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(photo credit: Bloomberg)
As the country's fixed-line and cellular service companies make final preparations for the start of the Communications Ministry's long awaited number portability program on December 1, analysts differ on the affect the program will have on the country's communications sector.
"We can clearly divide the leading communications companies into two distinct groups ahead of the portability program. We have those companies that will go on the offensive and those that will be more defensive," Ori Licht, a telecom analyst at IBI, told The Jerusalem Post. "The aggressors have been waiting for this decision to take effect and have been actively marketing themselves in order to grab more of a market share. The more defensive-minded companies will be looking to not spend money in big advertising campaigns and hope to wait out the expected rush once the law comes into effect."
Number portability will allow cell phone subscribers to take their numbers with them between phone companies within three hours of making the request. The ministry suspects that the lack of portability is one of the main barriers preventing consumers from switching providers.
The portability plan was meant to start in September 2006, however no communication companies met the deadline. Led by Bezeq, a group of companies petitioned the High Court of Justice to overturn a government decision obligating that start date, which prompted the Communications Ministry to open a dialog with all the country's phone companies - cellular, landline, and cable - in order to find a realistic date for implementation of the portability plan while still insisting that it must start in 2007.
They settled on September 2007 but the Ministry was forced once again to delay the program's start after Bezeq said over the summer that it would not be able to meet the ministry's preferred dates of September or October. If the companies do not meet the December deadline, they will be fined NIS 300,000 for every day they are late.
"Right now, the date of December 1 is final and we expect that all the communication companies will comply with this date," said a Communications Ministry spokesman. "However, we have not received confirmation from any of the companies that they have completed the process and they are all still finishing the implementation of the changes."
Among the largest phone companies, Licht believes HOT and Partner will reap the greatest benefits from the number portability program.
"HOT has been upgrading its services and has run an aggressive marketing campaign," he said, "while the tagline on Partner is that it has become one of the strongest players in the communications market today and I expect that the new law will only serve to strengthen Partner's market share."
Licht also singled out Internet Gold as a company that should garner more of a market share following the introduction of the number portability program.
Meanwhile, traditional powerhouses such as Bezeq and Cellcom, said Licht, will suffer as a result of the legislation, anticipating that Bezeq will lose customers to HOT and Internet Gold.
Cellcom, even though it does not expect to be dragged into a price war with its competitors, woke up "too late to compete in certain areas with the other leading providers," he added.
Tsahi Avraham, communications and technology analyst at Clal Finance Batucha, however, is not so sure that Cellcom and the other leading companies will be able to avoid an unwanted price war.
"The one big uncertainty about this program is what kind of price battles the big companies will get into," Avraham told Post. "Investors are worried that number portability will lead to the market deteriorating into a price war, and while I think that customers will switch between companies, I don't think that the program will create such a revolution or change the whole market. Churn rates will be up in all companies, but in the end it's a zero-sum game because the number of customers switching will pretty much balance out."
Avraham though, similar to Licht, does expect Partner to gain market shares over its competitors, while he predicts that Pelephone will be in a "higher risk category" and a "bottom position" against competitors because Pelephone customers can't use their handsets abroad and the company does not sell Nokia models.
A Pelephone spokeswoman, however, told the Post the company has made the appropriate changes and is looking forward to December 1.
"We will attract more customers because we can offer more options for them to choose from," she said. "We have invested a lot of money in building a better selection for them and we think that our investments will earn us a bigger market share."
Bozhena Gandelman, a telecom analyst at Psagot Ofek, also expects to see a rise among the as-to-now less heralded communication companies.
"I think that HOT, which already has close to 40,000 new subscribers over the last quarter, will continue to take a portion of Bezeq's customers, while Internet Gold has also put itself into position to grab a bigger market share," she said.
She does not, however, expect to see the outbreak of a price war.
"Each of these companies is a good company and I think that the owners of the companies will be able to maintain cash flow without having to drop their prices too low."