Minister of Communications Moshe Kahlon is not taking a breather after the big bang in Israel's mobile market. The details of how the reform came about are not yet available, but it can be said that he found the courage and initiative to act against the opinions of top ministry officials and to join forces with the Ministry of Finance officials who pressed for a reform that would serve as an example for all ministers.
Kahlon told "Globes" about his next reforms, what he thinks about competition, and the threats by the veteran carriers that they cannot continue making investments at such low consumer prices.
"Globes": What about other fields for which you are responsible?
Kahlon: "I have no doubt that the moment internet-protocol television (IPTV) enters the market, which won't take long, prices for TV services will plummet. There is no reason in the world to pay NIS 300 to HOT or YES (cable and satellite broadcasters, respectively). That's a lot of money, and IPTV will give them competition. I have no doubt about it. My goal is 4 TV companies - 2 IPTV, and 2 cable or satellite."
What lesson have you drawn from the dramatic changes in the mobile market for government work and the regulator's work?
"I have learned no particular lesson. As an economics minister, when I took up my post, I saw the failures, and what needed to be done, and I and my team realized that there had to be market reform. But I must tell you one more thing: I couldn’t have done this without the support of the prime minister. My conclusion on copletion of the reform is that competition is necessary in every sector of the economy. Every sector needs reform and competition. The basic answer to the high cost of living and consumers' complaints is competition, and the government should implement consumer reforms that meet all these responses."
Did you think that what we saw yesterday would be so dramatic?
"Yes. You sat with me at the press conference, when I said two years ago that I expected prices to fall by 50%, and everyone thought that I was crazy. I said it. It's documented."
Do you think that this competition can really exist, and that we're not just seeing rapid market penetration?
"I have no doubt that the market can sort itself out, but in my opinion, the level of prices is reasonable. Prices in Israel are more or less the same as around the world. We're talking about €20-25 per plan, which is not very different from other countries."
What do you say to the veteran carriers who claim that it will be hard for them to continue investments at such low price levels?
"I say that competition will force them to invest, as well as providing good service and good prices. The companies that won't invest, won't progress or develop, and they'll lag behind. In my opinion, no normal company wants to lag, so I'm less bothered. When there's competition, it forces you to invest. When there's no competition, it's the best incentive not to invest, because your customers are your captives, they have no options, they have no choice, so companies don’t invest."
Published by Globes [online], Israel business news - www.globes-online.com - on May 15, 2012
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