Telecommunications and internet

The telecommunications market increased by 7 percent per year between 1998 and 2004, reaching total sales turnover of approximately $5.7 billion. Israel continued to implement deregulation policy in 2005, in particular privatisation of Bezeq, in operation since 1989, taken over in September 2005 by the Apax-Saban-Arkin group with a controlling share in this previously state-owned telecommunications firm. Other challenges include liberalisation of the fixed-line domestic telephony market and design of a regulatory framework that effectively promotes competition. The opening of the sector to competition has helped develop a wide range of services as well as bring about lower prices, making the most modern technologies like internet broadband, Wi-Fi or multi-channel TV accessible to more people.

There are currently three million landlines in service. Since the end of Bezeq’s monopoly of fixed telephony, Hot Telecom has become the second largest operator. Currently, internet providers (ISP) Netvison and Internet Gold Lines are testing telephony services based on the VoIP protocol.

At the end of 2005, the cellular operator Golden Lines Communications Services secured a new licence enabling him to provide services on the fixed telephony market and VoBB (Voice over Broad Band). For international telephony, three operators compete with Bezeq International: Barak (in association with Israeli companies Calcom and Matav and foreign companies Sprint, Deutsche Telekom, and France Telecom); Golden Lines (with Israeli companies Aurec and Globscom and Italy’s Italia Telecom); and Internet Gold Lines (Eurocom Communications) since June 2004. NetVision (supplier of internet services) and Xfone Communication (a British-Israeli company) entered the international communications market in 2004.

Four operators share the national cellular communications network: Cellcom (BellSouth, Safra Group, Discount Investment Corp.) with approximately 2.25 million subscribers; Partner Communications-Orange (Hutchinson, Elron Industries, Eurocom, Matav and Polar) with nearly 2 million subscribers; Pelephone (owned by Bezeq, operates with CDMA technology) with approximately 1.95 million subscribers; and MIRS (Motorola Israel) with 250,000 subscribers. There are approximately 6.5 million mobile phones in service, a penetration rate of over 97 percent. Total sales turnover for mobile telephony came to some $3.1 billion in 2004.

There are some 60 internet providers, mainly Netvision, Internet Gold, Bezeq International and Barak Online, Bezeq Zahav, Hot Telecom, and Golden Delicious Lines, totalling 3.6 million subscribers in 2005. Only 30 months after it was launched (i.e. at the end of 2004), high-speed internet access (by ADSL and cable) recorded a 15 percent penetration rate (approximately 40 percent of households). By the end of 2005, there were nearly 1.22 million subscribers to ADSL access, a penetration rate of 65 percent of households (South Korea alone ranks higher, with 75 percent). It should be noted that only Bezeq offers ADSL services, with other operators proposing cable broadband. Wireless internet is also being developed, with more than 150 Wi-Fi connexion points throughout the country.

Israel is among the 30 best-equipped countries in the world in terms of computer equipment, with approximately 24 percent of the population having a computer. It is a fast-growing market, with +16.4 percent in volume recorded in 2004, turning out more than 612,000 units for an amount of more than 1 billion dollars per quarter. Market opportunities for companies are estimated at $52.14 million, while investment in IT services is expected to reach $497 million in 2006.

Three cable TV providers as well as a satellite TV provider have been issued general licenses. The rate of penetration for household cable TV has reached more than 55 percent. At the end of 2003, 77 percent of Israeli households (1.4 million) were subscribed to digital multi-channel TV. The rate of penetration for digital satellite TV and cable TV is 70 percent. The range of services offered on internet has grown considerably thanks to liberalisation, particularly in the banking environment and government. For example, the government has authorised use of electronic signatures for identification purposes and monetary transactions; and taxes or fines can be paid online. Israel currently has 3 million main telephone lines and 6.3 million mobile customers on four networks. It is one of the few countries to have adopted broadband Universal Service Obligation (USO) for Broadband Regulation (100 percent population coverage in four years). In 2004, The World Electronics Forum (WEF) ranked Israel seventh in telephone infrastructure and cellular mobile subscriptions and first for availability of cellular phones.