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TelecomIsrael 2000 International Exhibition

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Expectation of 150,000 participants, 6000 foreign visitors, 20 ... Nautilus 1. STATE OF ISRAEL. MINISTRY OF COMMUNICATIONS. Additional Aspects. STATE OF ISRAEL ... – PowerPoint PPT presentation

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Title: TelecomIsrael 2000 International Exhibition


1
Telecom-Israel 2000 International Exhibition
Conference
  • The Future is Here
  • Daniel Rosenne
  • Director General, Ministry of Communications
  • rosenned_at_moc.gov.il

2
Presentation Agenda
  • Telecom Israel 2000 Event
  • Telecom Networks Services
  • Manufacturing Industry
  • Summary.

3
Telecom-Israel 2000 International Exhibition
Conference Tel Aviv, 6 - 9 November, 2000
4
Telecom-Israel 2000
  • A bi-annual international event
  • Expectation of 150,000 participants, 6000 foreign
    visitors, 20 telecom ministers.
  • Following the remarkable success of
    Telecom-Israel 1998 - 100,000 participants, 3000
    foreign visitors.
  • Exhibition
  • 25,000 sqm.
  • Over 100 start-ups stands.
  • Conference
  • over 100 industry leading speakers.
  • Combination of market giants with start-up
    entrepreneurs guarantees innovative and
    interesting discussions.
  • Pre Post conference tours.

5
Telecom-Israel 2000 Exhibition (1)
  • Source of telecom innovation - focused on
    unveiling new products, services and ideas.
  • Novel products services
  • Wireless
  • Mobile
  • Internet
  • Networking
  • Broadband access
  • Broadband switching
  • Optical networking
  • Multimedia
  • Interactive TV
  • Network storage
  • Network management
  • Messaging
  • Satellite
  • Test systems
  • E Commerce
  • Tele-learning
  • Tele-medicine

6
Telecom-Israel 2000 Exhibition (2)
  • 270 stands in 9 pavilions.
  • 25 foreign companies 8 national stands
    (Austria, Brazil, Canada, Cyprus, Hong-Kong,
    Italy, Netherlands, Taiwan).
  • Israels competitive advantage showcase
  • System approach
  • Market driven development
  • Advanced research capabilities
  • Quality production
  • Flexible support.

7
Telecom-Israel 2000 Conference 7, 8 9 November,
2000
  • Three Plenary sessions
  • Telecom in times of change
  • Research development in Israel
  • Internet - the next generation
  • Parallel sessions
  • Multimedia
  • Broadband access
  • Optical networks
  • Mobile networks
  • Messaging
  • IP ATM
  • Portable Internet
  • Storage Networking
  • Network security
  • Industry sponsored sessions seminars.
  • Network management
  • Available government
  • Remote learning
  • Telemedicine
  • Interactive TV
  • E-Commerce
  • Telecom competition
  • Advanced telecom services
  • Telecom services marketing

8
Telecom-Israel 2000 Start-Ups (1)
  • Israel is one of the largest world centers for
    start-up enterprise, with 2000 active start-ups.
  • Innovative, technology-intensive systems,
    equipment and services, representing technology
    breakthrough.
  • Major international activity
  • Strategic alliances and joint ventures.
  • Raising capital - venture, seed risk
    investments.
  • Over 100 start-ups will be located in one central
    pavilion.

9
Telecom-Israel 2000 Start-Ups (2)
  • Main Topics of the start-up pavilion
  • Internet Billing
  • Internet Security
  • Internet telephony
  • Internet Multimedia
  • Video on Demand
  • E M Commerce
  • Micro Browsers
  • 3G Cellular
  • Wireless
  • Assistance in pre-scheduling of one-to-one
    business meetings.
  • Brokerage event www.matimop.org.il/telecom2000.
  • Satellite Communications
  • Optical Communications
  • Voice recognition
  • Messaging
  • CTI
  • Data Storage
  • In building networking
  • Tele Learning
  • Tele Medicine

10
Telecommunications Network Services
11
Israel's Telecommunications
  • 2.8 million main telephone lines
  • (47 penetration).
  • 3.5 million cellular customers, on three
    networks Pelephone, Cellcom Partner/Orange.
  • (58 penetration).
  • 1.1 million cable-TV connected households.
  • (3 operators, 70 of passed households, 92
    household coverage).

