Israel – Telecommunication

Review of Israel’s Telecommunication Market Sector :-

Fixed Services :-

The penetration rate of phone lines to households is falling, owing mainly to increased use of mobile services and broadband (rather than dialup) internet, and currently stands at approximately 92%, while the home-pass rate for domestic telephony exceeds 99%. Broadband service in Israel (by cable modem or ADSL) has a home-pass rate of 99%, and a penetration rate of approximately 85% of households (2014). High speed internet access is firmly entrenched as a standard service in most Israeli homes, with average speeds of about 35 megabits per second.

In March 2002, the cable companies were granted licenses to provide broadband telephony access on their infrastructure (using cable modems). The cable infrastructure became a competitor to the Bezeq infrastructure. As a result, the penetration rate of broadband grew from approximately 4% in 2002 to approximately 85% in 2014, with a home-pass rate of 99%. The prices of broadband internet access have decreased precipitously, and currently stand at approximately NIS 88 (about $23) per month, with average speeds of about 37 Mbps. Since high-speed internet access is a key driver for the global ICT economy, it is also a key to advancing the Israeli market. Recent market developments have increased the pace of speed upgrades among consumers, with Bezeq offering services of up to 100 Mbps and HOT offering up to 200 Mbps. Bezeq has rolled out a fiber-to-the-building (FTTB) network and HOT is upgrading their hybrid fiber-coax network to enable higher speeds for more consumers. In addition, the “Unlimited” venture, a joint venture between the Israel Electric Corporation and a strategic investor, is in the first stages of rolling out a countrywide FTTB network.

Since September 2004, it became possible for new competitors to enter the fixed telecommunications service market, free from universal service obligations. Five providers are operating in accordance with such licenses, which are granted to operators who own limited infrastructures and to operators who provide VoIP service over the broadband infrastructure of other operators.

Cellular Telephony :-

There are five cellular operators in Israel who provide countrywide services using various technologies, as shown in the table below:

·          Cellcom provides in-country roaming services to Golan Telecom

·         Partner and HOT Mobile share their allocated frequencies and deploy a shared RAN using MOCN 

·         Only HOT Mobile subscribers are served by the iDEN system

In addition to these infrastructure-based competitors, the Ministry amended the regulatory framework to allow the provision of services by mobile virtual network operators (MVNOs). Two of Israel's leading supermarket chains have begun offering services as MVNOs.

The introduction of competition in 1995 led to an extremely high subscriber growth rate, one of the highest in the world. As of 2014, penetration stands at approximately 125%. This rapid growth was achieved by providing nationwide coverage, low tariffs, introduction of the Calling Party Pays (CPP) method in 1994, network quality, and effective marketing. On December 18, 2001, tenders were concluded for licenses for additional 2G and 3G cellular frequency bands, in order to expand network capacities and enable the use of broadband cellular applications employing DCS-1800 and UMTS technologies. Cellcom, Pelephone and Partner participated in these tenders; a total of 115 MHz were assigned to those parties at a total license fee of US$ 240 million. The new frequencies enabled the operators to provide GSM 1800 modern services and third generation UMTS features. During 2004, an additional 10 MHz were assigned to the UMTS network of Cellcom, by tender, and in 2010, a further spectrum tender resulted in the entry of two new operators. Each of the winners was allocated frequencies in the 2100 MHz band.

A tender for 4G service in the 1800 MHz band was published in July 2014. Six winners were announced in January 2015, including all five existing operators and a new entrant, 018 Xfone. Frequencies were assigned to all winners except two who have not complied with all the relevant requirements.

Approval for RAN sharing between two of the existing operators was issued in April 2015, and approval for sharing their respective assigned frequencies was issued in August 2015.

As part of the process of increasing competition, the Ministry lowered the regulated rate for termination of calls on mobile networks from approximately NIS 0.27 to approximately NIS 0.07 at the beginning of 2011, after comprehensive consultation. These updated rates contribute to a more competitive environment and better reflect the cost of terminating calls on mobile networks.

Number Portability :-

On September 1, 2006, the act approved by the Israeli government regarding the implementation of number portability in Israel came into effect. The Portability Law allows fixed and mobile telephony subscribers to keep their phone numbers when changing operators. In 2014 over 2,600,000 consumers took advantage of this option, which is seen as a critical factor in improving the competitiveness of both the mobile and the fixed telephony markets. One notable feature of the Israeli number portability scheme is the short turnaround time of three hours, with no more than half an hour's interruption of service. The introduction of two new operators was a significant test of the number portability system, which continues to perform well.

