State of Israel
Ministry of Communications
Telecommunications
Industry in Israel
august 2002
Ministry of Communications
1
State of Israel
Presentation Agenda
Ministry of Communications
 Israel Demographics & ICT Statistics
 Telecommunications Industry
 Telecommunications Market Overview
2
State of Israel
Ministry of Communications
Israel Demographics
&
ICT Statistics
3
State of Israel
ISRAEL Demographics
Ministry of Communications
 Population ~ 6.5 million.
 Households ~ 1.8 million.
 Average family ~ 3.6 persons.
4
State of Israel
Israel’s ICT Sector - 2000
Ministry of Communications
(Information & Communications Technology)
 Israeli ICT GDP grew from NIS 8.7 billion in
1990 to NIS 39 billion in 2000, 20% of business
sector GDP.
 ICT GDP is 14.3% of total GDP.
OECD highest - compared to 10-11% in US.
 Investment in ICT research and
development is 23% of the ICT GDP.
OECD highest - compared to 16-17% in Finland.
 148,000 employees.
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Source: CBS, 2001
Israel's Telecommunications
State of Israel
Ministry of Communications
 3.2 million main telephone lines (50%
penetration, more than 95% of households)
 5.5 million mobile customers, on 4 networks
(85% penetration)
 1.5 million households connected to multichannel subscriber television
 Cable TV: 3 operators, 1.2 million subscribers, 70% of
homes passed, 95% household coverage.
 Satellite DTH TV: 1 operator, 0.3 million subscribers
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State of Israel
Ministry of Communications
Telecommunications
Industry
7
Israel's Electronics Industries
State of Israel
Source: IAEI, 2002
Ministry of Communications
Combined 2001 sales - $14.25 billion,
of which $11.75 billion were exports
sales.
Highly skilled workforce - 62,000
employees, including over 63%
scientists, engineers & technicians.
Sales per employee - over $230,000.
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Total 2001 Sales – $14.25 billion
Source: IAEI, 2002
Software
21%
State of Israel
Ministry of Communications
Telecommunications
29.6%
Defense
Systems
15%
Components
16.7%
Industrial &
Medical Systems
17.7%
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Leading Israeli Telecommunications &
Electronics Companies
Company
Sales 2001
(US$M)
Intel Electronics (Israel)
Motorola Israel
Vishay Israel
ECI
Comverce
Gilat Satellite Networks
Telrad
Check Point
Formula
RAD
1614
1278
1182
1170
710
505
470
425
406
190
State of Israel
Ministry of Communications
Line of Business
Semiconductors
Communications & Semiconductors
Electronics & Electricity
Telecommunications
Telecommunications & Electronics
Satellites Communications
Telecommunications
Software
Software
Telecommunications & Electronics
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Industry Excellence Areas
State of Israel
Ministry of Communications
 Telecommunications – networking & network
management, billing, Internet, video & image
processing, wireless, satellite communications,
access networks, broadband & photonics,
network security & VPN’s, messaging, home
networking.
 Computerized production equipment & imaging.
 Software.
 Semiconductors & photonic components.
 Defense systems – missiles, anti-missiles &
guided weapons, opto-electronics, radars, C4I,
EW (Electronic Warfare), simulation, training.
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Statistical Highlights
Source: IAEI, 2002
State of Israel
Ministry of Communications
Electronics All Other
Industries Industries
Exports
[% of total sales]
82
25
Added value [%]
68
42
Scientist, engineers
& technicians [%]
63
14
Employees in R&D [%]
12
2
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Major R&D Efforts
State of Israel
Ministry of Communications
Stretching Boundaries of Imagination & Ingenuity
 Innovative synergistic industry-academy
cooperation, supported by the Chief Scientist,
Ministry of Industry & Trade.
 Over 100 industrial & academic participants.
 Focused on establishment of the technological
infrastructure for the next generation.
 Key telecommunications R&D activities:
 Digital wireless
 Satellite systems
 Broadband & optical
technology




Internet & Multimedia
Telemedicine
Microelectronics
Network management
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Technology Start-ups
State of Israel
Ministry of Communications
 Israel is one of the largest world centers for
start-up enterprises, with ~2000 active
start-ups.
