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Sunday, December 13, 2009

Kahlon: There's no competition in Israel's cellular market

There's no competition in Israel's cellular market, Communications Minister Moshe Kahlon (Likud) told TheMarker over the weekend.

"I started this post nine months ago with a lot of things on the table - three large cellular companies that pretty much split the market with no competition," he said. Advertisement

When asked whether he considered this a cartel, Kahlon responded, "I'll call it a controlling group, if that won't get me into court."

"There are many serious matters that haven't been attended to," he said. "Some ministers are concerned about blocking certain Web sites and telephone numbers and that's nice, but I have other matters," Kahlon said, referring to his predecessor, Ariel Atias of Shas. "I want new technology, competition."

He added, "We're trying to figure out how to develop competition, in particular in the cellular market. I understood that around the world, other operators, including virtual operators, can create competition, which improves things for the consumer and certainly pushes down prices," he said.

Israel will be offering its first licenses for mobile virtual network operators, known as MVNOs, at the end of the month, he said. "Dozens of companies are interested, and I believe the [licenses] will be sold. It's not certain that the MVNOs will reduce prices entirely, but our research shows it could get a market share of 7%, or 630,000 customers, and that will do something to the market - start bringing in competition," he said.

Currently, Cellcom has 36.2% of the market, Orange (Partner) has 33.4% and Pelepone has 33.2%. Israel's fourth cellular service provider is MIRS.

"Another thing I had to handle was the issue of the fifth cellular service provider. We've issued a tender and on December 31, we'll get preliminary offers," Kahlon said.

"The meaning of the MVNO is that the companies are required by law to sell minutes to other providers at reduced prices. The dilemma is in the price. If Cellcom sells minutes for 20 agorot and sells us minutes for 18 agorot, the change will be pointless. The law says we'll be involved in the price. The aspiration is that the minutes will be sold and purchased out of free will, but if that doesn't happen, then I am authorized to intervene and set the price," he said.

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