1 / 47

Israel’s Telecommunications

Israel’s Telecommunications. Towards Competitive Advantage Daniel Rosenne Director General, Ministry of Communications rosenned@moc.gov.il. Presentation Agenda. Networks & Services Competitive areas: Cellular telephony International Telecommunications The “Second Wave” of Competition:

fadey
Download Presentation

Israel’s Telecommunications

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Israel’sTelecommunications Towards Competitive Advantage Daniel Rosenne Director General, Ministry of Communications rosenned@moc.gov.il

  2. Presentation Agenda • Networks & Services • Competitive areas: • Cellular telephony • International Telecommunications • The “Second Wave” of Competition: • Telecommunications • Broadcasting • Manufacturing Industry

  3. Network & Services

  4. Israel's Telecommunications • 2.8 million main telephone lines • (47% penetration). • 2.5 million cellular customers, on three networks: Pelephone, Cellcom & Partner/Orange. • (42% penetration). • 1.1 million Cable-TV connected households. • (3 operators, 70% of passed households, 90% household coverage).

  5. Telecommunications Services Market - 1998 Cable TV International Long-Distance Internet services Terminal Equipment & Business Systems 2% 2% 7% Cellular Telephony 11% 38% Fixed Services 40% Total telecom services market ~ $ 3.7 billion

  6. The Cellular Boom:Israel Telecommunications Services Revenues, 1995-1998 ($US M) 2,000 Fixed 1,500 Cellular 1,000 International 500 CATV 0 1995 1996 1997 1998

  7. Existing Regulatory Environment • Separation between regulation and operation (since 1984). Regulation responsibility - Ministry of Communications. • General operating licenses issued to Bezeq, cellular operators & facility based international long distance service providers. • Special licenses issued by the Ministry of Communications, for value added services. • Exclusive rights of Bezeq in fixed services canceled, as of 1 June 1999.

  8. BezeqThe Israel Telecommunication Corp Ltd. • Israel’s national telecommunications operator. • Annual sales - NIS 9.3 billion. • 11,500 employees (8,500 in Bezeq, the mother company). • Bezeq pays 5% royalties on income. • Regulatory environment: • Price cap tariff regulation (CPI - X formula). • Universal service obligations.

  9. Modern Fixed Network • 100% digital network. • #7 ISUP signaling. • Country-wide Euro ISDN. • AIN features. • SDH transmission. • Country-wide fiber deployment.

  10. Cellular TelephonyCompetition Introduced December 1994

  11. Cellular Operators • Pelephone: 800 MHz NAMPS and CDMA. Operations since 1987. Bezeq (50%), Motorola (50%). • Cellcom: 800 MHz TDMA. Operations since 1995. BellSouth (34%), Safra Brothers (34%), Discount Investments (12.5%), PEC (12.5%), private investors (7%). • Partner/Orange: 900 MHz GSM. Operations since October 1998. Hutchison (46.67%), Matab (20.31%), Elbit.com (16.5%), Tapuz (16.5%)

  12. Cellular Telephony • High growth - 2.5 million subscribers, compared to 125,000 in January 1995. • Key expansion stimulators: • Low tariffs: ~ US $0.11 to 0.23/minute air time, ~ $11 to 29 monthly charge. (300 min average monthly bill - $56 to 74) • Calling Party Pays (CPP), in operation since 1994. • Nationwide coverage. • Competition.

  13. International TelecommunicationsFacilities Based Competition Introduced July 1997

  14. Facilities Based International Service Providers • Bezeq International (014) The incumbent carrier, 100% owned by Bezeq. • Two new carriers, operating since July, 1997: • Golden Lines (012) • STET, SouthWestern Bell, • Aurek, Globscom & Meitar/Kahn. • Barak (013) • Sprint, Deutsche Telekom, France Telecom, • Clalcom & Matav.

  15. Dialing Parity Rules • Per-call carrier-selection prefixes (01X). For each of the international service providers. • Pre-selection - subscribers can choose a preferred provider for ‘00’ prefix and ’188’ international operator services. Pre-selections of existing subscribers that didn’t choose will be “re-allocated” between operators. • Competitive practices - services & consumers’ data provided by Bezeq to all operators on non-discriminatory basis.

