Late and with the delay pill: The separation between ISP and infrastructure will be eliminated


The Ministry of Communications announced on Sunday this week that it is putting an end to one of the biggest and oldest failures in the Israeli market – the separation between an infrastructure provider and an Internet provider. For more than 20 years, Israeli citizens have been accustomed to having two different companies that offer complementary services, one for the connection infrastructure and the other for connecting to the network and obtaining a valid IP address.

As usual in our places, and especially in the regulation of the communications market, this is a unique arrangement for us that does not exist anywhere else in the world. And this is not a source of great pride. There is no issue in the communications market that has received such harsh criticism as the issue of infrastructure-provider separation.

In a document published this week by the ministry ahead of a hearing, quite a few words are devoted to explaining why the separation model has been implemented in Israel. But, it seems that even the authors of the document do not really believe in what they are writing. This is a cumbersome, expensive, bad model that annoys the customer and severely impairs the level of service. It is not for nothing that nowhere else in the world have they chosen to apply such a distorted model.

Moreover, the firm acknowledges that the current model is responsible for the dormant customer phenomenon, customers paying one provider and surfing through another. The firm even sets a price tag for the model – NIS 50 million a year, which is stolen from customers without receiving any service, all because of a lack of knowledge and awareness.

Bezeq and Hot will only sell infrastructure

The document that has now been published seeks to put an end to this phenomenon, and to return Israel to the family of nations, at least in everything related to the manner of connecting to the Internet. The Minister of Communications, Yoaz Handel, and the director general of the ministry, Liran Avishar Ben Horin, should be thanked for their public honesty and determination to correct distortions that have existed for decades, that no one else has made such a determined and quick effort to correct. For a long time, the Ministry of Communications in Israel has not done such a positive and clean thing that is entirely for the benefit of the citizen, without tricks and without sticks.

But “to her and a thorn in her side”, instead of the new arrangement coming into force soon, the Ministry of Communications chose to set a very long “cooling off” period of over a year, proposing that the current model be abolished only in January 2022. Not only that, but the ministry proposed Bezeq and Hot sell an Internet service in the familiar format of “Bundle”, and they will be allowed to sell only infrastructure.

It seems that there are strongholds of resistance in the Ministry of Communications, which want to continue to preserve the distortions. They managed to dissolve at the last minute the whole essence of the reform and thus there is a kind of finger-pointing at the minister, the CEO – and in fact us citizens.

Ministry officials send hundreds of thousands of citizens in Israel to purchase “infrastructure” and “provider” services separately for a period of more than a year. Why? To satisfy their fear of “harm to competition” and to give Internet providers in Israel time to prepare to get used to the wholesale market, a market in which they have been operating for over five years – and with great success.

The Minister of Communications would do well to reject the Achitophel’s advice he apparently received from some of his officials, and to make a decision to implement the reform as soon as possible, with a short period of assessments. Israel craves a good, high-quality Internet service, one that can only be provided in the proposed model. It would be better to see what happened with the launch of the 200-megabyte service by Bezeq, which the ministry officials prevented for three years, and even after they approved, set a cooling-off period of four months.

Bureaucracy and the fear of market reform

The operators have long been prepared to provide the service and the citizens of Israel have long been able to enjoy the new service, but we are all sitting in homes frustrated by the pace of surfing, all because of the arbitrariness of the ministry officials.

The heads of the ministry will explain how they mobilize vigorously for every consumer tort, especially in the days of Corona (for example, mobilization in favor of a mobile site that must be set up), and completely ignore the fact that Corona will accompany us beyond 2022 and the need to improve Internet infrastructure will increase, even if we quit soon.

When the ministry details in its position paper why the split model has caused and still does so much damage to consumers, what sense does it make to wait for 2022?

This is how the ministry writes when it comes to explaining why ISPs will not be harmed by the move: In the shadow of the fear of the infrastructure owners entering the field at this time. There is no doubt that this state of the world is inferior to the current state. But keep in mind that the artificial separation created by the regulation and requiring the payment of interest to ISP providers, is financed by service consumers both through the price of the service and through harm to the user experience.

“We believe that this one-time investment in transferring customers to the wholesale configuration will benefit service consumers, turn suppliers into value-generating factors, put all market players in a position where they market a comparable service to consumers, and even contribute to competition in pushing ISPs. Up the investment ladder. “

In other words, after 20 years the firm recognizes the injustice created by the Internet split and that we all pay a “commission” to ISPs, so it is even harder to understand why they go to the protection of ISPs, who are only going to profit from the wholesale market model.

In conclusion, this is an important move that will change the face of the communications market and is expected to bring a lot of benefit to consumers. In addition, it seems that in the short term Bezeq and Hot will be harmed by it. It should be remembered that under the proposed policy, the two will only be able to sell infrastructure between the date of approval of the new policy and the beginning of 2022. There is no such thing as “only infrastructure”, so what the ministry is actually proposing is to completely block both from providing internet for a year.

And when does all this come? In parallel with the heavy investments that both companies are required in the field of fiber optics. A decision that is clearly not clear.

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