Bezeq (TASE: BZEQ) international telephony services carrier Bezeq International Ltd. has renewed its application to the Ministry of Communications for a license to provide VoIP-based wireline telephony services. The company is making the request in light of the expected narrowing of its parent Bezeq's share in the telephony market to 85%. The company's present service offering interfaces with VoIP, which means that under the Communications Ministry's policy guidelines, Bezeq and its subsidiaries can offer the service.
Bezeq International carried out a VoIP pilot among several thousands customers before the Communications Ministry's policy guidelines were drafted, and before the opening up of the market to competition in January 2007. However, once the guidelines came into force, they proscribed the entry by the group as a whole into VoIP-based telephony, and Bezeq International appealed the ruling in the High Court of Justice.
Bezeq International lost its appeal, and was forced to discontinue the service to its subscribers. The court said in its ruling that the Communications Ministry had properly exercised its authority, and that no flaws had been found in the drafting of its policy. In other words, the High Court dismissed the appeal because it did not want to go into the matter deeply and review the Communication Ministry's considerations. Bezeq International's impending entry into the field will provide further competition to Bezeq itself, although on the other hand, Bezeq has a vested interest in its subsidiary's success.
Bezeq International is also the largest Internet service provider (ISP) in Israel, with the resources and capability to compete with 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC), the only one of the frontline ISPs currently offering VoIP service, so it will be interesting to see how the competition in the market develops.
Bezeq itself is also set to begin offering VoIP-based wireline telephony services, and already has the necessary technology in place, although the prices of its telephony services are regulated, and it will be unable to bring these down to the level its competitors are charging. Bezeq International, on the other hand, will be able to compete on price, so the public is in with a chance of benefiting from better competition in this segment.
Published by Globes [online], Israel business news - www.globes-online.com - on May 15, 2008
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