December 12, 2003
The Communications Ministry will postpone opening the international calling market to free competition until at least 2005 if a proposal submitted yesterday by senior ministry officials to Minister Ehud Olmert is accepted. A ministry spokeswoman stressed that no decision has yet to be made; however, since Olmert is known to favor a delay, he is expected to adopt the proposal.
The international calling market originally was set to be opened on January 1, 2004 to any company that met the requirements for a license. But two months ago Olmert froze this decision, fearing that the three current international calling comapnies would be hurt by the move.
The proposal submitted yesterday by ministry director-general Uri Olenik and his deputy Assaf Cohen, would still permit a few small operators to receive licenses next year. However, the country's three leading cellular telephone companies - which are expected to be the existing providers' main competitors - will not be allowed to enter the market until at least 2005.
The current providers had argued that if cellular companies entered the market, they would make international calls part of a total package and then provide them virtually at cost, while using other parts of the package to cover their expenses. Since they would never be able to match this price, they would collapse.
Olmert, convinced by these arguments, decided to postpone the change and asked Olenik and Cohen to examine the issue again.
They considered two options. One to require companies to keep their cellular and international businesses separate. The second option was the one they chose: delaying the cell phone companies' entry into the market.