Telecom Infrastructure

Total Telecommunications Services Revenues: $3.7 billion dollars (USD)[1]

The breakdown of this investment into market sectors is as follows:

• Fixed Services - 40%

• Cellular Telephony – 38%

• Cable TV – 11%

• International Long Distance – 7%

• Terminal Equipment and Business Systems – 2%

• Internet Services – 2%

Telephone

• Israel has 2.8 millions main telephone lines which is equivalent to a 47% penetration rate

• Israel is one of only a few countries to have a 100% digital telecommunications network

• Israel’s digital network is deployed throughout the country and includes ISDN lines and Fiber Optic           cabling

Domestic and Long Distance Service

In January 2001, Bezeq Communication’s (Israeli National Telecom), authorized monopoly of the national telephone infrastructure ended when ‘Ofek the New World Ltd’ was granted a general fixed services license by the Ministry of Communications to start operations for domestic telephone service.  Prior to this, Bezeq had annual sales of approximately NIS (New Israeli Sheqel) 9.3 billion, and retained 11,500 employees.  Bezeq is responsible for the 100% digitalization of the telecom network.

In November 1995, the Government of Israel published a tender for two additional telecommunication licenses for international service to compete with Bezeq.  There were two groups awarded these licenses.  The first license was issued to Golden Lines, owned by Southwestern Bell Corporation, Italy’s STET, Aureq, Globescom, and Meitar/Kahan. The second license was issued to Barak, owned by Sprint, Deutsche Telekom, France Telecom, Klalcom, and Matab.

• International Service Providers pay 5% royalties on all their income

• They may operate and invest jointly in submarine cabling systems

• The three providers offer consumer, business, and carrier service offerings

• There are three services delivered on the all-digital network.  They are:

•  Switching facilities that incorporate an advanced intelligent network infrastructure

•  Optical submarine cables, digital satellite links, and modern operations facilities

• The major beneficiaries of these new services are the Israeli people.  The chart below shows the decrease in consumer prices as a result of these actions[2]

• Number of Public Pay Phone: 41,407

• Number of Telephone Lines in Operation: 2,819,000

• Cost of Residential Telephone Service (USD): $140.00/month

• Cost of Residential Telephone Service (USD): $8.00/month

• Cost of Business Telephone Service (USD): $140.00/month

• Cost of Business Monthly Telephone Subscription (USD): $8.00/month[3]

Cellular

In the cellular market there are three major service providers.  They are:

• Pelephone, owned by Bezeq Communications and Motorola Israe

• Cellcom, owned by BellSouth and Safra Banking Family and Discount Investment Ltd.

• GSM Digital Technology owned by Hutchison of Hong Kong and Israeli Investors

Each company deploys different technologies to service its customers.  Pelephone uses NAMPS and CDMA Technology.  Cellcom uses TDMA technology.  GSM Digital Technology operates according to the GSM standard.  Each of the three cellular providers offers country-wide coverage.  Text and data services are now available in SMS, WAP and IP formats, and GPRS and EDGE technologies are on the threshold of being placed into use.

Today there are 3.5 million cellular telephone customers, a penetration rate of 58%, up from 0.1 million in 1995.  This explosive growth was achieved by providing nationwide coverage, low tariffs, use of the Calling Party Pays (CPP) method, network quality and an effective marketing strategy.[4]

Analyst’s predictions indicate a significant slowdown in the cellular arena in 2001.  Pelephone is expected to persist with its share of the cellular market in 2001.  Cellcom will face a shortage of frequencies in 2001 that could affect its growth rate.  Cellcom may be forced to adopt new technology, CDMA or GSM, to solve this problem.  No predictions were made about GSM Digital Technology.

The following diagram shows the growth of the cellular industry over the last six years.

Commercial Broadcasting

Israel has 1.15 million cable-connected households, a penetration rate of 72%.   Cable TV coverage extends to 95% of the households in the country.[5]

There are three multi-channel cable television operators, each with a geographic monopoly, as well as a Direct Broadcasting Satellite operator that uses Israel’s AMOS-1 satellite. 

Israel has two national television channels, one public and one commercial.  A second commercial channel is expected to start operating in 2001.  Additionally, there are five special interest channels.

[6]

Internet

Israel has an estimated one million users, 30,000 domains, 800,000 dial-up and 5,000 direct-connect customers.  Approximately, 305 of Israeli households, and 60% of Israeli businesses use the Internet.  There are four major and thirty smaller Internet Service Providers (ISP’s) that service Israel’s Internet users.  An annual growth rate of 50% is expected over each of the next five years.[7]

Factors encouraging this type of growth include:

• Widespread use of computers in businesses and households

• An advanced local telecommunications infrastructure

• Low tariffs and

• A regulatory policy of minimal intervention

Other factors encouraging Internet usage are:

• The availability of sophisticated Hebrew language portals

• Israel’s recognition as a leader in the development of Internet applications and products

• Israeli companies years of marked success in the Internet arena

This international reputation is recognized on the home market and contributes to local interest and use of the Internet.

Main Internet Service Providers

[8]

Main Internet Portals

[9]

The following chart, developed in 1997, was taken from the below listed source and summarizes some of Israel’s ISP’s and their offerings.

Click on the above ISP’s links to see a map of their networks!!![10]

Number of Internet hosts registered with the Israel Internet Association: 48,433

Number of Internet users as of December 2000: 1,270,000

Number of Domestic Internet users as of December 2000: 1,130,000

Number of Internet users per 100 inhabitants: 17.41 (12/2000)

Estimated Internet penetration in businesses: 77,000 or 60% (12/2000)

Number of Telecommuting workers as of 1998: 15,000[11]

In addition to fiber optic and digital networks, Israel makes use of modern X.25, Frame Relay, ATM, IP, and Switched networks to service its Internet users.