(Don't) phone home

Politicians and educators are concerned about the economic and social effects of mobile phones.

By ZIV HELLMAN
mobile (photo credit: marc israel sellem)
mobile
(photo credit: marc israel sellem)
THEY ARE EVERYWHERE. WAITING FOR THE BUS, on the bus, getting off the bus; lining up for the cinema, sometimes during the film, and as soon as the film ends, as the credits are still rolling; as they close the door to the plane before take-off and before they open it after landing: A phone is always switched on, only a few paces away. Everywhere you go, someone is providing the person on the other end of the line – and everyone in the vicinity – with an endless stream of verbal details.
In theaters and lectures, people have generally learned to tone down the loud ring tones, but that does not stop them from silently sending text messages, or even Web surfing, while the show goes on.
People in Israel are seemingly organically attached to their mobile telephones. The extent of mobile telephone penetration in Israel is among the highest in the world. In fact, there are more mobile phones than people, with more than 9.3 million phones in a country with a population of about 7.3 million. That translates into 127.5 percent penetration, a bit less than the comparable figure in Germany, Italy and Portugal, but ahead of Denmark, the Netherlands, and the United Kingdom. The numbers in North America do not even come close: cell phone penetration in the United States registers at 91 percent and in Canada it is a paltry 64.2 percent.
“Israeli society is very technology-friendly, so it is not surprising that people here have readily adopted cell-phone use. Internet penetration has also been very high,” says Tamir Leon, an anthropologist who is the founder of Ethos, an applied anthropology firm. “The mobile telephone also fits well with general Israeli personality traits: it is a tool for immediate access and informality. It enables much more narrowing of personal space than fixed land-line telephones.”
With such evident exuberant demand, it is not surprising that over the past decade providing mobile service has been a very lucrative market in Israel. The total telecommunications market has surpassed 29 billion shekels ($8 billion) annually. Wireless communications comprise about half of the telecommunications market and virtually all of the wireless profits have been raked in by three major providers in what has been a remarkably stable and nearly symmetric arrangement, with each competitor holding approximately a third of the market.
Cellcom Israel, which is traded on the New York Stock Exchange, has the largest market share, with 34.6 percent; trailed by Orange, owned by Partner Communications (traded on the NASDAQ) with 32 percent; and Pelephone, a subsidiary of Bezeq (traded on the Tel Aviv Stock Exchange) with 28.9 percent.
It might seem that a market with 127 percent penetration would be saturated and would no longer serve as a potential source of growing profits. But in the world of high-tech and communications, technological advances have a tendency to create an ever-expanding market. Double-digit growth in new subscribers naturally began to taper off in 2005 along with market saturation, but mobile telephones, of course, have long ceased to be merely instruments for talking. Today, the big money is made in the margins provided by value-added services such as mobile Internet access, ring tone sales, text messaging, video games and the brave new world of “apps” for smart phones. Given the dizzying pace of new technology offerings, with a seemingly revolutionary new phone appearing on the market at least once a month, one can expect the revenue party for mobile carriers to continue for a long time.
Yet, through the chatter, it is possible to sense that the mobile phone market is about to undergo a period of readjustment. To no small extent, the changes are due to the determined efforts of Minister of Communications Moshe Kahlon to introduce more competitiveness into the relatively cozy three-way local market, including preparations for introducing more competing companies.
And at the same time, observers are beginning to wonder, sometimes with alarm, about the effect the mobile communications revolution is having on children, who are coming to regard a four-word text message as the epitome of heart-to-heart interaction.
ALMOST AS SOON AS HE TOOK OFFICE TWO YEARS ago, Kahlon made it clear that he had an agenda with regards to the mobile market, terming the Cellcom, Pelephone and Partner threesome a “controlling group” that stifles competition. Following up on a previous government initiative that permitted consumers to move from one carrier to another without changing their mobile numbers, intended to temper subscriber “lock-in” effects, Kahlon’s first major initiative permitted mobile virtual network operators to enter the market. Virtual networks are resellers who purchase cellular capacity from facilities-based carriers at a wholesale discount and then resell the service to retail consumers. Kahlon has stated that he expects virtual networks eventually to expand to at least a 7 percent market share.
Other Ministry of Communications initiatives followed, many going into effect on January 1, 2011. A central move, approved into law in December 2010, requires that beginning on January 1, 2011, all mobile telephones sold in Israel must be sold “unlocked,” enabling all purchasers of mobile telephones to choose their carriers independently of the handset. Locking telephones was an invention of mobile carriers, intended, as the name implies, to “lock” consumers to their service contracts. A locked phone only recognizes Subscriber Identification Module (SIM) cards issued by a particular carrier; an unlocked phone recognizes any SIM card inserted into it. There is a clear consumer benefit to having the choice of a carrier offering the best service contract, but there is also a case made by mobile carriers that locking telephones enables them to sell handsets at greatly reduced prices, because knowing that they can lock purchasers into service contracts enables them to sell the handsets at a loss that they make up via service charges.
The new law not only requires all new mobile telephones sold in Israel to be unlocked to accept all SIM cards, it also applies retroactively, in the sense that consumers in possession of locked telephones sold in the past have the right to demand their mobile carriers to unlock them, free of charge, knocking out the gray market of hackers who specialized in unlocking telephones for a fee.
Mobile carriers are now also forbidden from blocking any Internet or Voice-Over IP application over their airwaves, to prevent them from offering only applications that they own. Nor are carriers permitted to charge differential tariffs for accessing different Web pages over their airwaves, thus preventing them from favoring certain sites over others.
Another mobile carrier monopoly now broken is the new regulation permitting mobile handset importers to bring into the country any device that meets Communication Ministry standards – carriers can no longer limit the importation to devices produced solely by makers with whom they have signed contracts.