12
Telecommunications Services Market - 1999
International Long-Distance
Cable TV
Terminal Equipment Business Systems
Internet services
2
2
7
Fixed Services
35
10
Cellular Telephony
44
Total telecom services market 4.2 billion
13
The Cellular Boom Israel Telecommunications
Services Revenues, 1995-1999 (US M)
2,000
Cellular
Fixed
1,500
1,000
International
500
CATV
0
1995
1996
1997
1998
1999
14
The Existing Regulatory Environment
  • Separation between regulation and operation
    (since 1984).
  • Regulation responsibility - Ministry of
    Communications.
  • General operating licenses issued to Bezeq,
    cellular operators facility-based international
    long-distance service providers.
  • Special licenses issued by the Ministry of
    Communications for value-added services.
  • Exclusive rights of Bezeq in fixed services
    canceled as of 1 June 1999.

15
Bezeq The Israel Telecommunication Corp Ltd.
  • Israel's national telecommunications operator.
  • Annual sales - NIS 9.3 billion.
  • 11,500 employees (8,500 in Bezeq, the mother
    company).
  • 5 royalties on income.
  • Regulatory environment
  • Price cap tariff regulation (CPI - X formula).
  • Universal service obligations.

16
Bezeq Restructuring 1995 -2000
  • Structural separation - promoting fair
    competition.
  • Leaner Telco
  • Improving efficiency customer focus.
  • Getting ready for local competition.
  • Entering new markets.

17
Bezeq Consortium
Bezeq International ILD Internet (100)
Pelephone Cellular Services (50)
Bezeq Fixed Services Infrastructure (Holding
Company)
18
Cellular Telephony Competition Introduced
December 1994
19
Cellular Operators
Pelephone Cellcom Partner/Orange 800 MHz
800 MHz 900 MHz NAMPS CDMA TDMA GSM 1987
1995 1999 BellSouth Hutchison Bezeq Safra
Brothers Matav Motorola Discount
Investments Elbit.com PEC Tapuz private
investors free float
20
Cellular Telephony
  • Rapid growth - 125,000 subscribers in January
    1995. In November 1999 the number of mobiles (2.9
    million) exceeded the number of fixed lines.
  • Key expansion stimulators
  • Perceived low tariffs US 0.11 to 0.23/minute
    air time, 11 to 29 monthly charge. (300 min
    average monthly bill - 56 to 74)
  • Calling party pays (CPP).
  • Nationwide coverage.
  • Competition marketing innovations.

21
Average Number of Monthly Usage Minutes
  • 1995 1996 1997 1998 1999
  • Fixed
  • Bezeq 687 687 679 699 732
  • Mobile
  • Pelephone 530 430 320 300 295
  • Partner 427
  • (Q4)
  • Source Bezeq Eurobonds Prospectus, August 2000
    Partner annual report 1999

22
Cellular Competition key trends for 2000
  • New services
  • SMS, WAP, wireless internet.
  • Content news, media data services.
  • New pricing models
  • Regional pricing plans.
  • Pay as you use programs.
  • Low cost position for low usage segments.
  • Churn reduction plans.

23
International Long Distance Facilities Based
Competition Introduced July 1997
24
Facilities-Based International Service Providers
  • Golden Lines (012)
  • Telecom Italia, SouthWestern Bell,
  • Aurek, Globscom Meitar/Kahn.
  • Barak (013)
  • Sprint, Deutsche Telekom, France Telecom,
    Clalcom Matav.
  • Bezeq International (014)
  • The incumbent carrier, 100 owned by Bezeq.

