Israel’s Communications Ministry has issued a notice that it intends to prohibit phone companies from linking minutes to handset sales, in an attempt to further open up the market in advance of the introduction of mobile number portability in December.
Israel already has among the world’s highest level of mobile phone penetration, estimated at 116% in 2006, so it is fascinating that Israel’s government felt that further intervention in market pricing was warranted.
According to the story in the Jerusalem Post, the intent is to enable more retailers and suppliers to enter the market for handsets:
In order to move new players into the market we have to make it fair. Therefore, cell phone service providers will no longer be allowed to subsidize the price of expensive handsets by offering free minutes.
An analyst suggests that the move will help independent retailers and handset manufacturers, but it is less clear how consumers benefit.
Should carriers be limited in the types of offers that they can offer consumers? What is the role of pricing regulation in the wireless market?