Lawmakers are also imposing new rules applying to mobile contracts and fee changes by carriers, to go into effect in March. The rules are intended to increase competitiveness in the mobile phone market, and to lay the groundwork for the entrance of new competitors into the market, after more than a decade in which only three national mobile carriers, Pelephone, Orange and Cellcom, have carved up the market between them.
Among the new rules is a requirement that customers entering into a service subscription with a mobile carrier be given copies of their service contracts upon demand. Customers must also be given one-page summaries of their service contracts spelling out the main elements of the fees charged and the service provided, relieving them of the burden of wading through multiple pages composed in thick legalese.
Customers who have purchased limited Internet access contracts must now be informed by text message when they are approaching 95 percent of the access they have paid for. This is intended to avoid situations in which customers unwittingly ran over the number of pre-paid Internet minutes and were then handed exorbitant bills for the overtime they racked up. And customers must be informed of changes in mobile phone rates at least 14 days before they go into effect.
Nor is the Communications Ministry resting on its laurels. It intends to impose more new regulatory rules in the coming year, including a requirement that customers be offered mobile Internet connection packages that do not necessarily include other expensive services, such as GPS access, music access and so on, if they prefer Internet access alone.
At the same time, land-line usage is expected to get a boost due to reduced interconnection fees, the tariff charged to customers when they call between networks, as set by the Communications Ministry. Bezeq, main land-line telephone provider, is reducing the consumer end-cost of making a call to a mobile number to 14.74 agorot (4 cents) per minute, down from 35.48 agorot (9.9 cents). This makes calling from a land-line a more attractive option compared to using a mobile phone and may cause a shift in usage patterns. The three mobile telephone operators may lose as much as 930 million shekels ($310 million) annually due to the interconnection fee reduction.
The muscular regulatory attitude of the Ministry of Communications has not gone unnoticed in the market. Over the past year, shares in both Cellcom Israel and Partner Communications fell, although not by a very large margin, with Israeli mobile carriers consistently offering higher returns than comparable companies in many European countries. Hutchison Telecommunications International, a Hong Kong-based company, made a tidy profit selling its 51 percent share in Partner Communications for $1.4 billion in 2009. Partner recently acquired Internet service provider 012 Smile Telecom Ltd., in an effort to diversify its services and holdings. According to reports in the Israeli media, Cellcom is also looking into merging with 013 Netvision Ltd., an Internet service provider; both Cellcom and Netvision are owned by the IDB Holding Corporation.
DESPITE THE CLEAR BENEFITS that mobile communications confer on society, there are some who warn that their proliferation is having negative consequences, especially for young children.
“Modern telecommunications gives us access to an inordinate amount of knowledge – but most of it shallow knowledge,” says Eyal Reiter, who leads workshops for children at Hevroota, a childhood education company. “We see children who say that they have ‘visited a friend’ when what they mean is that they had an instant exchange with him or her through Facebook or a mobile telephone text message. This is worrying.”
“A great deal of communication nowadays has ceased to be face-to-face communication. Interpersonal interaction, the way we once knew it, has changed dramatically,” laments Reiter. “It now consists very often of brief, shallow messages lacking deep content. What would once have been complex descriptions of experiences are now reduced to a one-sentence text message. Children spend more time staring at screens, either via computers or mobile telephones, than they do sleeping and eating.”
Anthropologist Leon concurs. “The main problem is that communication tends to be ‘flat’ without a real sharing of extended experiences,” he tells The Report. “Communication becomes compressed into short text messages.
Attention is chopped into brief bursts, instead of being extended over a long period of time. Young people are living their lives in brief pieces of time, switching their attention from one thing to another. They are in one place, but in their minds they keep moving to another place. The constant shifting of attention has long-term effects.”
Alarmingly, Leon sees even language changing along with these new developments. “Languages always change from one generation to another, that is natural,” says Leon. “But children are beginning to talk to each other the way they write in short text messages. That means that their language tends to be uninflected, brief, with little range of emotions, very little true sharing of descriptions of experiences. Direct eye contact is often avoided in such children. They seem to think that if they smile at the end of a sentence, it is like inserting a smiley to a text message. There is a bilateral dialectic between spoken and written language. That dialectic has always existed, but it is now being seen in text message styles spilling over into spoken language.”
For remedying this situation, both Reiter and Leon recommend actively working towards inculcating more personal interaction among children – away from the mobile telephones.
“We cannot go back to an age before the mobile telephone, nor do we want to. Overcoming this requires first of all being aware of it,” recommends Reiter. “Secondly, we need to give children frameworks, such as the old youth movements, in which they interact in the physical world, not the virtual world alone. Getting children into playing on sports teams is also important, to get them feeling what it is like to participate in something as a team, instead of as isolated individuals, who may physically be near each other but far apart because they are focused on the small screens they have in their hands.”
Leon is even more emphatic in insisting on separating children from their beloved phones. “No child prior to high school ‘needs’ a mobile telephone,” he insists. “Concerned parents, who feel a need constantly to be in touch with their young children in school, need to get over it. They should not project their fears on their children. Mobile telephones should be entirely banned in all schools, K-12. And that does not mean telling children to switch off their telephones during class hours. It means no telephones at all on school grounds. This is sufficiently serious that it should be discussed as a potential law by the Knesset.”


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