Turnaround time was further reduced from three hours to 30 minutes.

International Telecommunications Services :-

International long-distance services have traditionally been a monopoly of Bezeq International. In July 1997, two privately-owned facility-based carriers, Golden Lines and Barak, were also licensed. In May 2004, three additional licenses were granted: to internet Gold, Xfone, and Netvision. Some smaller entrants have since begun offering services, bringing the total to eight.

In 2014, outgoing fixed international telephone traffic amounted to 1.5 billion minutes; the figure for incoming traffic was 1 billion minutes.

The licensed operators currently deliver services over a modern digital network, including several switching facilities incorporating advanced intelligent network infrastructure. The operators also use VoIP technology. Some additional enhancements are: optical submarine cables (including Lev, a 5 Gb/s fiber cable between Israel, Cyprus and Italy, in service since 1998, and MED Nautilus, a 3.84 Tb/s DWDM system in restorable ring configuration, between Israel, Cyprus, Greece and Italy); digital satellite links; modern operator facilities; and advanced data communications facilities. In recent years, two new submarine cables were inaugurated – one (owned by Bezeq International) to mainland Europe, and the other (owned by the Tamares Group) to Cyprus. These new cables carry mainly internet traffic, which is growing at a fast pace.

Outgoing traffic quickly tripled and the new carriers rapidly gained substantial market share as the incumbent operator lost its exclusive position. Fair and transparent interconnection arrangements, equal access rules, and bold cuts in retail prices, have enhanced competition in international services. As a result of the competition –in 1997, prices dropped by approximately 70%, and 2004 saw additional substantial reductions. Today, owing to significant competition from non-licensed traffic such as VoIP, international calling is becoming part of a bundle of services. For example, many mobile operators offer unlimited international calling to a large number of destinations as part of their service package.

Internet & Broadband :-

 There are three large internet service providers in Israel and 45 smaller license holders, serving more than three million users, including over 85% of households and over 80% of businesses. Cellular phone companies introduced wireless internet in 2001. Bezeq began to offer ADSL services in 2000, and the cable companies started to provide broadband cable modem access in March 2002.

Internet service providers purchase international IP bandwidth, connect to the backbone networks of Bezeq and HOT, and provide services to consumers based on a VPN configuration. The average purchased speed in Israel is approximately 37 Mbps, with speeds of up to 200 Mbps available on HOT’s network and 100 Mbps on Bezeq’s network (download). Bezeq completed the rollout of an FTTB network. while HOT is investing in their hybrid fiber-coaxial network to provide higher speeds as well

As a result of the competition, the penetration rate of broadband to households has grown from approximately 4% in 2002 to approximately 85% in 2014. Fixed broadband service in Israel (by cable modem or ADSL) has a home-pass of 99%. The tariffs of broadband internet dropped substantially after introducing the wholesale regulation in 2015. Broadband internet is now a common household product.

The cable company and Bezeq are obligated to provide universal deployment of broadband internet access service. Broadband penetration rates are high: over 1,375,000 ADSL subscribers and 700,000 cable modem subscribers, constituting a penetration rate of 85%, placing Israel among the leading countries in the world in terms of broadband penetration.

Factors encouraging this growth include the competition between Bezeq and the cable company (both are under universal service obligation for broadband as well as telephony), competition between five major ISPs, widespread use of computers in business and at home, advanced telecommunications infrastructure, and a regulatory policy of minimal intervention. Several sophisticated Hebrew-language portals and a vast array of Hebrew web sites also contribute to ubiquitous internet use in Israel. In addition, the Israeli government has undertaken many e-government initiatives and many interactions with government agencies are done online, such as license renewal, payments, taxation, viewing of court documents, etc.

Israel is a world leader in developing internet technologies and applications, and Israeli companies operating in the field have marked several international successes. This international reputation is also recognized in the home market, and influences local interest and use.

The country's strong tradition of academic inquiry and research has placed Israel on the global research network for the NGI (Next Generation Internet), linking Israel to the world's seekers of scientific and industrial knowledge through StarTap (Chicago) to the U.S. Internet2 Network, through the Point of Presence (London) to the EU GEANT Network and to Q-Med (Mediterranean consortium Quantum extension).

Statistics :-

C)   Internet & Broadband

D)  Cellular Telephony

E)   International Telecommunications Services

F)   TV Broadcasting