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Government allows cable TV companies to compete with phone

Posted on: Tuesday, 25 November 2003, 06:00 CST

JERUSALEM (AP) -- Israel's government on Tuesday granted a license to three cable TV companies to compete with the existing Bezeq monopoly in land line telephone service.

As a condition of their merger, the government is requiring the three companies to offer telephone service over their lines. This would break a monopoly held by Bezeq since the founding of the state of Israel.

However, the monopoly has been weakened since cellular phone service became available in Israel a decade ago. Three cellular companies offer services, while leasing phone lines from Bezeq.

Under the license issued Tuesday, the cable companies would start offering ''voice over Internet'' technology for phone service within a year. However, some experts say the technology is inferior to Bezeq's present service and would not pose a real threat to the company.

Evgeny Sokolsky, telecoms analyst at National Consultants Ltd., told Dow Jones Newswires that the cable companies would not get involved in telephone services by choice.

``They'll do what they have to do, but with as low a profile as possible,'' Sokolsky said. ``They don't want another war with Bezeq. They're slowly returning to profitability after years of heavy losses and investments.''

In a statement Tuesday, Bezeq welcomed its new competitors. In preparation for the expected development, Bezeq has invested heavily in a satellite TV service that competes with the cable companies.

The government has been trying to privatize Bezeq for years but has run into stiff resistance from the company's workers.

(dj-ml)

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