rescue injured people. The humanitarian work, the peace organizations, the NGOs - there are many people on the ground here doing good things. For some reason we don't hear as much about those stories," Skoll says.

What the world does hear about, loud and clear, are the stories about families being evicted, or incidents at checkpoints, Skoll points out. "I think it does behoove the brand of the country to recognize that these little things are not helpful. And that there are good things that the country does that really need to be told."

Consistency is of the essence, adds Branson. "If hospitals are seeing Palestinian people, they must be consistent. And there mustn't be a situation of suddenly, pregnant mothers who cannot be seen. It must be consistent. Otherwise you lose the moral high ground."

Public relations is all about branding. What does brand Israel stand for, in the eyes of the world? That has changed over time, Branson explains.

"I think it's something similar to what happened after 9/11. You know after 9/11 the world had enormous sympathy for America, and you know that sympathy was somehow lost. And obviously after the Second World War, the world had enormous sympathy for the Jewish people. Over a number of decades, that sympathy has been lost .... You've got a great country, but you've just got to hold the hands of your neighbors, and then you'll get back on top again."