Will portability make a difference?

Analysis: The impact the program will have on Israeli consumers is unclear.

By MATTHEW KRIEGER
November 22, 2007 22:58
2 minute read.
Will portability make a difference?

cell phone 88. (photo credit: )

 
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While the Communications Ministry has called its number portability program, set to be introduced on December 1, a "revolution," the actual impact that the program will have on Israeli consumers is unclear. The aim of the program is to allow customers to keep their phone numbers while switching between phone service providers, both fixed-line and cellular, within three hours of making a request to the company. The Communications Ministry has long believed that the lack of portability is one of the main barriers preventing consumers from switching providers. Over the last couple of months, the communications market has seen a surge of activity among phone providers, as each company has attempted to expand their customer base by offering attractive deals to current customers and incentives to customers who switch once the program begins. "Any opening of the market is good for customers," Bozhena Gandelman, a telecom analyst at Psagot Ofek, told The Jerusalem Post on Wednesday. "However, while we haven't seen these types of offers from companies for two years, we don't really know if they are making these offers now in order to compete for more customers or just because their costs have gone down." Additionally, explained Gandelman, the immediate impact of the program will be limited, as most Israeli cellphone consumers are locked into long-term contracts, estimating that approximately one-third of consumers are closed into such contracts. Should customers choose to terminate a contract before its expiration date, they will be faced with steep penalties. Another factor that will limit the impact of the program is the fact that the country's leading cellular providers - Partner, Cellcom and Pelephone - charge similar prices. "Prices aren't so high to begin with, something which makes it hard to predict what will happen when the program is started," she said. Meanwhile, others are taking a different approach. "While a revolution is a strong word, this program will have a big effect on the cellular market - keeping your number is very important for consumers - and it will give more power to the customers," said Tsahi Avraham, a communications and technology analyst at Clal Finance Batucha. "This program will definitely have an impact in the short term and will bring down prices in the market," he added. According to Avraham, cellphone owners switch their handsets every two years, leading to a situation where, within half a year, some 25 percent of Israeli cellphone customers will have the option of switching providers while retaining their number. "It doesn't matter that many are locked into long-term contracts. As soon as a small percentage of customers begin to be able to choose among the different providers while keeping their number, it will make a difference."

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