2009 Israel - Telecoms, Mobile and Broadband

Israel has a very competitive telecommunications market with one of the highest mobile penetration rates in the world and also one of the highest household broadband penetration rates. This report introduces the key aspects of the market with statistics and analysis; it overviews the key regulatory issues affecting Israel’s telecom industry in some detail. The nature of competition in the market is changing and the advent of VoIP, triple play strategies and the new digital media puts particular focus on the details of regulation. The recommendations of the Gronau Commission are likely to cause further regulatory changes in the near future.

Israel has very competitive fixed-line voice, broadband and digital media market sectors. Bezeq has retained the vast majority of the domestic fixed-line voice services, but new licences being granted for VoIP service provision are beginning to shake up the market. Partner, Netvision, Xfone and Bezeq International had all acquired VoIP licences and had begun providing competitive domestic telephone services by early 2009. The International fixed-line voice market is already very competitive and recent mergers have created strong players.

Market competition is fierce, both between cable and DSL infrastructures and between ISPs. Competition is also fierce between Bezeq’s satellite TV subsidiary YES and cable TV operator HOT. Israel’s very high broadband penetration rate provides great potential for triple play and digital media developments and competitors are manoeuvring for positions.

Israel’s mobile communications market is one of the most competitive in the region, with four operators in a saturated market. The difficulties of growth through new customer acquisitions and voice tariff competition have led the operators to focus on mobile data, regularly launching new value-added products and extending their offerings to provide bundled services including fixed-line. Third generation services have been launched by the three major operators and subscriber numbers are significant. Success in selling mobile content and applications is essential to combat falling ARPU.

Key highlights:

·         Infrastructure investment by the mobile operators in 3G and HSPA is having an impact. Cellcom has flagged its intention to build its own infrastructure to be operational by the time its contract with Bezeq runs out in 2010.

·         Pelephone launched its 3.5G HSPA network in February 2009, after investing NIS1 billion and by April there were over 200,000 subscribers on the new network.

·         Bezeq’s share of the domestic fixed-line voice market has now fallen to below the magic 85% figure. Bezeq is awaiting the promised licence amendments and has applied to the Ministry of Communications for a VoIP permit. Bezeq reportedly aims to migrate all its fixed-line subscribers to VoIP by 2014.

·         Bezeq has begun the rollout of its NGN with a pilot in Ness Ziona, Kiron and Rishon LeZion and plans to complete the nationwide rollout by 2013. In June 2009, the operator had migrated 100,000 of its existing subscribers to the new network which provides speeds of up to 15Mb/s.

·         In February 2009, a proposed merger between Bezeq and YES was approved by the Restricted Trade Practices Tribunal, with conditions which will cause a further shift in the telecommunications landscape if the merger goes ahead. The conditions include a requirement for Bezeq to unbundle its NGN to make it available to other operators and a requirement to keep YES on the air.

·         In addition to a competitive FTA TV market, the majority of the Israeli population subscribe to cable or satellite TV, mostly digital. Both HOT and DBS satellite TV operator YES offer PVRs and HOT also offers VoD services.

Israel – key telecom parameters – 2009

(Source: BuddeComm)

Data in this report is the latest available at the time of preparation and may not be for the current year.