July
1999
Israel
Master Report
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Israel Master Report |
1. The Interaction between business and regulatory constraints
1.1 The regulatory background
The internal telecommunications market has been opened and liberalized following the implementation of the Rosenne Report beginning June 1,1999. The tariffs of the historical operator have been revised following the Gronau Committee and are down by 21% (since April, 1999) in preparation to the liberalization; cross subsidy among the services of the historical operator are being abolished.
General licenses for new networks and providers will follow the guidelines established in the report are to be provided in the coming months. New providers will need to stand up to standards of capability, financial soundness and technical skills.
The competition will be facilities-based; there will be universal service obligations including equal terms service offering and non-discriminatory tariffs; cross-ownership limitations will be enforced.
The new fixed-service operators will be permitted to provide their services throughout the country but will be obliged to do so in at least one "expanded demand area"; such area will include at least twelve "natural regions" form the 41 into which Israel is divided by the Central Bureau of Statistics.
Allocation of additional spectrum for additional providers of wireless cellular and for LDMS will be by made by tender.
1.2 Business constraints and entry barriers
The alternative networks being established will compete among themselves and with the historical operator in the provision of telecommunication services in the new open market created by the liberalization since June 1, 1999..
Best positioned for such competition are the Cable TV networks which has the local loop in place. The high level of penetration of Cable TV in Israel (more than 63% of the households) set Cable TV networks as the main contenders able to stand up to the demands for universal service from the new players.
Other contenders will be best able to compete as transmission backbones. Among these the Israel Electric Company, the Israel Railways and the new Cross Israel road. The Israel Railways has already asked from the Ministry of Communications for a license as "Independent Communications Operator" intending to offer data communications, Internet and additional applications.
An additional provider of transmission services will be the company MED-1 which set the LEV undersea communications cable from Israel to Sicily. This corporation is now laying an undersea cable in parallel to the Israeli coast (from Rosh Hanikra to Ashdod) intending to offer data transmission services for large customers.
1.3 Attitude of the incumbent operator towards alternative network providers
In its offer of shares of March 1998 the historical operator recorded the need for major changes in its operations to be ready to the incoming competitive market. They were aware of the need to eliminate cross-subsidy among different services and to rise the overall efficiency of its operations. A major step in the process of liberalization was the Gronau report - the historical operator tried to appeal its conclusions and moderate the drop in tariffs.
Another way the historical operator found to cope with the opened market is to speed the introduction of broadband technologies over its copper local loop, both with the expansion of ISDN services and with the upcoming ADSL services now being tested.
The historical operator is being provided with some compensation for the competition by the Cable TV companies through the authorization it received from the Ministry of Communications to participate in the two DBS (Direct Broadcasting Satellite) companies (an operating one and one for content); it has a 30% share of these companies.
The historical operator avoided a possible confrontation with the Anti-Trust Authority Commissioner and decided to upgrade that part of the Cable TV corporation network, Aruzei Zahav, that it is under her control to a two-way network.
The Cable TV companies have been carrying out experiments with IP Telephony and Internet provision in view of the coming extension of their licenses to additional communications areas.
1.4 On-going regulatory
developments concerning alternative network providers
See 1.1 above
2. Inventory of the major "public" utilities with a potential for use in I.S. applications
2.1 Types of companies offering networks
The companies that in the near future will be able to offer alternative network services are the following:
2.2 Types of operators using the networks
The possible opening of these networks to operators is dated from June 1, 1999 so that no new licenses have been already allocated.
2.3 Types of services offered by the operators on the networks
The possible opening of these networks to operators is dated from June 1, 1999 so that no new licenses have been already allocated.
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