Israel govt panel aims to boost telecom competition

JERUSALEM, March 12 (Reuters) - A government-appointed committee on Wednesday issued a long-awaited report on shaking up Israel's telecoms sector intended to create more competition and lowering prices for consumers.

The Gronau committee recommended that dominant phone and telecoms company Bezeq (BEZQ.TA: Quote, Profile, Research), which holds nearly 90 percent of the country's fixed-line business, be forced to allow other firms to lease its infrastructure.

In return, Bezeq would be allowed to sell packages of fixed- line phone services along with high-speed Internet via DSL.

Due to Bezeq's monopoly status until recently, it has been restricted by the Communications Ministry from offering packages like its rival, cable company HOT (HOT.TA: Quote, Profile, Research), which has been selling a "triple-play" of phone, Internet and TV for more than a year.

Bezeq owns half of digital satellite company YES and all of its Internet Service Provider (ISP) and long distance calling unit Bezeq International. Those units would not be allowed to be merged into one company, the Gronau report said.

The committee also recommended that Bezeq's calling rates become more flexible, although they would remain supervised as long as Bezeq's fixed-line market share was above 60 percent.

It also recommended changes to further open Israel's mobile phone market.

"I will study the committee's recommendations and take the best decisions for Israel's telecommunications market," said Communications Minister Ariel Attias in a statement.

Bezeq has long pushed for the ability to provide triple-play packages. But in a response to the committee's recommendations, it said it was disappointed overall since it would be forced to unbundle its fixed-line infrastructure.

(Reporting by Steven Scheer and Tova Cohen; Editing by Erica Billingham)