25
Dialing Parity Rules
  • Per-call carrier-selection prefixes (01X).
  • For each of the international service providers.
  • CPS (Carrier pre-selection) - subscribers can
    choose a preferred provider for 00 prefix and
    188 international operator services.
  • Competitive practices
  • CPS balloting.
  • Consumers data provided by Bezeq Cellular
    operators on non-discriminatory basis.

26
Resulting Market Environment
  • Highly competitive market, with low customer
    switching barriers.
  • Drastic cuts in retail tariffs
  • (example 0.20/min to any destination).
  • International long distance calls - a commodity.
  • The incumbent carrier, Bezeq International, lost
    its dominant position (60 gt billed minutes)
    within 70 days.

27
International Traffic Million Minutes/Year
1000
Outgoing
800
600
Incoming
400
200
0
1996
1997
1998
1999
28
Submarine Optical Cables Infrastructure
EMOS
CIOS
Cable RFCS Capacity EMOS 1990 280
Mb/s CIOS 1994 622 Mb/s LEV 1998 5
Gb/s FLAG 1999 5 Gb/s MN1 2001 3.84 Tb/s
LEV
MED Nautilus 1
FLAG
29
Additional Aspects
30
Internet Services Profile
  • 30 Internet service providers, more than 1
    million users, 600,000 dial-up 5,000 directly
    connected customers, 30,000 domains.
  • Typical tariffs 12 monthly fee, including 10
    usage hours, 1 for each additional hour.
    Unlimited access at lt 1 per day.
  • IIX (Israel Internet eXchange) non-profit peering
    point.
  • Hands-off overall regulatory policy.
  • High growth 50 annual.

31
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.
  • Quantum - EC International test network
    (TEN-155).
  • Q-Med - Mediterranean consortia (Cyprus, Greece,
    Israel, Italy) Quantum extension.
  • 34 Mb/s connection to London, 45 Mb/s connection
    to Chicago (155/622 Mb/s - planned).
  • 10 Mb/s 155 Mb/s domestic connectivity
  • (622 Mb/s, 10Gb/s - planned).

32
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.

33
Telecommunications Competition Enhancement by
Regulatory Reform
34
The Competitive Environment
  • Wide competition in customer premise equipment
    and value-added services.
  • Limited competition in cellular and international
    services.
  • Two monopoly areas
  • Bezeq - Domestic fixed services (infrastructure,
    transmission, data communications telephony).
  • Cable TV operators - Multi-channel subscriber
    television.

35
Regulatory Reform (Promoting competitive
Advantage)
  • Competition in fixed services.
  • Structural change of the telecommunications
    sector
  • Liberalization.
  • Privatization.
  • Re-regulation.

36
Proactive Re-regulation
  • The end of the access monopoly
  • Facility-based competition.
  • Alternative infrastructure fiber, copper, cable,
    fixed wireless, satellite.
  • Simple interconnection rules
  • Non-discriminatory access, carrier pre-selection
    dialing parity.
  • Non-discriminatory interconnection tariffs.
  • Minimum compatibility requirements.
  • New numbering plan frequency allocations.

37
Competition Rules
  • Three tier market structure
  • Mobile services (Cellular PCS).
  • Fixed domestic services (infrastructure,
    transmission, data comm's telephony).
  • International services.
  • Facilities based competition.
  • Non-discriminatory access - to all networks.
  • Universal service obligations - including equal
    terms service offering requirement, at
    non-discriminatory tariffs.
  • Cross-ownership limitations, assuring fair
    competition.

38
Re-regulation Covers
  • Competition rules - ownership, resale. timetable.
  • Universal service - obligations, reciprocal
    compensation.
  • Interconnection rules, tariffs, terms.
  • General license owners - obligations, structural
    regulation, services.
  • Numbering - administration, portability, new
    numbering plan.
  • Bezeq tariff rebalancing
  • National security.

39
Licenses for new operators
  • General licenses for fixed domestic services
    (infrastructure, transmission, data services
    telephony) will be issued to applicants meeting
    economic and know-how criteria.
  • General license requiring limited spectrum
    resources (mobile, FWA) shall be issued through
    public tenders.

