Israel Communications Ministry Creates Hedges for Tamares Telecom Undersea Cable

The hedges were given over the objections of the Communications Ministry legal and economics departments.

Ministry of Communications director general Eden Bar-Tal instructed the ministry’s legal and economics departments to create hedges for Tamares Telecom Ltd., which is laying a third undersea cable between Israel and Cyprus, in order to facilitate the company’s entry into the market. At Bar-Tal’s instructions, the hedges are minimal, proportionate, and limited in time.

Bar Tal’s instructions were given following a request of Tamares Telecom, after discounts granted by its rival, MedNautilus, which is considered to have a monopoly in the field. The instructions were given over the objections of the ministry’s economics and legal departments.

The Ministry of Communications held a public hearing on whether to protect Tamares Telecom, and if so, how, in view of its heavy investments in the undersea cable. A variety of opinions was offered during the hearing, and the main one by three internet service providers (ISPs) – Smile Telecom Ltd., NetVision Ltd., and Xfone Communications Ltd. – which said that the ministry should not intervene, because that would raise prices in the market.

As “Globes” reported, before the hearing, the Ministry of Communications’ legal and economics departments held that the ministry should not intervene, and that it should let the companies compete for the ISPs’ business. Officials at the legal and economics departments said that if Tamares Telecom decided against laying or operating an undersea cable, another company would do so at better prices, or nothing would be built because it was not economically viable. In either case, the free market should decide, not the regulator. Bar Tal overruled their objections and ordered hedges given to Tamares Telecom.

(globes)

[mappress]

Source: globes , January 02 , 2012