Update:
July 1999
Israel - General Telecom Policy
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Israel - General Telecom Policy |
In the last three years several government committees have issued policy recommendations in the areas of telecommunications and broadcasting; these recommendations are being translated into governmental decisions and implementation.
The inter-ministerial Wax-Brodet-Lyon Commission was established to examine the policy in the telecommunications sector and opening it to competition. It presented their findings to the Minister of Finance and the Ministry of Communications in December 1996.
The implementation of its recommendations has been set up by the Rosenne Committees reports of February and September 1998.
The Peled Committee was established by the Minister of Communications in October 21, 1996. It has been given a mandate to prepare recommendations for extending and re-organizing of the broadcasting system for public radio and television and reforming the overall broadcasting map. The scope of the Peled Committee included present and expected broadcasting elements; broadcasting by terrestrial, cables and satellites means.
The Wax-Brodet-Lyon Commission Recommendations
The Committee defined the main aims of the government's telecommunications policy as follows: (1) To provide a wide variety of modern telecommunications services; (2)To assure quality telecommunications services, in line with other well-developed economies; (3)To achieve reasonable tariff levels (4) To ensure universal service; (5) To create a competitive environment, which will, in turn, promote technological innovation, economic efficiency and ample investments; (6) To safeguard vital national interests; (7) To safeguard national security interests.
The Committee perceived competition as the primary means for achieving these policy goals; its main recommendation was to open up domestic fixed telecommunications services (infrastructure, transmission, data communications and telephony) to competition no later than January 1999.
The Committee's recommendations were adopted by the government on January 3, 1997. An Implementation Committee headed by the Director General of the Ministry of Communications (Daniel Rosenne) was appointed and submitted detailed guidelines for the implementation of competition and structural changes in the telecommunications sector (October 30, 1997). The Ministry of Communications turned to the public for an in-depth review and evaluation of these guidelines (February 10, 1998) presenting alternatives regarding the definition of service areas for fixed-service operators. Following this public consultation process updated recommendations of the Rosenne Committee were published in September 6, 1998.
The future Telecommunications Map Envisaged by the Rosenne Committee
The Israeli telecommunications sector will undergo major restructuring set in motion in June 1999 at which time licenses will be granted to domestic fixed-services operators. The changes include development in the following areas:
In light of the importance of innovation and creativity of SMEs competition in non-infrastructure services will be implemented as much as possible through licenses for value added services in traditional wireless services (paging, two-way radio and trunking) and terminal equipment.
Competition will be facilities based and each telecom operator which provides infrastructure, transmission, data communications and telephony services will be required to set up its own facilities.
Fixed operators will not be permitted to provide services to non-subscribers and those not connected to their facilities by an independent access network under the operator's control.
The competition rules will not impose unbundling of existing services or sale of facilities to competitors. Except for the obligation of every operator to sell its services to anyone who demands them, including competitors, no operator will be compelled to allow competitors to install facilities on its own premises (co-location).
Every telecom operator, fixed or mobile, incumbent or new, will be obliged to meet the following requirements:
The following conditions for development of competition must be established:
Granting Licenses to New Operators
Competition in fixed telecommunications services will be fostered by granting a license to entities which comply to high preliminary qualifications. Licenses requiring the use of a limited resource, such as spectrum where a license can be given to a limited number of operator will be granted by public tender.
Competition in mobile communications services will be fostered by granting licenses through public tenders since the limitations of the frequency spectrum availability do not allow multi-party competition.
In 2002 licenses for the supply of international services will be granted on demand in accordance to assessment of compliance with criteria based on capability, financial soundness and technical skills.
Limitations involving cross-ownership will ensure competition by means of structural separation among bodies operating at various strata - fixed telecommunications, mobile telecommunications and international telecommunications - as well as limiting the capability of any single entity to hold, control, or direct more than one company in each stratum .
Licensing of new fixed-services operators will be long term; twelve years with the option of extension for an additional ten years. Fixed services operators may possible receive legal exemptions and easements, such as rights-of-way, similar to those granted to Bezeq.
Telecommunications operators will provide services to every subscriber and other licensees under equal conditions and without discrimination.
The new fixed-service operators will be permitted to provide their services throughout the country, but will be obliged to do so in the "expanded demand area"; this will be enforced gradually, and will be fully operational within three years of granting of the license; the expanded area will be defined in advance in the license of each operator, and will include at least twelve "natural regions" based on the administrative division of Israel into 41 such regions by the Central Bureau of Statistics. The expanded area of a cable television concession holder will be a cluster of all his concession regions; Bezeq's expanded demand area will be the entire country.