40
Proposed New Frequency Bands Allocations
  • Band Application Allocation Year
  • 800/900 MHz Cellular 30 MHz 1998
  • 2 GHz PCS/UMTS 175 MHz up to 2005
  • 3.5 GHz N-FWA/WLL 72 MHz 2000
  • 26 GHz B-FWA/LMDS 1200 MHz 2000

41
License Auctions
  • Fixed Wireless Access
  • Broadband (26 GHz) Narrowband (3.5 GHz).
  • Up to 3 operators, selected in MSR (Multiple
    Simultaneous Round) auction.
  • Participation of Bezeq CATV operators in the
    auction will be excluded.
  • Tender process planned to begin summer 2000.
  • Additional Mobile Competition
  • 2G (DCS-1800) 3G (UMTS).
  • Allocations for new existing operators.
  • Tender process planned to begin during 2001.

42
Israel's Telecommunications Map
1994
Mobile Services
  • Pelephone
  • (Bezeq)

Fixed Services (Infrastructure, Transmission
Telephony)
  • Bezeq

International Long Distance Services
  • Bezeq

43
Bezeq Tariff Rebalancing - April 1999
  • One step rate rebalancing, almost eliminating
    cross-subsidies between services (voice traffic
    still subsidized telephone access).
  • New price-cap regime - productivity gap
    (x-factor) of 7 (6 in 1999, will be adjusted if
    Bezeq output deviates from predictions).
  • 6 average rate decrease (21 decrease on voice
    traffic, 16 increase on fixed monthly payment.
    Typical tariffs - NIS 0.208 for local call, NIS
    36.1 monthly payment, 532 NIS for line
    installation).
  • ROE (before tax) - 10.5.

44
Bezeq Tariff Update - May 2000
  • Annual efficiency factor update (6).
  • Elimination of regional tariffs (replacing
    traditional 3 x 3 tariff matrix 3 distance
    zones, 3 time zones with simple tariff matrix
    local calls or urban-toll calls during peak
    hours, unified tariff for off-peak hours).
  • Per-second billing (replacing traditional meter
    pulse with per second billing and minimum charge
    per call).
  • Alternative tariff plans (Customer choice between
    number of alternative tariff plans, bundling
    local call minutes in exchange for monthly fee).

45
Interconnection Rates
  • Interconnection Israel EU
  • Tariff benchmarks
  • Local 0.6 1.4 0.7-1
  • Urban Toll - 1-2
  • National Toll 0.6 - 2.9 1.7-3

US cents, 1 NIS 4.16
46
Bezeq Privatization
  • Government holds 55 of Bezeq shares (remaining
    shares - publicly held).
  • In August 2000, government formally approved
    selling 50.01 of Bezeq shares to a single
    strategic investor.
  • Privatization planned to be completed by spring
    2001.

47
New NNP (National Numbering Plan)
48
Existing NNP
  • Adopted by Bezeq in the late 80s, as part of the
    network digitization program.
  • 8 digits number length
  • Fixed A NXX XXXX
  • (area code exchange code local number)
  • Mobile 5X NX XXXX
  • (network Identification subscriber number)
  • Services variable length, 2 to 10 digits.
  • Prefixes 0 - long distance (00, 01X -
    International)
  • 1 - service prefix
  • - access to network services
  • - service deactivation.

49
New NNP
  • Additional digit (9 digits number length)
  • Step 1 - Mobile 5 NXXX XXXX
  • (N 2 for Cellcom, 4 for Orange, 6 for
    Pelephone)
  • Step 2 - Fixed A NXXX XXXX
  • Area codes consolidation
  • Reclaim area codes 6 8 (end up with 5 areas).
  • Services numbering re-arrangement
  • 1XX for life threatening emergency 1XXX for
    other services.
  • 1 YYY XXX XXX logical numbering.
  • Toll-free (1-800) number portability.

