Israel Information Technology Ministry of Communications to increase fiber optic competition

Last month, the Ministry of Communication, hosted a hearing on “Margin Squeeze” in internet services. This is part of the effort to fulfill the reform of the wholesale market and its aim is to preserve and expand the level of competition evolving in the advanced infrastructures, so that telecom consumers will continue to enjoy a range of marketing offers within the very same infrastructure. The hearing focused on the fiber optic networks that are now being deployed and are already accessible to 70% of the households in Israel.

The previous administration invested considerable effort to increase the deployment of fiber optics across the country. The proposal will enable the public to choose a service provider among a variety of companies and benefit from competitive prices. According to the OECD Israel is considered among the leaders in the world in the rate of connectivity. - Fiber optics will reach any point and any household in Israel - from the peripheral and rural areas to cities and villages.

The ministry is working to prevent anything that adversely impacts competition, and at the same time, enhance competition in the fiber optic network market so that smaller players can operate freely on the infrastructure of other companies and offer competitive prices to consumers. The initiative is meant to prevent the “Margin Squeeze” phenomenon, which occurs when an infrastructure owner dominates the market, exercising its power over it while providing wholesale services to its competitors, thus narrowing the margin between its retail price to the consumer and the wholesale tariff to its competitors in a manner that harms the economic viability of the competitors to operate in the wholesale market. 

The Ministry of Communications intends to apply a new and more focused format to examine the possibility of reducing Margin Squeeze, that will offer a simple procedure under which retail marketing offers are not disqualified; rather, an adjustment is made to the relevant wholesale tariff so that a margin to ensure competition will be maintained.

Thus, customers will benefit from competition and the authorized suppliers operating in the wholesale market will get economic viability while maintaining marketing flexibility for the infrastructure owners. With time fiber optics will integrate itself into more industries because of its capacity for modern, innovative solutions which will lead to opportunities for American companies operating in the internet service or rely on a strong network connection.  

U.S. companies interested in learning more about Israel’s fiber optic market or other opportunities within Israel’s telecommunications sector may contact Christina.azar@trade.gov.