Moshe Kahlon: Telecommunications Reform and Competition in Israel's Cellular Market (B)

Joshua  Margolis; Amram  Migdal; Kerry  Herman

Supplement | HBS Case Collection | October 2016

Moshe Kahlon: Telecommunications Reform and Competition in Israel's Cellular Market (B)

by Joshua Margolis, Amram Migdal and Kerry Herman

Abstract

The case complements “Moshe Kahlon: Telecommunications Reform and Competition in Israel’s Cellular Market (A),” HBS case number 417-017, which addresses reforms to regulations in Israel’s telecommunications industry initiated and implemented under the leadership of Minister of Communications Moshe Kahlon in 2009-2010. The case highlights the challenges faced by a politician attempting to institute regulatory and legislative reforms in the face of uncertainty and resistance from an incumbent oligopoly. When Kahlon entered office, three cellular companies, Pelephone, Cellcom, and Partner (the Big Three), dominated the market. Against Big Three opposition, Kahlon must decide whether to continue pushing changes to introduce new competitors in the industry, remove contract termination fees, and reduce the payment of inter-connection fees between cellular providers, which advantaged incumbent companies and drove up consumer prices. Kahlon applied a distinct political style that won him support from career civil servants within the ministry of communications and ministry of finance, from the press, and from the public. This (B) case describes the successful implementation of the reforms, which led to the entry of new competitors into the industry, a sharp decline in consumer prices, and layoffs and declining performance at the Big Three.

Keywords: market reform; political leadership; industry regulation; Regulatory Reforms; Economic Sectors; Private Sector; Public Sector; Values and Beliefs; Ethics; Geography; Geopolitical Units; Country; Government and Politics; Government Administration; Government Legislation; Leadership; Leadership Style; Leading Change; Market Design; Market Participation; Duopoly and Oligopoly; Supply and Industry; Industry Structures; Telecommunications Industry; Communications Industry; Public Administration Industry; Israel;

Language: English

Format: Print

9 pages

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Citation:

Margolis, Joshua, Amram Migdal, and Kerry Herman. "Moshe Kahlon: Telecommunications Reform and Competition in Israel's Cellular Market (B)." Harvard Business School Supplement 417-018, October 2016.

Korea Telecom (KT) has committed $4 billion in investments and R&D to build a GiGAtopia, essentially ushering in the next generation of mobile (5G) and wired infrastructure. CEO Dr. Chang-Gyu Hwang, and his team are considering which areas to prioritize in terms of new products and services in development. The top five sectors identified by KT’s team include the Internet of Things (including connected cars and smart city/homes), media, health, energy, and security and surveillance, which might provide some quick wins both in terms of revenues and market lead. Should KT develop solutions that could be exported to other countries? Should KT go all in across all five sectors, or select one or two to prioritize?

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Moshe Kahlon: Telecommunications Reform and Competition in Israel's Cellular Market (B)

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