Communications Ministry set to cancel connectivity fees

Netanyahu, Kahlon  Knesset; Ouria Tadmor
Netanyahu, Kahlon Knesset; Ouria Tadmor

The connectivity fee in Israel's mobile market is currently NIS 0.06 per call and NIS 0.01 in the landline market.

Israel's Ministry of Communications is set to hold a hearing on cancelling connectivity fees between telecom operators in both the landline and cellular markets. The hearing is ready to be convened and at the moment all parties are simply waiting for the draft amendment of the operators' license to be completed so that it can be presented at the hearing. This will bring about a substantial change in the market that many believe should have been implemented a long time ago.

Connectivity fees are payments that are passed on by one operator to another for incoming calls between those two operators. The connectivity fee in the mobile market is currently NIS 0.06 per call and NIS 0.01 in the landline market. Estimates are that each of the major mobile operators in Israel's telecom market earns NIS 20-30 million annually from connectivity fees.

The last time connectivity fees were revised was in 2009 and the Ministry of Communications was meant to look at them again in 2014. This review was not carried out and consequently connectivity fees in the cellular market are currently higher than the real cost to operators.

The Ministry of Communications now plans cancelling the connectivity fee because at such low level prices there is no point in hiring an international economic consultancy company to conduct a study and find that the cost is close to zero.

In addition, in light of the major shift from telephone calls to web based communications, and taking into account that the mobile operators will soon be switching to more advanced Internet-based protocols, there is no reason to continue the current connectivity model from the traditional telecom switch-based market. The move will also save telecom operators costs in terms of the more complex billing involved.

Even so, the major telecom operators are concerned that scrapping connectivity fees will intensify competition and bite into their revenue. The smaller operators, however, will likely profit from the change. Companies like Rami Levy Communications and Telzar 019 have a higher proportion of outgoing calls and will save the connectivity fees they must pay and will be able to continue pushing prices downwards.

Published by Globes [online], Israel business news - www.globes-online.com - on June 23, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Netanyahu, Kahlon  Knesset; Ouria Tadmor
Netanyahu, Kahlon Knesset; Ouria Tadmor
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