50
Will We Have Enough Telephone Numbers?
Numbers Millions Number Type Old
NNP New NNP Geographic 56 160 -
320 Mobile 8 80 Logical - 160 - 80 New
Services 10 100 Future Use - 240 - 160
51
Competition In Broadcasting Services
52
Broadcasting Networks
  • Radio -
  • Public radio - 7 national AM/FM radio stations,
    AM Arabic channel world-wide short-wave
    service.
  • Commercial radio 14 local FM radio stations.
  • Television -
  • Public channel (Channel 1).
  • Commercial channel (Channel 2).
  • Multi-channel subscriber TV -
  • 3 regional cable TV operators.
  • 1 direct broadcasting satellite operator (yes).

53
Open Sky - New Broadcasting Policy
  • Creating competitive broadcasting market.
  • Key policy ingredients -
  • Public broadcasting - new definitions (goals,
    structure, finance).
  • Commercial broadcasting - introduction of second
    commercial television channel commercial
    country-wide radio stations.
  • Multi-channel subscriber television - direct
    broadcasting satellite, in competition with cable
    television, began services in July 2000.
  • Digital Television - cable satellite.

54
Competition in Multi-Channel Subscriber TV
  • License for DBS (Direct Broadcasting Satellite)
    issued January 1999
  • Digital system, 60-120 cm receiving antennas.
  • Basic package of 10 channels.
  • Additional pay channels/channel packages.
  • Local content obligations.
  • Additional independent cable/satellite channels,
    based on advertisement revenues.

55
Manufacturing Industry
56
Israel's Electronics Industries
  • Combined 1999 sales - 8.6 billion, of which 7.1
    billion were exports sales.
  • Highly skilled workforce - 46,000 employees,
    including over 28,000 engineers technicians,
    18,000 of them university graduates.
  • Output per employee - over 187,000.

57
Total 1999 Sales - 8.6 billion
Industrial Medical Systems 21
Telecommunications 42
Components 15
Defense Systems 22
58
Industry Excellence Areas
  • Telecommunications - Internet, data
    communications, local area networks, wireless,
    video image processing, satellite
    communications, access networks, broadband,
    network security.
  • Computerized production equipment.
  • Defense systems Missiles, anti-missiles
    guided weapons, opto-electronics, radars, C4I, EW
    (Electronic Warfare).

59
Statistical Highlights
Electronics All Other Industries
Industries Exports of total
sales 82 25 Added value 68 42 Engineers
technicians 62 14 Employees in RD 12 2
60
Major RD Efforts 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 RD activities
  • Digital wireless
  • Satellite systems
  • Broadband telecommunications
  • Internet Multimedia
  • Telemedicine
  • Microelectronics
  • Network management

61
Summary
62
Israel's Regulatory Policy
  • Structural changes - achieving strategic
    advantage in competitive global markets.
  • Competition - the key for innovation,
    entrepreneurship, investment growth.
  • Key action areas
  • Liberalization.
  • Re-regulation.
  • Privatization.

63
Regulation Philosophy
  • 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.

64
Israel's Telecom Future Real and Sustainable
Growth
  • Technology enabled evolution
  • From simple fixed voice and narrowband to
    broadband, mobile, internet advanced services.
  • From circuit switching to IP based
    infrastructure.
  • Rapid growth
  • Prediction for additional 1 million fixed lines,
    1 million cellular customers
  • 1 million internet users by 2003.

65
Facing Exciting Events
  • Broadcasting
  • Tender for second commercial TV channel.
  • Tender for Independent cable/satellite channels.
  • Telecommunications
  • Tender for 3 fixed wireless access licenses.
  • Tender for additional cellular operator 3G
    frequencies.
  • Broadband Digital Cable, Bezeqs ADSL.
  • Market re-structuring
  • Bezeq privatization.
  • Further IPOs.

66
Telecom-Israel 2000 Tel-Aviv, 6-9 November, 2000
  • Important international exhibition conference.
  • 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, Israels born products stand up.
  • We invite you to witness for yourself!

67
For more information Telecom Israel
2000 http//www.telecom-israel.com Ministry of
Communications http//www.moc.gov.il
68
The End
  • Thank you for your attention
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