  16. Resulting MarketEnvironment • Highly competitive market, with low customer switching barriers. • Drastic cuts in retail tariffs(USA - 0.20$/min, UK - 0.18$/min, Japan - 0.30$/min). • International long distance calls - a commodity. • The incumbent carrier, Bezeq International, lost its dominant position (60% > billed minutes) within 70 days.

  17. Submarine Optical Cables Infrastructure EMOS CIOS Cable RFCS Capacity EMOS 1990 280 Mb/s CIOS 1994 622 Mb/s LEV 1998 5 Gb/s FLAG 1999 5 Gb/s LEV FLAG

  18. Additional Aspects

  19. Internet Services • ~30 Internet service providers, 800,000 users, 300,000 dial-up & 2,000 directly connected customers, 18,000 domains. • Typical tariffs: • ~ $15 monthly fee, including 10 usage hours, ~ $1.5 for each additional hour. • Unlimited access at ~ $1 per day. • IIX (Israel Internet eXchange) domestic interconnection service. • High growth - prediction for 1.2 to 1.5 million users by year end 2000.

  20. The Israel Internet 2 Network • Part of the global research network for the NGI (Next Generation Internet). • Connecting Israel to the forefront of scientific and industrial R&D, through: • StarTap - US NSF/I-2/NGI interconnection point. • Quantum - EC International test network (TEN-155). • Q-Med - Mediterranean consortia (Cyprus, Greece, Israel, Italy) Quantum extension. • 34 Mb/s connection to London, 45 Mb/s connection to Chicago (155/622 Mb/s - planned). • 10 Mb/s & 155 Mb/s domestic connectivity (622 Mb/s, 10Gb/s - planned).

  21. Civilian Satellites • AMOS-1: TV distribution, SNG & VSAT • launched May 1996. • Geostationary orbit at 4o West. • 7 transponders, covering Middle East & Central Europe. • Designed, manufactured and controlled by Israel Aircraft Industries. • Gurwin-II TechSAT: communications, remote sensing & research • Launched July 1998. • 830 km altitude sun-synchronous circular orbit. • 50 kg, 3-axis stabilized Earth-pointing microsat. • Designed, manufactured and controlled by the Technion - Israel Institute of Technology.

  22. The “Second Wave” of Telecommunications Competition

  23. Competitive Environment • Wide competition in customer premise equipment and value added services. • Limited competition in cellular and international services. • Two monopoly areas: • Bezeq - Domestic fixed services (Infrastructure, transmission, data communications & telephony). • Cable TV operators - Multi-channel subscriber television.

  24. New Regulatory Policy(Promoting competitive Advantage) • Competition in fixed services. • Structural change of the telecommunications sector: • Liberalization. • Privatization. • Re-regulation.

  25. Competition Rules • Three tier market structure: • Mobile services (Cellular & PCS). • Fixed domestic services (infrastructure, transmission, data comm’s & telephony). • International services. • Facilities based competition. • Universal service obligations- including equal terms service offering requirement, at non-discriminatory tariffs. • Cross-ownership limitations, assuring fair competition.

  26. Facilities based competition • New operators required to set up their own facilities. • No unbundling or co-location requirements on existing operators. • Interconnection rules, including tariffs, technical requirements, equal access and number portability.

  27. 1999 2000 & onwards • Pelephone • Cellcom • Partner/Orange • PCS operators • Pelephone • Cellcom • Partner/Orange • Bezeq • Competing • Operators: • Wireline • Wireless • Bezeq • Bezeq International • Barak • Golden Lines • Additional operators • Bezeq International • Barak • Golden Lines Israel’s Telecommunications Map 1994 Mobile Services • Pelephone Fixed Services (Infrastructure, Transmission & Telephony) • Bezeq International Long Distance Services • Bezeq

  28. Proposed New Frequency Bands Allocations Band Application Allocation Year 800/900 MHz Cellular 30 MHz 1998 2 GHz PCS/UMTS 300 MHz up to 2005 2 GHz N-FWA/WLL 60 MHz 1999 3.5 GHz N-FWA/WLL 90 MHz 1999 26/28 GHz B-FWA/LMDS 1300 MHz 1999

  29. Bezeq in the New Era • Structural regulation. • Universal service obligation. • Tariff controls, until market share in domestic services (Infrastructure, transmission, data services & telephony) falls bellow 60%. • Tariff re-balancing, dealing with access deficit and cross subsidies.