Bezeq will be obliged to continue to ensure countrywide universal access, i.e. the provision of a wide range of telephony services to every Israeli citizen, as entailed by Bezeq's dominant position and activities in every region of the country.
The contents of the universal access basket provided by Bezeq will be revised every five years. Presently the Committee recommends basing universal access on availability of the following services:
If Bezeq is the sole provider of universal access in certain areas the regulating body will consider participation of other fixed services licensees in funding of universal service, by paying a fixed percentage of their total income.
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Bezeq - The Historical Operator
Regulating the activities of the historical operator, the Bezeq, in the early stages of competition is of key significance for the advancement of telecommunications liberalization, as every new operator will have to be linked to Bezeq's network, and Bezeq bears the main burden of providing universal access.
As long as Bezeq remains a monopoly in the fixed market (infrastructure, transmission, data networks and telephony) with revenues of more than 50% of the market in at least one of the primary operational spheres or sectors it must be closely supervised so as to safeguard fair competition, in particular concerning:
The arrangement for the regulation of Bezeq's tariffs set by a committee of experts in 1993 expired at the end of 1998. A new committee of experts, headed by Professor R. Gronau, formulated the regulation determining the level of Bezeq's tariffs and the way those tariffs are updated; it also addressed reduction of cross-subsidization and determination of interconnection tariffs. The committee developed an innovative macroeconomic model that enable it to analyse the structure of the telecom tariffs validating it through traditional analyses carried out in other countries.
The Gronau Committee recommendations were accepted by the Minister of Communications and brought by her for approval by the government and the Finances Committee of the Parliament. From 1.4.199 the tariffs for intra country calls were lowered by 21% .
The Gronau Committee recommended that the tariffs be lowered by a mean rate of 8%; the company estimated that for the household customer the mean lowering of the telephone invoice is about 12% .
Recommendations for extending and re-organizing the broadcasting system for public radio and television; reform the overall broadcasting map including present and expected broadcasting elements; broadcasting by terrestrial, cables and satellites means. The recommendations of the committee are the following:
The main recommendation is the pursuing the creation of a free market for electronic communication services based on the principle of "Open Skies". The following steps are necessary:
(a) Immediate decision for a planned and phased regulation of the electronic communication sector including the necessary legislation. (b) The removal of restraining barriers. (c) Implementation of an open market under fair and equal conditions ensuring security and freedom of choice for all branches of the electronic media.
The committee suggest the consolidation of the present legislation throughout the Broadcasting Act in Israel;the Creation of a National Authority for Electronic Communication Services similar to the FCC that will be the Statutory Regulator .It will deal with planning, licensing and supervision of all broadcasting services; they recommend the inclusion of the telecommunication services within the framework of one Authority.
A Commission for Public Complaints will be established and an unified code of ethics for broadcasting and advertising established.
They recommend the transition from Broadcasting Franchises to Broadcasting Licenses preventing future claims of exclusivity or "first rights" which may prevent or limit free competition and technological innovation.
Another aspect of the recommendations aims at a clear separation between carrier services and content services.
The regulation of the carriers services sector will aim at equal competition offering carrier services to content services license holders. No conditions of exclusivity on service provision will be allowed; content license holders may offer their services to the public through any carriers concurr, in part, or in whole.
Regulation of the content services sector will provide for a competitive framework aiming ar: (a) Pluralism and variety of broadcasts; (b) Uniform ethical guidelines in broadcasting and advertising; (c) Safeguarding original Israeli productions and support to Israeli producers and artists.
Content license holders, except for public broadcasting, will be entitled to use all methods of financing available as long as transparency is maintained. Licensees will publish who directly or indirectly holds over 5% of the holding entity. Licenses will be limited to a fixed period of time and the holder abides to the threshold conditions determined in the license; enforcement conditions for the licenses conditions will be included in the law.
Content providers will be able to provide news and information services without limitations as far as the framework of the code of ethis and the prevention of conflict of interests is maintained.
Limitations in ownership in both the carrier and content sectors will be implemented and equal conditions for competition limiting cross ownership.
Recommendations for the reform of the Public Broadcasting sector in Israel are being prepared by the Zuckerman Committee established by the Prime Minister so that the Peled Committee restrains from making recommendations in this area.
One important recommendation is for a planned and phased, transition to digital broadcasting in the television and radio sectors: (a) Three years for digital broadcasts; (b) Five to eight years for all the population to receive digital broadcasts.
The committee recommends examining the expected development of motion and sound through the Internet which will change the Web into a global network providing TV and Radio programs.
Due to the complexity of the transition period and the abundance of government authorities and statutory bodies involved it is advised to prepare the Broadcasting Act immediately so that the National Authority is established no later than the end of 1999 and the full "Open Skies" policy is arranged in time from 2003 onwards.