 Innovative, technology-intensive activity,
representing several technology
breakthroughs.
 Major international activity:
 Strategic alliances and joint ventures.
 Raising capital - venture, seed & risk
investments.
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Venture Capital
State of Israel
Ministry of Communications
Source: IVC Research Center (TheMarker, 27 January 2002)
 Investments by venture capital funds constitute an
added value above financial contributions - in
management, world market familiarity, strategic
guidance and economic credibility.
 During 2001, 526 Israeli companies raised $2.0 billion
(compared to 513 companies & $3.1 billion during
2000).
 40% ($812 million) was invested by Israeli venture
capital funds.
 The active sectors are communications (42%),
software (20%), life sciences (14%) & Internet (9%).
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State of Israel
Ministry of Communications
Telecom Israel 2002 Exhibition
and Conference:
The Future is Here
Tel-Aviv, 4-7 November, 2002
For more information
Telecom Israel 2002:
http://www.telecom2002.co.il
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Telecom-Israel 2002 Event
State of Israel
Ministry of Communications
Tel-Aviv, 4-7 November, 2002
 Important international exhibition & conference:
 Exhibition: 4-7 November 2002
 Conference: 5-7 November 2002
 A showcase of hottest technologies and
applications.
 The place to see how new technologies, products,
services and issues are reshaping the world of
communications.
 The future is here - Wherever you look, across the
globe, Israel’s born products stand up.
 We invite you to witness for yourself!
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Telecom Israel 2002 Conference
Program (preliminary)
Tuesday, 5 Nov.
Wednesday, 6 Nov.
Telecom, IT & Media at the Crossroad:
Challenges and Opportunities
After the Hype - Sober View of the IT,
Telecoms and Media Industries
Information is Power
Civilian & Military Information Security at
the Turn of the Century
Network Infrastructure in a
Competitive World - All Optical Core
The New Mobile World - Will Mobile
Operators Make the Change From Voice
to Multimedia?
Broadband Fixed & Mobile Access
Networks - Will the Bottleneck Open?
Delivering Business Services - The
New Generation Application Service
Provider
Interactive Entertainment - Is There
More than Sex, Shopping and Games?
Intelligent Buildings and Home
Networking - Towards Networked
Home?
Network Infrastructure in a Competitive Service and Network Security in an
World - Next Generation Network: All IP
Open Broadband World
Switching and Service Delivery
State of Israel
Ministry of Communications
Thursday, 7 Nov.
BB and 3G - is the Future Bright?
The Drivers for Successful Broadband
Fixed and Mobile Implementation
Telecom and Content Regulation Critical Must or Unnecessary Burden?
Government & Business
Collaboration - Government Incentives
and Business Motivation Support for
Technology Development
The Future of Fixed Services
Competition - Is There Opportunity for
CLEC’s?
New Horizons for Internet Technology
- What is the Next Big Thing?
Consumer and Business Applications
- The Future of B2C Retailing and B2B
Trading
Israel Telecommunications Market Will the Growth Continue?
Fixed Mobile Convergence - Bundling
or Bumbling?
Managing Customer Relationship Adding Value Through Customer
Management
Startups and Venture Capital Investments in the Future of Israel’s
Technology
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State of Israel
Ministry of Communications
Telecommunications
Market Overview
19
Telecommunications
Services Market - 2001
State of Israel
Ministry of Communications
Cable International Internet Terminal Equipment
TV Long-Distance services & Business Systems
9%
7%
Fixed
Services
4%
2%
Mobile
Services
52%
26%
Total telecom services market ~ US $5 billion
20
Internet Users
Across The World 2001
State of Israel
Ministry of Communications
60
60
48 48
50
43
40
Country average (31%)
30
9
11
13 13
17
15 15 16 16
33 33 33 34
36
51 52
45
39 40 40
26 26
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Norway
Denmark
Canada
USA
Netherlands
Korea
Australia
Singapore
Finland
Hong Kong
Taiwan
Israel
Ireland
Germany
Great Britain
Estonia
Belgium
France
Italy
Czech
Spain
Malaysia
Thailand
Hungary
Argentina
Turkey
Poland
Portugal
Latvia
India
Philippines
Lithuania
4 4
Ukraine
0
30
24
20
10
62 63
57
Indonesia
Percentage of total adult population
70
Percentage of the population who have personally used the Internet during the past month
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Source: Tayler Nelson Sofres Interactive – Global eCommerce Report 2001
State of Israel
Broad Band
Ministry of Communications
 100,000 ADSL lines, 15,000 Cable modems.
