ESIS extension / Key Person Contacts and Organisations / Israel / Update Memo 5

1.1 The New Chief Scientist, Carmel Vernier, announce significant changes in the RTD Law

An inter ministerial committee for the preparation of the new RTD Support Law was established and is chaired by the new Chief Scientist of the Ministry of Trade and Industry, Carmel Vernier, and by the head of the Budget Division of the Ministry of Finance, David Milgrom. Carmel Vernier does not demand that the budget for RTD be enlarged but expect it to be defined as a fixed percentage of the overall GPB or the government budget. His purpose is to have more flexibility and a larger latitude for decision in setting up and carrying out the RTD policy. He thinks that in the new law, several programs should be included like the MAGNET program for joint infrastructural research by the academy and the industry; the Technological Incubators program; the international cooperation programs. His purpose is to have all these programs under the same umbrella as policy tools of the Chief Scientist Office. He suggest more flexibility regarding the results of the RTD process – instead of insisting that the production should remain in Israel the new law will demand that the fruits of the Intellectual Property that was developed by RTD with support from the government RTD program should remain in the country. The share of the government grants for RTD should be up to 50% and the research committees should be allowed, in a case by case basis, to determine the exact amount. (Haaretz, June 11, 2000 page C1).

The General Manager of the cellular telephony company Yigal Bar Yosef announced that in May the company added 50 thousand new subscribers. Cellcom announced that it added 40 thousand new users, a rate similar to the whole number for the first quarter. Circles closed to the industry evaluates the number for Partner as 25 thousand for May. The Marketing Manager for Partner, Yacov Kedmi, explained that the main consideration of new users in choosing a cellular company is the style, design and quality of the telephone itself; the delay in getting the necessary equipment is the explanation they have for the small number of new users in May. (Haaretz, June 1 2000, p. C1).

The ammendment to the Telecommunications (Bezeq) Law that will enable the concession of licenses to the Cable TV corporations to provide telephony, broadband Internet access and other communications services will include a provision on the body which will determine the value of the license. It seems that only a foreign arbiter may be acceptable; to find an impartial Israeli CPA Office or Economic Consulting company may be an impossible mission. The three cable companies are controlled by three of the central holding corporations in Israel. Any Israeli candidate as arbiter most certainly has business relations to one of the hundreds of companies related to the families Nimrodi, Recanati, Denkner and Moses. Prof. Haim Ben-Shachar and Prof. Ytzhak Souari were among the Israeli names suggested but both said they will not be able to carry out this job (Haaretz, June 15 2000, page C2).

A recent survey by Gallup indicates that 29% of the households in Israel are connected to the Internet. This is an 23% increase since December 1999. The survey was carried out in June among a sample of 1,200 users. The mean time spent in the network is rising and is now 10 hours weekly compared to 7.9 hours in 1998 and 9.5 hours in 1999. The main portals are Walla (visited by 46% of the users); Yahoo (21%) and Nana (21%). The main Internet providers are Internet Zahav and Netvision each with 33% of the private market. The remaining main ISPs are: Internet Bezeq Beinleumi (14.2%); BezeqNet (7.2%) and Barak Online (5.6%). (From Haaretz, July 17, page C8).

Rafi Gidron and Orni Petroushka, founders of Chromatis will receive shares at a value of 450 million dollars each, for their 10% interest in the company. Petroushka studied engineering in the Technion, Israel Technological Institute and completed his second degree in Cornell University; he then worked in the Bellcore Laboratories in the development of communications protocols. In the early nineties he arrived to the E.C.I. company and served as system engineer in the area of SDH. In ’93 he established the Scorpio company that dealt in the area of ATM technologies; this company was bought by U.S.Robotics in ’96 for 72 million dollars. In ’97 he established a new start up now sold to Lucent. Dr. Rafi Gidron was the joint director of the Center for Communications Research at Columbia University where he completed his studies. He managed projects in the area of ATM and WDM. He established with Orni Petroushka the Scorpio company and after it was sold he managed the Strategic Planning Unit of U.S.Robotics until the establishment of Chromatis in 1997. (Haaretz, June 1 2000, C1).

Amir Haiek, the General Manager of the Israel Export Institute announced that exports of Software from Israel reached in ’99 2.2 billion dollars, that are 45% of the services exports of the country. Lately the Institute established a database investors, directors and marketing personnel that may help Israeli Software Corporations to penetrate into foreign markets.

The Teleseker Internet Monitor survey found that 21% of the Internet users stated that they buy products or services through the Internet; this is about a quarter of million users. 8.7% of the users said they buy books (42.1% of the population of buyers); 5.1% (24.4% of the buyers) said they bought computers or supporting equipment; 3.3% of the users (15.5% of the buyers) bought home electrical equipment. The preferred ISPs found in the survey are: Internet Zahav (34.4%); Netvision (31.8.%) and Bezeq-Bezeqnet (13%). The main applications used are electronic mail (74%); search of data and information (73%) and downloading of programs and files (59%). (Haaretz, June 28 2000, page C6).

The businesman Benny Gaon and his Arab partner have almost entirely completed the establishment of an Arab portal that will start broadcasting in a month to the Arab countries. Gaon invested almost 2 million dollars in the portal which will compete with the leading Arab portal, Planet Arabia (the Arab Star). Gaon’s portal which will be called Away (http://www.away.com) has contracted with Reuters to receive news. The portal will be established in an Arab country said Gur Holzman, the general manager of Genius Technology, the company in which Gaon has a 54% share and which is establishing the Portal. An advantage for the portal is its use of a virtual Arabic keyboard that appears on the screeen independently from the user’s computer operating system. This way anyuser can send email Arabic messages from any computer without any addiional adaptations. The other partners in Genius (Gaon) Technologies are Sami Katsav (20%); Magor Holdings (Oded Ronen) (13%); and the Oz Atid (Danael Manpower, Yehuda Adir) (13%). (Haaretz, June 28 2000, page C7).

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It does not necessarily reflect the views of the Commission, nor does the Commission accept responsibility for the accuracy or completeness of information contained herein.
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