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Ringing In A New Era
State-owned Bezeq battles for market share as new
Israeli phone companies slash long-distance rates.
AVI MACHLIS ISRAEL CORRESPONDENT
doubt that Bezeq's old ones were
artificially inflated. Calls to the
United States, including value
added tax, for example, cost Is-
raelis between 63 cents and $1.14
per minute with Bezeq as the
only player. But now Israelis can
call America for a mere 21 cents
a minute through Barak or Gold-
en Lines, the new long-distance
companies. This is just a penny
more than what it costs to call
from Jerusalem to Tel Aviv dur-
ing peak hours.
It is also far cheaper than the
same call placed from the Unit-
ed States to Israel, reversing the
previous situation.
The cheapest U.S.-to-Israel
rate offered by U.S. long-distance
service MCI, for example, is 62
cents per minute; and this is
available only those who pay $3
per month for a special long-dis-
tance package.
In response, Bezeq also has
lowered its international rates to
competitive lev-
els. It is hoping
the bargain-base-
ment prices will
spark an in-
creased volume of
international calls
to compensate for
profits it surely
will lose. The new
firms must also
pay the state-
owned company
fees for the calls it
processes in ex-
Cheap calls: Israelis, like these at the Tel Aviv Stock Exchange, change for hook-
ing up through
are about to benefit from long-distance competition.
Bezeq's systems.
tanyahu's approval ratings into Despite this compensation,
the deep freeze, the telecommu- and although Bezeq has im-
nications upheaval has provided proved service tremendously in
a jaundiced public two good rea- recent years to become one of the
sons to celebrate. most technologically advanced
Most important, of course, they phone networks in the world, the
are enjoying the cheap interna- company is braced for a profits
tional calls. But many are rel- hit.
Last year, nearly 30 percent of
ishing also the spectacle of the
two new companies chipping Bezeq's revenues of $2.42 billion
away at Bezeq, the long-reviled, came from international calls.
imperious monopoly that has Some financial analysts have pre-
been scrambling to hold on to its dieted Bezeq's profitability could
market share. drop as much as 25 percent when
Bezeq executives, with some its lost market share begins to eat
reason, fear the public will flock away at revenues.
The current competition was
to the new companies en masse.
"If they can reduce the prices kicked off last November when
by 80 percent, how much profit the Communications Ministry
has Bezeq been making all these chose Barak and Golden Lines
years at the public's expense?" from a tender in which six groups
said Ethel Schiffinan, a 74-year- participated. Each consortium
old retiree who moved to Israel contained local companies and
from the United States in 1984 international players eager to se-
and is an avid international cure a foothold in Israel. ❑
caller.
The new rates have left no New York Jewish Week
I
AP PHOTO BY NATI HARNI K
flong-lost friends and relatives
from Itrael suddenly start call-
ing you this week, don't be sur-
prised. Israel's liberalized
international telecommunica-
tions market is officially open for
business. And suddenly, long-suf-
fering international callers are
getting a break.
In a nutshell, two new private
companies have been licensed to
compete on international calls
with Bezeq — until now the
state-owned telephone monopoly.
Both are offering rates up to 80
percent cheaper on internation-
al calls than those Bezeq had
charged.
For many Israelis, this is the
first significant down payment
on the privatization revolution
Prime Minister Binyamin Ne-
tanyahu promised during his
campaign for office, at least the
first to actually affect their lives.
And amid all the recent political
turmoil that has plunged Ne-
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