Division for Economic Policy Research
Economic Commentary
Bezek's Waste of Taxpayer Funds
Many of our readers might have gotten the impression that as bad as Bezek might be as a state-owned, state-sanctioned telecommunications monopoly, it couldn't be as obnoxious as presented. But IASPS is hardly alone in its assessment of the boorish behavior of Bezek, especially in the way in which Bezek flaunts its abuse of what amounts to taxpayers hard-earned shekels. The following article appeared in Globes: Israel's Business Arena, Israel's leading business newspaper on October 19, 1999. The Globes article can be found at http://www.globes.co.il/cgi-bin/Serve_Arena/pages/English/1.3.2.1.1
Geneva is Ours
By Efi Landau, Geneva
Globes: Israel's Business Arena
The Israelis sometimes seemed to have overrun the exhibition's corridors. Proportionate to the size of Israel's population, the Israeli presence at Telecom 99 Geneva was massive. On Tuesday-Wednesday, some three to four thousand visitors and exhibitors from Israel thronged the exhibition. The holy tongue resounded not only at Israel national pavilion and at major Israeli pavilions such as those of ECI Telecom, the RAD group, Gilat Satellite Networks and Orckit, but also in Hall 4-5. This was the hall dedicated to mammoth companies such as Alcatel, NEC, Ericsson, Lucent, SwissCom, Siemens, Motorola, Bosch, Nortel, Samsung, NTT and so on and so forth.
Minister of Communications Binyamin Ben-Eliezer was there, with a retinue consisting of his director-general, advisors, deputy directors-general and a spokesperson. His extremely tight schedule whisked him from the Israeli pavilions to be hosted by the managers of international giants at their pavilions, to meetings with other communications ministers and to social events. The visit to Telecom Geneva was the high spot of Fuad's days of grace at the Ministry of Communications. There he sat, dutifully doing his homework, getting to know the market and its people. From now on, he will be judged by deed, rather than word. Since he has been talking rather a lot recently, he has also created some high expectations.
Bezeq International runs to show and tell
The most surprising Israeli company at the exhibition, in the negative sense,
was Bezeq International. An El Al Jumbo jet was parked all day Tuesday at the
Geneva airfield waiting for 400 privileged individuals on a perks jaunt: general
managers, treasurers and communications managers, all flown here by Bezeq
International for a day of touring the exhibition. They arrived by night and
were flown back to Israel next day. This is not unprecedented. Four years ago,
ECI Telecom brought a few dozen analysts and potential investors to Geneva to
gain a first hand impression, recommend and possibly even invest. They came and
went by regular flights, at ECI's expense. A legitimate marketing gimmick. ECI
Telecom is a private company: a communications manufacturer, not an operator.
Bezeq International, on the other hand, is a communications operator that has
nothing to display at Telecom Geneva. A large part of the happy four hundred
flown to the exhibition know nothing about communications, and their visit there
did nothing to enhance their professional experience. In the companies they
manage, however, they are the ones who decide through whom to make their
international calls.
Bezeq International claims this was a legitimate, indeed a brilliant marketing move. But this is a government company wholly owned by Bezeq, which is still under State control. In other words, it hires a Jumbo jet and flies and feeds four hundred people for a whole day at State expense. Bezeq International was not prepared to reveal the cost of the operation. The company's spokesperson insists it was an innocent marketing move. Not only does it dispense munificent treats of this sort, Bezeq International also, in true Israeli style, runs to tell its friends all about it. On Sunday, AT&T of the US and BT of Britain staged a grand happening - a reception for guests from various countries on board a ship setting sail that afternoon on Lake Geneva. The press was not admitted. Two people who did gain admittance, to roam around among the mountains of shrimp and free-flowing wine, were Bezeq International chair Moshe Haba and director general Uri Yogev. Next day, these two gentlemen met with AT&T and BT executives. The two companies are currently concluding procedures for the formation of their international partnership, named "Concert". Both companies reported that an ordinary meeting had taken place, which adopted no resolutions. No concrete intentions were expressed there. Bezeq International has long since been seeking investors, and always had AT&T in it sights (while always denying any such intention). According to off-the-record conversations with people in both companies, Bezeq International brought up the subject, eliciting a courteous "we'll look into it" reply, the sort of reply one gives under such circumstances.
But Haba and Yogev emerged from the meeting, called their public relations office in Israel, and at four o'clock that afternoon, there was a dramatic press bulletin to the effect that Concert - which still doesn't actually exist - was exploring a possible investment in Bezeq International. So said the bulletin. AT&T and BT firmly denied the report. Off the record, the two companies had some harsh words to say about Bezeq International's trial balloon. It certainly did nothing to promote the chances of such an investment. The Bezeq International spokesperson insisted that a meeting at which investment had been discussed had, in fact, taken place, and that the announcement was correct. She refused to comment when asked who raised the subject at the meeting, and how Bezeq International had arrived at the formula "Concert is exploring a possible investment".
Shame and scandal at the President Wilson Hotel
The official Israeli reception at Telecom Geneva, organised by the Export
Institute, the Ministry of Communications and Bezeq at the President Wilson
luxury hotel, was supposed to be the crowning glory of the Israeli success story
at the exhibition. Anyone even vaguely connected with telecom in Israel was
there, with barely room to breathe. In the receiving line were Minister of
Communications Binyamin Ben-Eliezer, Bezeq chair Izzy Tapuhi and Export
Institute director general Amir Hayek. They shook hands with those arriving, and
failed to warn them what they were in for. The hundreds of guests invested by
the three organising bodies crowded into a small hall, perspiring profusely and
suffocating in their smart suits. They could barely exchange a word with one
another. Even the food was terrible.
High-Tech Bibi
No less of an attention grabber at the exhibition than Fuad was former Prime
Minister Benjamin Netanyahu (hereafter - Bibi), hired as a consultant by BATM of
Israel and present at Telecom Geneva in that capacity. With lady-wife Sarah,
naturally.
The pavilion of US company M, one of the owners of BATM, was an attraction, because Bibi sat there, staging presentations of BATM products and meeting customers. Here and there he took time out to visit the pavilions of the other Israeli companies, with two security guards equipped with headsets dancing attendance. Bibi and Sarah came to the Israeli reception too, jostling with the best of them, and even getting a welcome from the Minister of Communications, who wished Bibi every success in his endeavours. Ben-Eliezer undoubtedly meant every word he said. A Bibi successful in communications will, hopefully, stay away from politics.
Published by Israel's Business Arena October 19, 1999
http://www.globes.co.il/cgi-bin/Serve_Arena/pages/English/1.3.2.1.1
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