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Bidding War Ends with Victories for Xfone and Mirs

Two new competitors will try to carve out a place in Israel's cellular market place. Hopefully the consumer will benefit.
By Aryeh Ben Hayim
First Publish: 4/12/2011, 1:56 PM / Last Update: 4/12/2011, 3:14 PM

Two new cellular providers, Xfone and Mirs, will compete in the Israeli market as of 2012. They were the winners in a government tender and each of them coughed up more than NIS 700 million for the licensing fee.

Neither is a new player in the Israeli communications market. Xfone has specialized in international calls from Israel to foreign countries as well as calls from abroad to Israel. Since international calls carry a hefty price tag, Xfone's entry may help lower costs in this area.

Mirs is owned by the same company that provides the HOT brand Israeli cable television services and cable Internet. Xfone is also involved with Internet, and this is part of a trend in which communications companies attempt to branch out into other communications sectors.

For Communications Minister Moshe Kachlon, the entry of the two new players is part of his strategy of increasing competition for the benefit of the Israeli consumer.

An interesting facet of the license is the government willingness to reimburse either of the new players (or both) for the license fee, if the company captures a 7% market share. With the 700 million NIS incentive to prod them, new players will compete heavily for market share while the veteran companies will try to resist with the ultimate beneficiary being the consumer.

Editor's note: Israeli electronic media are touting the entry of two new providers as a way to improve customer service and prices as all the providers will have to compete for consumers.

A testimony for the need for competition is the following: The editor's mobile is operated by Orange and was brought in for repair two days ago. After waiting a non insignificant time in the center to hand it in, the writer asked to be sure the list of phone numbers, crucial to media work and gathered painstakingly, is not erased in the process. Just to be sure, the manager himself helped the clerk copy the numbers onto the temporary mobile given for the interim. Upon attempting to use it the next day, the writer discovered that the numbers were not there. Upon returning to pick up the repaired phone, after waiting another not insignificant time, the writer was informed that the numbers had been erased from the original phone. The manager did not think it necessary to apologize for causing total havoc in someone's professional life, offered 60 free minutes to other Orange mobiles as compensation and printed out a list of phone numbers (without accompanying names, of course) that had been used recently and were completely useless.