  30. Bezeq Tariff Rebalancing - April 1999 • One step rate rebalancing, almost eliminating cross-subsidies between services (voice traffic still subsidized telephone access). • New price-cap regime - productivity gap (x-factor) of 7% (6% in 1999, will be adjusted if Bezeq output deviates from predictions). • 6% average rate decrease (21% decrease on voice traffic, 16% increase on fixed monthly payment. Typical tariffs - NIS 0.208 for local call, NIS 36.1 monthly payment, 532 NIS for line installation). • ROE (before tax) - 10.5%.

  31. Interconnection Rates Interconnection Israel EU Tariff benchmarks Local 0.8 0.7-1 Urban Toll 1.3 1-2 National Toll 2.5 1.7-3 US cents, $1 = NIS 4.16

  32. Bezeq Privatization • Bezeq shareholders: • Government of Israel - 54 %. • Cable & Wireless - 13%. • Remaining shares - publicly held. • Government’s holding shall be further reduced, in synchronization with market liberalization. • Government approval required for holding of more than 5%.

  33. Introduction of CompetitionBroadcasting

  34. Broadcasting Networks • Radio - • Public radio - 7 national AM/FM radio stations, AM Arabic channel & world-wide short-wave service. • Commercial radio: 14 local FM radio stations. • Television - • Public channel (Channel 1). • Commercial channel (Channel 2). • Multi-channel subscriber TV - 3 regional cable TV operators, providing service over 550 MHz (50 channels) systems, including 7 self provided program channels.

  35. “Open Sky” - NewBroadcasting Policy • Creating competitive broadcasting market. • Key policy ingredients - • Public broadcasting - new definitions (goals, structure, finance). • Commercial broadcasting - introduction of second commercial television channel & private country-wide radio stations. • Multi-channel subscriber television - introduction of direct broadcasting satellite, in competition with cable television. • Broadcasting digitization - radio & Television, terrestrial, cable television & satellite (DAB/DVB).

  36. Competition inMulti-Channel Subscriber TV • DBS (Direct Broadcasting Satellite): • Digital system, ~60 cm receiving antennas. • Basic package of ~10 channels. • Additional pay channels/channel packages. • Local content obligations. • Local production of additional cable/satellite channels: • Israeli music. • News (2 channels). • Jewish heritage. • Immigration absorption. • Arabic channel.

  37. Manufacturing Industry

  38. Israel’s Electronics Industries • Combined 1998 sales - $8.1 billion, of which $6.6 billion were exports sales. • Highly skilled workforce - 45,000 employees, including over 27,000 engineers & technicians, 17,000 of them university graduates. • Output per employee - over $180,000.

  39. Total 1998 Sales - $ 8.1 billion Industrial & Medical Systems 23% Telecommunications 40% Components 14% Defense Systems 23%

  40. Industry Excellence Areas • Telecommunications - Internet, data communications, wireless, video & image processing, satellite communications, access networks, broadband, etc. • Semiconductor manufacturing equipment. • Defense systems - self developed main platforms, opto-electronics, radars, C4I, UAV (Unmanned Air Vehicles) & avionics.

  41. Statistical Highlights Electronics All Other Industries Industries Exports [% of total sales] 81 25 Added value [%] 68 42 Engineers & technicians [%] 61 14 Employees in R&D [%] 12 2

  42. Major R&D EffortsStretching Boundaries of Imagination & Ingenuity • Innovative synergistic industry-academy cooperation, supported by the Chief Scientist, Ministry of Industry & Trade. • Over 100 industrial & academic participants. • Focused on establishment of the technological infrastructure for the next generation. • Key telecommunications R&D activities: • Digital wireless • Satellite systems • Broadband telecommunications • Internet & Multimedia • Telemedicine • Microelectronics • Network management

  43. Summary

  44. Israel’s Regulatory Policy • Structural changes - achieving strategic advantage in competitive global markets. • Competition - the key for innovation, entrepreneurship, investment & growth. • Key action areas: • Liberalization. • Re-regulation. • Privatization.

  45. Regulation Philosophy • Free and competitive markets promote growth, efficiency, customer satisfaction & economic advantage. • Market restructuring, in transition from monopoly to open and free market, during a short time period, requires active regulatory intervention. • Once competitive marketplace is achieved, strong regulator will provide unnecessary intervention, and should be abolished.

  46. For more information:http://www.moc.gov.il

  47. The End Thank you for your attention

More Related