 Competition launched January 2002.
 Subscribers growth ~175% in the last 8 month.
 Households penetration ~6%.
State of Israel
Regulatory Policy
Ministry of Communications
 Public interest - the main issue
 Competition - the key for innovation,
entrepreneurship, investment & growth.
 Key action areas:
 Liberalization.
 Re-regulation.
 Privatization.
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Regulation Ideology
State of Israel
Ministry of Communications
 Free and competitive markets promote
growth, efficiency, customer satisfaction &
economic advantage.
 Market restructuring, in transition from
monopoly to open and free market, during a
short time period, requires active and
balanced regulatory intervention.
 Once competitive marketplace is achieved,
a strong regulator will provide unnecessary
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intervention, and should be abolished.
From Monopoly
to Competition
Mobile
Services
Fixed
Services
(Infrastructure,
Transmission
& Telephony)
International
Long
Distance
Services
State of Israel
Ministry of Communications
1994
2000
2002 +
 Pelephone
(Bezeq)
Pelephone
Cellcom
Partner
Pelephone
Cellcom
Partner
MIRS
 Bezeq
 Bezeq
 Bezeq
Bezeq-International
Barak
Golden-Lines
Bezeq
Cable Companies
Others:
Wireline
Wireless
Bezeq-International
Barak
Golden-Lines
Additional operators 25
State of Israel
Ministry of Communications
Fixed services
Driven by Broadband Demand
Actual competition started Q2 2002
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State of Israel
Bezeq Consortium
Ministry of Communications
Bezeq Online
Call Center
(100%)
Walla!
Communications
yes
Direct
Broadcasting
Satellite
(44.9%)
Portal & web
hosting
(36.7% by BI)
Bezeq
International
ILD & Internet
(100%)
Bezeq Call
Communications
CPE &
Business
Solutions
(100%)
Pelephone
Mobile Services
(50%)
Bezeq
Fixed Services
& Infrastructure
(Holding Company)
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Bidding for Majority
Stake in Bezeq
State of Israel
Ministry of Communications
 Israel’s incumbent telecommunications operator.
 annual sales ~2 billion US $.
 11,000 employees (8,500 in Bezeq, The parent
company).
 Government holds 54.6% of Bezeq shares
(remaining shares - publicly held).
 Government issued a formal tender, for private
sale of 50.01% of the share capital of Bezeq.
 Six groups filed applications at 13 February 2002.
 The process is planned to be completed in 6
months.
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Incumbent main services &
technologies
State of Israel
Ministry of Communications
 100% digital exchanges &
transmission (mainly SDH).
 Interconnection with mobile & ILD
operators.
 ISDN & ADSL Access.
 Data Network – TDM, F.R, ATM,
64Kb/s – 622Mb/s.
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Cable TV firms the new entrants
State of Israel
Ministry of Communications
 Fully digitized HFC networks
(750MHz).
 Cable Modem broadband Internet
services (64Kb/s – 2Mb/s).
 Interactive TV
 T- mail, T- commerce.
 Future plans – IP telephony and
data services over cable.
