By Steven Scheer
JERUSALEM (Reuters) - Israel is prepared to ease up on demands it had made on Bezeq Israel Telecom to rescue plans for a nationwide fiber-optic network, the Communications Ministry said on Tuesday.
Bezeq, Israel's main fixed-line operator, has said it was unable to carry the costs of laying fiber optics to some rural areas, stalling plans for a national network in a country that prides itself as a hub for technology and software development.
Under the new proposals, instead of requiring Bezeq to build a fiber-optic network across the whole country, the regulator would allow the company to choose where it rolls out its network, the ministry said.
In areas where Bezeq did not build a network, smaller rivals could bid for the business, the ministry said, adding that a fund using cash raised from the revenues of telecom firms would support the rollout in those places.
The ministry said amending the regulations would encourage "a wide and nationwide deployment of an advanced communications infrastructure that will enable a variety of consumer products and contribute to Israel's economy."
Bezeq, which said it was studying the proposals, could get a boost from the initiative after the former telecoms monopoly has seen its shares lose a third of their value so far this year to trade around 20-year lows.
The company has been struggling to compete with smaller rivals and has been locked in a row with the regulator over its restructuring plans that Bezeq says will help it cut costs.
"We expect that the essence of the proposition will stick, thereby paving the way for Bezeq to turn on its network and accelerate its fiber to the home deployment," said Barclays (LON:BARC) analyst Tavy Rosner.
Some 60% of Israel is already connected to Bezeq's fiber network but the company has yet to start it up.
Cellcom and Partner Communications have smaller networks, reaching almost 20% of homes, but have already started offering the service to the public.
The ministry said it has published the full proposal of regulation changes for public review on its website.