Eretz Yisrael Time

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Monday, February 23, 2009
Under MK Ariel Attias (Shas) the communications industry underwent a number of revolutions, and could undergo even more.

Another legislative act that Attias was working on under the previous administration was the creation of "Virtual Cellular Network Operators".

These VCNOs would be independent companies that buy raw infrastructure services/products (i.e. communications bandwidth) from the existing Cellular companies and then repackage them as they see fit. (My friend already has plans to set one up.)

These companies could offer whatever deals and programs they want.

I suspect, probably what scares the phone companies most is not that they will be selling voice time, or even data bandwidth, but that they will offer SMS deals.

People don't realize it, but SMS is 99.99% pure profit for the cellular companies.

SMS data is transmitted within the data packets that are sent between the antennas and the phones all the time. All they do is stick the SMS data into the existing packet and it rides for free, it doesn't cost the cellular phone companies any additional bandwidth whatsoever. None. That's pure profit.

Of course I'm exaggerating. Obviously they are worried that these companies will dig into their service related profits, especially their various package deals they force us to select from (does that includes insurance?) that we don't really ever use.

Imagine when one of these new companies starts offering services at just above cost.

Obviously the cell companies will still profit nicely on infrastructure fees (bandwidth usage) as usage will also increase, but their profits from selling us more than we need at more than we should be spending will start to disappear as real competition is introduced.

So here's hoping Attias continues as the Communications Minister in the next government.


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