HOT is trying to lead a wave of cellular price increases


Three cellular companies operated the 5th generation network yesterday at a ceremony where they received licenses from the Ministry of Communications. This is considered a revolution in the media world, after years of lagging behind local infrastructure. The companies are Pelephone and the Partner-HOT Mobile group, which share a common network. Prominent in its absence is the Cellcom-Golan Telecom-Expon (we4G) group, which did not receive the coveted license, as it is still required to complete compliance with certain conditions, such as providing guarantees and presenting an engineering plan.

In recent weeks, Pelephone and Partner have announced that they will not charge a higher price for the new technology, but only for value-added services. That is, the companies’ customers can stay with their current package and price and still experience the benefits of 5th generation, such as browsing speed that can reach over 1 GB.

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Partner CEO Itzik Benvenisti and HOT Mobile CEO Ilan Brock Photo: Tommy Harpaz

It seemed that the companies did not intend to take advantage of the new generation soon to raise prices – and rehabilitate their situation. However, yesterday for the first time HOT Mobile announced its new prices and re-shuffled the cards in the mobile market.

The company has announced that only customers who purchase premium packages will be able to enjoy Generation 5. That is, customers who stay at the current price level will not be upgraded automatically, unlike Pelephone and Partner customers.

HOT’s decision is dramatic for the cellular market, but at the moment there is no certainty whether it will succeed: on the one hand, there may be an influx of customers from HOT to competing companies, and on the other hand, which is a more likely scenario, competitors may align with HOT .

The cable company actually uses the cellular arm to signal to the market: water has reached the soul. HOT understands that if it does not take advantage of the momentum to rehabilitate the financial situation of the cellular market, there will be no way back. Thanks to the major cellular reform in 2012, cellular prices have eroded to a level that does not leave companies with large margins, if at all. The move has directly affected the financial situation of the companies, as they are facing heavy investments in the deployment of 5th generation infrastructure and fiber optics.

Will HOT be able to drag the other companies after it? Not sure. When Cellcom tried to make a similar move in 2018, it failed. The competition in the cellular market is perhaps the highest among the Israeli markets, and finally, when the companies offer a similar quality of technology and services, the only difference that remains is again – the price.

About 200,000 mobile users a month have already taught the companies that the Israeli consumer is not indifferent to the price – and that this is actually the name of the game. Even if the big companies try to join the celebration, we4G is likely to ruin it for them and continue to adhere to a strategy of growing market share, even at a loss. In this case HOT takes a risk by assuring the customer that the price will remain fixed for five years.

Economically, the companies’ new offers more than double existing prices, but do not jump too high: from an average package price of NIS 20-30 a month today for a volume of 100-200 GB, the companies offer 5th generation packages at a price of NIS 60-70. Per month for a volume of 500 – 1,000 GB. Generation 5 may not allow for higher call quality, but will allow for longer battery life, faster growth, lower latency and greater data transfer. Does the consumer currently need such a high package volume and additional services? Probably not in the coming years.

Despite the great excitement of the CEOs of the communications companies, there is still a long way to go and this is one of many steps that will be spread over five years. First, the companies have so far deployed only dozens of sites, in the form of upgrading 4th generation sites Announced that it has deployed about 250 sites in 150 cities, so that most of them have only one antenna, it is likely to be in a central location. Yes, in order to enjoy the benefits of Generation 5, the customer must have a compatible device.Currently, most of the population does not have such a device and the companies have started selling compatible models of Shiomi only, and later models from other companies such as Wawi, Samsung and Apple will arrive in Israel.

Generation 5 is a revolution that will take place mainly in the worlds of industry, entrepreneurship and business, with capabilities like remote medicine, autonomous vehicles, cities and smart homes, augmented reality and virtual reality.

The companies do not plan for the small consumer to return the heavy investment, but rather to lease the property they own – the frequencies – to external companies that will develop smart technologies based on it. Although even this business model is still vague.

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