Ministry of Communications director general Shlomo Filber today announced that he was fining Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) NIS 3.4 million for violation of the payments regulation and damaging competition. According to the Ministry of Communications, Bezeq violated the regulation through its benefits for business customers, and by charging its customers for phone numbers only if they switch to another company.
The Ministry of Communications explained that the fine was imposed because Bezeq charged its customers only half of the price for allocating a phone line, and charged the other half only if a customer switches to another company. The Ministry of Communications believes that this constitutes restraint. It is unclear how many of the fines against Bezeq and other operators levied by the Ministry of Communications were really paid.
After innumerable complaints, pleas, and requests, the Ministry of Communications Telecommunication Supervision Division has ordered Bezeq to halt its discrimination against its competitors' customers. Bezeq has been refusing to transfer information about customers it recruits for the competitors in the framework of unbundling in the wholesale market, in which Bezeq recruits customers for those competitors, thereby becoming the "owner" of the customer, rather than merely the provider.
As reported exclusively in "Globes," Bezeq acted on its own authority by unilaterally halting the transfer of particulars of customers that it was recruiting for the simple reason that it regarded those customers it was recruiting for competing Internet providers as being recruited by them later as subscribers in the framework of the wholesale market.
As a result, Bezeq decided to stop transferring the particulars of the customers it was recruiting for other Internet providers to those providers, so that the providers would be unable to contact them and offer them comprehensive packages including Internet services and infrastructure at a reduced price, in accordance with the new reform in the landline market.
Bezeq's policy is explicitly forbidden under the terms of its license. After many complaints, the Telecommunication Supervision Division decided to respond this week by notifying all Internet providers and Bezeq that it was considering putting a stop to unbundling. Meanwhile, until its consideration of the matter is completed, it ordered Bezeq to transfer complete information to the Internet providers, so that they could provide service to customers.
Before the landline telephone reform, a customer would contract with an infrastructure company and an Internet provider separately. Unbundling was allowed for Bezeq in 2010 as part of the regulatory concessions it received, in which it marketed all the Internet providers, and received fees for it.
Customers would call Bezeq, which offered them the bargains of all the providers, and took responsibility for the agreement and the billing. Up until the reform, Bezeq sent the providers all the subscriber's particulars, according to the law requiring the providers to provide various services to the customer, such as a mailbox, e-mail address, etc.
The reform, however, led to a situation in which unbundling became a competitive tool for Bezeq against its competitors. The Internet providers began to recruit customers for their bundles, which included Internet plus infrastructure. Bezeq lost customers and revenue in this way, because it received NIS 40-50 (depending on surfing speed) for each customer switching to an Internet provider's bundle in the framework of the reform, instead of the NIS 100 or more that it received before the reform, or through unbundling.
The Internet providers exploited unbundling by offering customers low prices. After the customers joined Bezeq, they received offers of larger discounts to switch to Bezeq's competitors. Some of the competing providers even denied what was happening, claiming that the measure was part of the competition in the market, following Bezeq's measures as part of its creation of virtual Internet providers to recruit subscribers for Bezeq, such as 099 and 011.
The result of the Ministry of Communications' failure to intervene in the matter and Bezeq's decision to stop transferring information to providers have become more extreme, after Bezeq also completely stopped marketing unbundling for Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) through 012 Smile and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) through 013 NetVision Ltd. in recent weeks. That was Bezeq's revenge against them for their complaints against it.
The Ministry of Communications has now decided to step in. It first ordered Bezeq to begin to supply the Internet providers with all the information they need about the customer. Bezeq's measure in effect caused them to violate the terms of their licenses, which required them to provide services to customers, while they could not do this without the customers' particulars.
Published by Globes [online], Israel business news - www.globes-online.com - on November 19, 2015
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