Attorney Gil Nadel, Gilad Paz
Recently, on August 2, 2012, something occurred in the Israeli cellular market. The Economics Committee of the Knesset approved reforms regarding the import of cellular devices to Israel, whose purpose was to simplify, as much as possible, the procedure by which cellular phones are imported to Israel so as to open up the market for devices (in addition to the market for airtime) to competition. This process is meant to eventually lead to significantly lower prices on devices for the end users.
Until this reform came into effect, the Israeli consumer was forced to purchase the cellular devices from one of four cellular companies working in Israel, and of these four the consumer had to purchase the line in any case and it was them the consumer paid for airtime.
These circumstances created a clearly uncompetitive cellular market in Israel, both in terms of airtime cost and in terms of the price of the devices themselves. Indeed, regarding the price of devices, on the cusp of this reform coming into force, advanced cellular devices, such as smartphones, were sold in Israel for twice the price of similar devices abroad.
It should be noted here that even within the legal status that was prevalent in Israel before this reform took effect, small importers could have theoretically taken steps to import cellular devices to Israel parallel to the big cellular companies. But the process of importing cellular deices to Israel before this reform came into effect had required the importers to maneuver through a complex network of bureaucracy in order to acquire various certifications and licenses from the Ministry of Communications.
Before this reform came into effect, the importer who was interested in importing cellular devices into Israel had to apply at the Ministry of Communications for two different licenses- first of all, a trade license which gave the importer general permission to import cellular telephones to Israel. Such a license obligated the importer to maintain an expensive network such as a service laboratory for repairing cellular phones and a commitment to always stock 7% of the new equipment which he intends to sell so that he may always have the ability to exchange faulty equipment at his expense, should such a need arise.
After receiving the trade license, the importer is required to receive class verification which is designated as approval for importing the specific cellular phone models that the importer is interested in importing. As for the class verification, before the reform took effect, the importer was obligated to acquire this approval for the sake of importing cellular phones to Israel without taking into consideration whether this cellular device is allowed for marketing abroad or not.
Under the reforms which have now taken effect, the importers are exempt from the need for both a trade license and a class verification, in certain instances. This exemption is stipulated under the condition that the models of the devices which the importer means to import have already been approved for marketing in the US or the EU, that the devices operate with the GSM or UMTS technologies and that, in devices installed with a lithium battery, the battery meets regulation UL-1642.
Today the reform greatly facilitates the importation of cellular devices to Israel. We assume many new players will soon join the market of cellular importers in Israel, which will lead to a drastic price reduction in this branch.
[Communications decree (telecommunications and broadcasting) (Exemption from class verification and exemption from trade license), 2012, approved by the Economics Committee of the Knesset during a sitting which took place on August 2, 2012, and recently came into effect].
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