Israel awards 1st mobile virtual network license
Telecom 365 gets six months to negotiate rates with one or more of cellular phone operators, who will need to supply the infrastructure for virtual network
The Communications Ministry on Wednesday awarded its first license for a mobile virtual network operator (MVNO), in a bid to stir up competition in the highly lucrative mobile phone industry.
Telecom 365, a subsidiary of the Hamashbir retail group, received the license and said it would begin the process of setting up its virtual network in the coming days.
It has a period of six months to negotiate rates with one or more of Israel's cellular phone operators, who would need to supply the infrastructure for the virtual network.
If an agreement is not reached in that timeframe the Communications Ministry will set the rates. Telecom 365 will then have another six months to set up its network.
"Today begins a new era in the cellular sector that could lead to intensified competition and a decline in prices for consumers," Communications Minister Moshe Kahlon said in a statement.
"I am hopeful that the companies will find the proper way to cooperate and that my intervention will not be needed."
'Quality communications services'
The ministry said that since regulations for MVNO licenses were published in March the ministry has received six other requests, all of which are being examined.
Shares in Hamashbir closed up 5.1 percent at 2.348 shekels.
"We will work vigorously to set up the network and estimate we will be able to supply customers, especially members of our Club 365, with quality communications services towards the end of 2011," Telecom 365 chief executive Oded Birger said in a statement.
Hamashbir's 365 club has 470,000 customers who receive benefits at the company's various retail chains, including Hamashbir department stores and New-Pharm drug stores.
Israel has four mobile phone operators, the largest being Cellcom, followed by Partner Communications unit Pelephone and Mirs. The mobile phone penetration rate in Israel is estimated at about 125 percent, one of the highest in the world.
In addition to MVNOs, the ministry has also ordered mobile phone operators to slash cross-network fees to further reduce customers' cell phone bills.
