For a cheaper, better mobile phone service

No drastic reductions in what we spend on our cellphone bills should be expected in the immediate offing, despite the announced entry of 2 new cellular providers.

Cellphone user 311 (photo credit: Ariel Jerozolimski)
Cellphone user 311
(photo credit: Ariel Jerozolimski)
It’s probably too soon to crack open the champagne bottles. No drastic reductions in what we spend on our cellphone bills should be expected in the immediate offing, despite the announced entry of two new cellular providers into the fray and the heady promises of sharply lower prices as a result.
To begin with, Mirs and 018 Xfone, which this week won the tender for two wireless frequency bands, will likely not appear on the marketplace before the second half of 2012.
That’s not to say, however, that the existing three providers – Pelephone (owned by Bezeq), Cellcom and Partner (which operates Orange) – aren’t already gearing up for the unprecedented challenge. They have every reason, even at this early phase of the looming changes, to woo us. Indeed, they have been doing so for some months already – even before the Communications Ministry tenders were secured. Among the manifestations of their alacrity to cement our loyalty is the fact that they have been inundating the market with Smartphones, both to lure subscribers and to accentuate a technological edge over the anticipated newbies.
But these are all warm-up maneuvers. The veteran providers’ real test is yet to come. It’s not only a matter of who will promote the best deal. These firms, which have been racking up immense profits, have managed to earn the public’s abiding antipathy. This is a consequence of, among other factors, a recurrently uncooperative attitude, frequently appalling service, abysmally long waits at customer centers and contracts featuring inscrutable small print that appear geared to trip and trap unwary ordinary folk.
This is no subjective impression. The Israel Consumer Council notes that survey respondents consistently rank cellular providers last on issues of fairness and transparency.
OUR HOPE is that competition will both drive prices down, a long way down, and lead to an improved business culture, wherein customers are treated more reasonably and much more respectfully.
In that context it was encouraging to hear Xfone owner Hezi Bezalel pledge to “be a different sort of investor. Yes, communications is a business, but it has a paramount social component,” he said. “We aim to be the people’s firm... that means being just and honest. I have a PhD in economics and am a former university lecturer, but even I cannot understand my cellphone bill.”
Indeed. Even getting an itemized bill from one’s cell provider is an achievement not to scoff at. Not all providers deign to detail all charges. Here, too, any improvement would be welcome.
THERE ARE some reasonable grounds for optimism. The very fact that more providers will son be vying for our business and our trust must per force make things better – at least for a while. Increased competition is always better than no competition or minimal competition. Some of us recall the pre-cellular era when Bezeq reigned supreme and the Soviet-like wait for a land-line could take years. These difficulties disappeared as soon as the first competitor appeared and phone services ceased being a monopoly.
The veteran cell providers argue otherwise and warn of over-saturating a limited market. But that is exactly what Pelephone and Cellcom claimed before Partner entered their arena. The very fact that the bidders in the latest tender were willing to fork out over NIS 700 million each attests to the fact that they identify a good business opportunity rather than a confined and overcrowded market.
Just how far and for how long the reinvigorated competition will reduce prices is a matter of debate. Some analysts predict at least a 20-percent plunge, while others caution us not to expect more than about 7%. Discounts are particularly generous when competition first gets under way and is at its fiercest. The veteran players are then at their most destabilized and likely to offer the greatest markdowns.
Whether or not the potential benefits from the new, wider market can be maximized ultimately depends on consumers, who will need to engage in much comparison shopping and market research.
Yesteryear’s conservatism and reluctance to switch providers are no longer justified, as recent regulatory reforms free customers from binding contracts and inordinate fines. The rest is up to us.