Phone Monopoly

There’s something to be said for monopolies – both the game, and the economic phenomenon. When you get a specific service – say, phone service – from a monopoly, you know exactly where to go to complain. You also have a target for public anger, someone (the chairman of the board of the monopoly, of course) to hiss and boo at, and an entity you can complain to your elected officials about – who will eventually “do something” about the monopoly and break it up, giving you, the consumer, more “freedom of choice.”

At which point, faced with a plethora of choices, you may just find yourself wishing that now-defunct monopoly back in existence!

Israeli trust-busters have been having a field day in recent years, legislating corporate diversity among cell phone service providers, long distance phone companies, TV and radio broadcasters – and now, local home and business phone service, wresting control of the fixed line phone business from Bezeq. Now, anyone with a license (which you get from the Ministry of Communications) can offer competing fixed line phone service, using the same phone infrastructure installed by Bezeq (but paid for by our tax shekels!). In other words, you use the Bezeq phone line, but you don’t pay Bezeq a shekel (or maybe you do, depending on whom you ask).

Long-time Israeli residents who remember the nose-up-in-the-air elitist attitude of the “old” quasi-governmental hyper-bureaucratic Bezeq jumped for joy when competitors started entering the home phone market in 2006, after the Knesset amended the Telecommunications Law (http://tinyurl.com/pp775z) to allow the licensing of fixed-line phone service providers – and to enable customers to keep their phone numbers when signing up with a new service provider (a provision which came into effect in 2007). Finally – a chance for the consumer to tell those Bezeq so-and-so’s where to go with their smug and condescending attitudes! On to the brave new world of freedom of telephone choice! Yeah!

Well, it certainly is a new world of home phone communications out there – and make no mistake, you need to be brave in order to take it on. For most home phone subscribers, there’s Bezeq, the known quantity, on this side of the technological abyss. Bezeq service works pretty much as it always has; you plug your phone into the wall, pick up the receiver, hear a dial tone, press the numbers on the phone pad, and talk. You get your bill at the end of the month and pay. Then you do it all over again next month. No surprises, and the service is usually pretty reliable; the only times you don’t get that dial tone are usually the result of cataclysmic events, like a war (when the lines may be jammed with worried callers or diverted for defense purposes), after a major storm when phone lines may be down, in the event of a strike – or, when you forgot to pay your bill.

But in this high-speed trust-busting freedom of choice era, variety is the spice of life, and you can now avail yourself of no fewer than five other choices for your local phone needs. Besides Bezeq, local phone service is now provided by 013 Netvision, 012 Smile, Hot (the cable TV service provider), Orange (the cellphone service provider), and Bezeq International (separate from Bezeq, known heretofore only as a long distance company).

As a good consumer (and thanks to a suggestion by a loyal reader), I decided to check out the phone field in order to determine whether I could save a few shekels by leaving Bezeq. So, can Bezeq customers save money by moving to another service provider? Short answer: Yes – but (there always has to be a “but!”)

The first question that people new to the concept of alternative phone companies ask is whether or not they can keep their current phone numbers. The answer is yes – thanks to the amendments to the telecommunications law mentioned earlier, your number is yours as long as you want to keep it, regardless of where you send your payments. You even get to keep your area code (if you sign up for a new line with any of the new service providers, they will give you the area code assigned to the company – for example, new accounts with 012Smile that were not transferred from Bezeq get an area code of 072).

All the competitors to Bezeq use broadband to connect your calls to the local and international phone network, so you have to be an ADSL customer with some level of high-speed internet in order to take advantage of their deals (unless you’re a customer of HOT, the cable company, which uses its own infrastructure to offer phone service).

All of the service providers offer what appear to be very attractive prices. Speaking at length to Ilan, a rep from 013Netvision, for example, I was offered a deal that would let me surf the internet (at a speed of 5MB/s) AND make 3,000 minutes of calls to landlines in Israel for NIS 55 a month. That sum does not include calls to cell phones, but for an extra NIS 7.90 a month, I could reduce the cost of calls to cell lines from the 33 agurot per minute they usually charge to “less” (depending on how much I called, times of day, etc.). In addition, Ilan told me (after somehow ascertaining that I was observant) that his company’s service was “approved by the Great Rabbis,” and that since calls to other 013Netvision customers were free, I could hear the various Torah-on-the-phone lectures that the company hosts for free, for as long as I wanted to listen. That sounded like a good deal – maybe a little too good, as we will see below.

I also checked out Orange, with whom I have a cellphone account. While Orange may not have the best price, it does have very advanced services, especially for Orange cellphone customers; for example, you can forward a call to your home or cell phone to the other device when one of them rings, you can hold as many as three conversations at once, and you pay one price to all phone numbers – including cell numbers (everyone else charges the same rate as Bezeq for calls to cellphones). I figured I could save about NIS 60 a month if I switched to Orange’s phone and internet service provider plan (you can find a helpful calculator here which will show you how much you can expect to pay, based on how much you surf and talk).

The story was the same everywhere else; Bezeq, it turns out, is more expensive than all the other providers (the one with the cheapest rates was Bezeq International). So of course I called Bezeq in order to see if they could be bargained with.

Apparently many others have done the same in recent months, because as soon as I said “013Netvision” and “Orange home phone,” they transferred me to a fellow who was clearly trained to deal with calls like mine. Of course, he said, you realize you won’t get the same quality with “the others,” since you’re using your ADSL line for talking and surfing at the same time. “I have had so many customers come back after they left to try out the others, complaining about how their calls drop when they download a movie or other heavy item,” said Matan, the rep. In addition, he said, all these companies were still obligated to pay Bezeq a line fee for use of the ADSL line, which added about NIS 25 to all the alternative providers, including (he said specifically) 013Netvision, a claim that both they and Orange denied, claiming it was already included in their monthly fees. In addition, Matan from Bezeq said, you have to pay an installation fee to switch services, and there is definitely a negative impact on phone service when you surf the net.

Installation does indeed cost money, with all the Bezeq alternatives – mostly in the area of NIS 200 or so. However, many of the companies seem willing to waive the installation fee if you are willing to commit to a period of service, like a year (both Orange and 013Netvision said I could drop the phone service any time, although they both wanted a year commitment on the internet service).

The latter claim is easy to check out too: If you’ve ever used a service like Vonage (or even Skype) on your home ADSL line, you’ll be ready for the worst-case scenario with the alternative phone companies. Just how much broadband “juice” does an Internet phone call use? I found a few interesting discussions on the internet (see http://tinyurl.com/qd4cfh, http://tinyurl.com/qu5yts, and http://tinyurl.com/okjx8g), but of course, those rates are dependent on many local factors that may or may not be relevant here in Israel.

And that, really, is where the dream of “punishing” Bezeq for all the injustices Israelis have suffered at the company’s hands over the years fell apart, at least for me. Because while in theory a 5MB/s connection sounds like it should be able to cover both serious surfing and internet phone calls, the sad truth is that you’re probably getting far less speed than you think you are (that’s a story for another day, but meanwhile check out the Hebrew article on the subject at here). Bezeq, of course, will say that the reason your bandwidth speed is up to 40% less than what you’re paying for is because of your home network, devices that are using the bandwidth, etc.

Which could very well be true – but currently, 5MB/s is the most cost effective speed for Bezeq ADSL (the price jumps significantly at 8MB, the maximum offered to home users, unless you live in an area served by its next generation network, which you probably don’t). Unfortunately, based on my experience, I’m not ready to trust my home phone service to the graces of my current ADSL setup – and as a result, Bezeq gets to keep its monopoly at our place, at least a little while longer.