The commission recommended the immediate allocation of licenses for direct satellite broadcasting (DBS). Broadcast licenses will be allocated to one-channel and to multi-channel broadcasts coded as Pay TV. DBS licenses uncoded and free of charge should be allocated only if they do not broadcast commercial advertisements, at leas until 2004. The allocation of such licenses will be carried out through the reform of the Bezeq Law from 1982, Section B.1 which should later be included in the completed Broadcast Act. Unified and obligatory standards for end receiving units to be installed at the consumer's home should be established both for cable as well as for satellite broadcasts.
Dedicated channels: National dedicated channels which will be allowed to broadcast by cable and satellite should be licensed. And financed by advertising. These will be dedicated to: Arabic Language; Amharic and Russian; Israeli Heritage; Israeli Music and Middle-Eastern Music; News and Information Channel. In addition the establishment of an International Israeli Channel dedicated to Jewish and Israeli communities abroad should be considered.
Cable television: preparations should be immediately started for changes in the current franchises, by consensus and legislation. Cable TV carriers should not hold control of systems that exceed 35% of the cable linked household in the country. They will be not allowed to transmit direct broadcasts via satellite (DBS) or control companies in this sector. The current policy of one service package (Super Basic) will be canceled by 1999. A group of separate services (tiering) will be offered to cable television customers; a basic service package at a basic rate (lower than the present) will be controlled; subscribers will then be offered additional coded groups of services (premium channels) provided by content suppliers with prices determined by the market.
Content provision by cable carrier companies will be allowed only through separate subsidiary companies operating under conditions of equal competiton.
The process of transition to tiering should be accelerated through the provision of a license for DBS providing a competitive alternative to cable TV.
Second commercial Television Channel in 1999: A tender should be published for a single corporate holder to establish an additiona commercial channel available to all. It will begin broadcast at the end of 1999 upon completion of the first franchise period of the present Second Channel. If it proves impossible to operate the new channel through terrestrial carriers (like the Second Channel) broadcasting freely by air and operating license will be given to the additional channel via cable (free of charge - Must Carry), via direct satellite broadcast, and will be uncoded. The new channel will enjoy full equality with the existing Second Channel with free and fair competition between the two channels as broadcasters of commercial advertisement. The equality will be based on changes to be effected in the "Law for the Second Authority for Television and Radio, 1990".
Commercial broadcasts in the interim period: by the end of 1999 franchises will be replaced by licenses and license holders will be considered content providers to the public. With the establishment of the National Authority or at the end of the first franchise of the Second Channel (1999) the statutory authority will not be involved in production or broadcasting but act exclusively as a regulatory body. The relevant statutory authority will decrease its involvement in planning broadcasts and supervising contents; it will enforce uniform ethical standards and the positioning original Israeli producions.
The Second Channel at the end of the franchise period will broadcast seven days a week; the franchise of Educational Televison in the Second Channel will be canceled. Broadcasting licenses will include authorization to broadcast news and current event without limitation; the news company of the Second Channel will operate as a separate subsidiary of the license holder under his full control with changes obligating the establishment of an independent news system preventing conflict of interests.
Opening Radio Stations to Competition: free competition will be established with the completion of the transition to digital radio broadcasts. Franchises provided to local radio stations will be transformed into licenses allowing the move to national broadcast. As long as the broadcast range remain a "scarce resource" local station which wish may become part of a national network via the broadcast network of the Second Authority. The 13 local stations will be permitted to create consortia for marketing advertisements; they will be allowed to broadcast news and current events programs (national and international) without limits to local regional broadcast as long as ethics are maintained and conflicts of interest prevented.
The Commission recommends allocating frequency and licenses to national radio stations religious or heritage related; licenses should be allocated through a competitive tender. In the process of regulating radio broadcasts licenses should be allocated to community radio stations on a low power supply with a radius that does not exceed 5 km for the use of universities, schools, small neighborhoods or villages.
Radio broadcast to other countries should be removed from the Broadcasting Authority ("Kol Yisrael") and established as a separate and independent framework budgeted and financed according to the purpose of the broadcast and its need.
The Commission recommends determining by law, immediately, that whoever has been convicted of operating an illegal radio station (pirate) will not be permitted to receive a legal license; this will extend to all who have been convicted of a major crime.
Implementation committee for the
recommendations and all-inclusive regulation of broadcasting to
the general public should be established as an Administration or
Executive Board for Start-up and Regulation in the Ministry of
Co. This has already been implemented and Adv. Zvi Hauser heads
now this new unit at the Ministry.
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