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State of Israel
Ministry of Communications
Mobile
Services
Competition Introduced
December 1994
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Mobile Operators
State of Israel
Ministry of Communications
Company
Pelephone
Cellcom
Partner
MIRS
Licensed
1987
1994
1998
2001
Market share
28%
40%
28%
4%
Frequencies
(Mhz)
800, 2000
800, 1800, 900, 1800,
2000
2000
800
Technology
(present)
NAMPS &
CDMA
TDMA &
GSM
GSM
iDEN
Future
CDMA &
UMTS
UMTS
UMTS
(ESMR)
iDEN
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Mobile Technologies:
key trends
State of Israel
Ministry of Communications
 New services:
 SMS (interoperable), WAP, SHTML
wireless internet.
 Content: news, media & data services.
 Location based services.
 M(obile) – Commerce
(vending machines, parking,
gas station,etc).
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2G/3G Mobile License
Auctions
State of Israel
Ministry of Communications
 MSR (Multiple Simultaneous Round)
combined auction.
 Frequency packages:
 4 Bands: 2G FDD, 2x10 MHz.
 4 Bands: 3G FDD, 2x10 MHz.
3G TDD: 5 MHz (for 3 packages only).
 Reserve price: 2G: US $45M. 3G: US$55M.
 Tender published: 28 March 2001.
 18 December 2001 auction produced NIS
1,026 million.
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Why Will 3G Succeed
in Israel?
State of Israel
Ministry of Communications
 Israel is well suited for 3G:
 Relatively wealthy country (~$20K GDP/cap).
 Technology literate.
 High mobile penetration, extremely high usage.
 Favorable auction price - $42/pop
Germany $544, UK $537, France $287, Italy $211, Ireland $211, Austria $91,
Denmark $80.
 Light rollout requirements:
 Operators do not have to launch services unless they
are sure they will succeed.
 Each service country-wide availability - 24mo after
initial commercialization.
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State of Israel
Ministry of Communications
International Long Distance
services
Facilities Based Competition Introduced
July 1997
1 state – owned, 2 privately – owned
service providers
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Submarine Optical
Cables Infrastructure
State of Israel
Ministry of Communications
EMOS
Cable
RFCS
Capacity
EMOS
CIOS
LEV
MN1
1990
1994
1998
2001
280 Mb/s
622 Mb/s
5 Gb/s
3.84 Tb/s
CIOS
LEV
MED
Nautilus 1
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State of Israel
The Israel Internet-2 Network
Ministry of Communications
 Part of the global research network for the NGI
(Next Generation Internet).
 Connecting Israel to the forefront of scientific and
industrial R&D, through:
 StarTap - US NSF/I-2/NGI interconnection point.
 Géant – The pan-European Gigabit research network.
 45 Mb/s connection to Géant (London), 45 Mb/s
connection to StarTap (Chicago).
 10 Mb/s & 155 Mb/s IP, ATM & SDH domestic
connectivity.
 http://www.internet-2.org.il
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Civilian Telecommunications
Satellites
State of Israel
Ministry of Communications
AMOS-1: TV distribution, SNG & VSAT
 launched May 1996.
o
 Geostationary orbit at 4 West.
 7 transponders, covering Middle East & Central Europe.
 Designed, manufactured and controlled by Israel Aircraft
Industries.
Gurwin-II TechSAT: communications, remote
sensing & research
 Launched July 1998.
 830 km altitude sun-synchronous circular orbit.
 50 kg, 3-axis stabilized Earth-pointing microsat.
 Designed, manufactured and controlled by the
Technion - Israel Institute of Technology.
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Amos 2 Satellite
State of Israel
Ministry of Communications
 Launch Planned for Q2 2003.
o
 Geostationary orbit at 4 West (co-located with AMOS 1).
 11 active transponders & 3 backup transponders, 72 MHz
bandwidth each.
 High power - planned for DTH TV distribution, two-way
Internet services and broadband VSAT networks.
 3 spot beams:
 Middle East - supporting up to 11 transponders.
 Europe - supporting up to 6 transponders.
 US East coast - supporting up to 8 transponders.
 Designed, manufactured and controlled by Israel Aircraft
Industries.
 Owned & operated by Spacecom Ltd.
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State of Israel
Ministry of Communications
The End
Thank you for your attention
For more information
http:/www.moc.gov.il
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