Communications Ministry asks Bezeq to cut Internet fees 40%

Ministry says current price illogical, fails to comply with directives that price of a line must be fair and lower than the payment for a combined telephone and ADSL line.

September 8, 2011 07:22
1 minute read.
Bezeq Israeli Telecommunications Corp.

Bezeq Israeli Telecommunications Corp.. (photo credit: Ariel Jerozolimksi)

The Communications Ministry has asked Bezeq Israeli Telecommunication Co. Ltd. to cut its Internet access (Naked ADSL) fees by 40 percent. In a letter to the company, the ministry questioned Bezeq’s conduct in setting the price of an ADSL line at NIS 25 per month over the past three years.

The ministry said the price was illogical and failed to comply with its directives that the price of a line must be fair and lower than the payment for a combined telephone and ADSL line.

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Naked ADSL is a service that Bezeq must offer to subscribers who want Internet access from the company but a telephone line from another carrier. The Communications Ministry estimates that Bezeq has cut prices for its services by 40%, but not for Naked ADSL. As a result, a subscriber pays about NIS 20 per month for a combined telephone and ADSL line.

Therefore, the price charged for a special ADSL line is illogical, and subscribers who want to obtain a telephone line from another carrier find it difficult to accept offers because other Internet service providers cannot match Bezeq’s price cuts. The result is that Bezeq forces other carriers to lower prices for their telephony services because it will not lower the price for Naked ADSL. This means that other carriers cannot compete against Bezeq and the telephony churn rate from Bezeq to them is falling, jeopardizing the competition that the ministry wants to promote in the telephony market.

The Communications Ministry has not directly ordered Bezeq to cut its Naked ADSL price because it prefers that the company do so voluntarily. Under normal circumstances, the ministry would conduct a cost review of the line to set the cost of the service. The ministry currently lacks the means to do this, which is why it is asking Bezeq to honor the fact that the price of a designated ADSL line is unrealistic and to cut the price accordingly. If Bezeq refuses, the ministry said it would use the Hayek Committee’s work to estimate the cost of the Naked ADSL service.

Bezeq said in response it was studying the letter.

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