Telecommunications Industry in Israel TELECOM ISRAEL 2002 ITALIAN DELEGATION

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TelecommunicationsIndustry in Israel TELECOM
ISRAEL 2002ITALIAN DELEGATION

• Uri Olenik
• Director General
• Ministry of Communications

oleniku_at_moc.gov.il
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Presentation Agenda

• Israel Demographics ICT Statistics
• Telecommunications Industry
• Telecommunications Market Overview

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Israel DemographicsICT Statistics
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ISRAEL Demographics

• Population 6.5 million.
• Households 1.8 million.
• Average family 3.6 persons.

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Israels ICT Sector - 2000(Information
Communications Technology)

• Israeli ICT GDP grew from NIS 8.7 milliard in
• 1990 to NIS 39 milliard (10 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 Finland.
• 148,000 employees.

Source CBS, 2001
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Telecommunications Industry
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Israel's Electronics IndustriesSource IAEI, 2002

• Combined 2001 sales - 14.25 milliard, of which
  11.75 milliard
• were exports sales.
• Highly skilled workforce - 62,000 employees,
  including over 63 scientists, engineers
  technicians.
• Sales per employee 230,000.

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Total 2001 Sales 14.25 billionSource IAEI,
2002
Telecommunications 29.6
Software 21
Defense Systems 15
Industrial Medical Systems 17.7
Components 16.7
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Leading Israeli Telecommunications Electronics
Companies
Company Sales 2001 Line of
Business
(USM) Intel Electronics (Israel) 1614
Semiconductors Motorola Israel
1278 Communications
Semiconductors Vishay Israel
1182 Electronics Electricity E
C I 1015
Telecommunications Comverse
710 Telecommunications
Electronics Telrad
470 Telecommunications Check
Point 425
Software Formula
406 Software Gilat Satellite
Networks 389 Satellites
Communications R A D
157 Telecommunications
Electronics
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Industry Excellence Areas

• Telecommunications networking network
  management, billing, Internet, video image
  processing, wireless, satellite communications,
  access networks, broadband photonics, network
  security VPNs, 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 HighlightsSource IAEI, 2002
Electronics All Other Industries
Industries Exports of total
sales 82 25 Added value 68 42 Scientist,
engineers technicians 63 14 Employees in
RD 12 2
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Major RD EffortsStretching 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 RD activities

• Digital wireless
• Satellite systems
• Broadband optical technology

• Internet Multimedia
• Telemedicine
• Microelectronics
• Network management

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Technology Start-ups

• Israel is one of the largest world centers for
  start-up enterprises, with 2000 (year 2001)
  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 CapitalSource 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
  milliard (compared to 513 companies 3.1
  milliard 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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Telecommunications Market Overview
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Israel's Telecommunications

• 3.2 million main telephone lines (50
  penetration, more than 95 of households)
• 6 million mobile customers, on 4 networks (90
  penetration)
• 1.5 million households connected to multi-channel
  subscriber television
• Cable TV 3 operators, 1.1 million subscribers,
  70 of homes passed, 95 household coverage.
• Satellite DTH TV 1 operator, 0.35 million
  subscribers

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Telecommunications Services Market - 2001
International Long-Distance
Cable TV
Terminal Equipment Business Systems
Internet services
2
4
7
9
Mobile Services
52
Fixed Services
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Total telecom services market US 5 billion
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Internet Users Across The World 2001
Country average (31)
Percentage of total adult population
Percentage of the population who have personally
used the Internet during the past month
Source Tayler Nelson Sofres Interactive Global
eCommerce Report 2001
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Broad Band

• 130,000 ADSL lines, 40,000 Cable modems.
• Competition launched January 2002.
• Subscribers growth 300 in the last 10 month.
• Households penetration 9.

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Regulation Ideology

• 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
  intervention, and should be abolished.

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From Monopoly to Competition
1994
2000
2002

• Pelephone
• Cellcom
• Partner
• MIRS

• Pelephone
• Cellcom
• Partner

• Pelephone
• (Bezeq)

Mobile Services

• Bezeq
• Cable Companies
• Others
• Wireline
• Wireless

Fixed Services (Infrastructure, Transmission
Telephony)

• Bezeq

• Bezeq

• Bezeq-International
• Barak
• Golden-Lines
• Additional operators

International Long Distance Services

• Bezeq-International
• Barak
• Golden-Lines

• Bezeq

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Fixed servicesDriven by Broadband DemandActual
competition started Q2 2002
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Bezeq Consortium
Bezeq Online Call Center (100)
Walla! Communications Portal web hosting (36.7
by BI)
Bezeq International ILD Internet (100)
Pelephone Mobile Services (50)
Bezeq Fixed Services Infrastructure (Holding
Company)
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Bidding for Majority Stake in Bezeq

• Israels incumbent telecommunications operator.
• annual sales 2 billion US .
• 6,300 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

• 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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Traffic Trends in Bezeq Network
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Cable TV firms - the new entrants

• Fully digitized HFC networks (750MHz).
• Cable Modem broadband Internet services (64Kb/s
  2Mb/s).
• Interactive TV
• T- mail, T- commerce.
• Future plans Universal IP telephony and data
  services over cable.

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Mobile Services Competition Introduced
December 1994
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Mobile Operators
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Mobile Technologies key trends

• 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

• 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 US55M.
• Tender published 28 March 2001.
• 18 December 2001 auction produced NIS 1,026
  million.

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Why Will 3G Succeed in Israel?

• 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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International Long DistanceservicesFacilities
Based Competition Introduced July 19971 state
owned, 2 privately owned service providers
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• Bezeq-International The incumbent carrier,
  100 owned by Bezeq
• Golden Lines
• Telecom Italia, Fishman.
• Barak
• Sprint, Deutsche Telecom, France Telecom, Clalcom
  Matav.

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Submarine Optical Cables Infrastructure
EMOS
CIOS
Cable RFCS Capacity EMOS 1990 280
Mb/s CIOS 1994 622 Mb/s LEV 1998 5
Gb/s MN1 2001 3.84 Tb/s
LEV
MED Nautilus 1
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The Israel Internet-2 Network

• Part of the global research network for the NGI
  (Next Generation Internet).
• Connecting Israel to the forefront of scientific
  and industrial RD, 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

• AMOS-1 TV distribution, SNG VSAT
• launched May 1996.
• Geostationary orbit at 4o 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

• Launch Planned for Q2 2003.
• Geostationary orbit at 4o 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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The End

• Thank you for your attention
• For more information
• http/www.moc.gov.il