Telecommunications Industry in Israel august 2002

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TelecommunicationsIndustry in Israel august
2002

• Ministry of Communications

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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 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.

Source CBS, 2001
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Israel's Telecommunications

• 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 multi-channel
  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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Telecommunications Industry
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Israel's Electronics IndustriesSource IAEI, 2002

• 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 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 1170
Telecommunications Comverce
710 Telecommunications
Electronics Gilat Satellite Networks 505
Satellites Communications Telrad
470
Telecommunications Check Point
425 Software Formula
406 Software R
A D 190
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 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
  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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Telecom Israel 2002 Exhibition and
ConferenceThe Future is Here

• Tel-Aviv, 4-7 November, 2002

For more informationTelecom Israel
2002http//www.telecom2002.co.il
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Telecom-Israel 2002 EventTel-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, Israels 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. Thursday, 7
  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
BB and 3G - is the Future Bright? The Drivers for
Successful Broadband Fixed and Mobile
Implementation
The New Mobile World - Will Mobile Operators Make
the Change From Voice to Multimedia?
Network Infrastructure in a Competitive World -
All Optical Core
Telecom and Content Regulation - Critical Must or
Unnecessary Burden?
Delivering Business Services - The New Generation
Application Service Provider
Broadband Fixed Mobile Access Networks - Will
the Bottleneck Open?
Government Business Collaboration - Government
Incentives and Business Motivation Support for
Technology Development
Intelligent Buildings and Home Networking -
Towards Networked Home?
Interactive Entertainment - Is There More than
Sex, Shopping and Games?
Network Infrastructure in a Competitive World -
Next Generation Network All IP Switching and
Service Delivery
The Future of Fixed Services Competition - Is
There Opportunity for CLECs?
Service and Network Security in an Open Broadband
World
Consumer and Business Applications - The Future
of B2C Retailing and B2B Trading
New Horizons for Internet Technology - What is
the Next Big Thing?
Israel Telecommunications Market - Will the
Growth Continue?
Managing Customer Relationship - Adding Value
Through Customer Management
Startups and Venture Capital - Investments in
the Future of Israels Technology
Fixed Mobile Convergence - Bundling or Bumbling?
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Telecommunications Market Overview
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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

• 100,000 ADSL lines, 15,000 Cable modems.
• Competition launched January 2002.
• Subscribers growth 175 in the last 8 month.
• Households penetration 6.

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Regulatory Policy

• 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

• 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 .
• 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

• 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

• 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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Mobile Services Competition Introduced
December 1994
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Mobile Operators
Company
Company Pelephone Cellcom Partner MIRS
Licensed 1987 1994 1998 2001
Market share 28 40 28 4
Frequencies (Mhz) 800, 2000 800, 1800, 2000 900, 1800, 2000 800
Technology (present) NAMPS CDMA TDMA GSM GSM iDEN (ESMR)
Future CDMA UMTS UMTS UMTS iDEN
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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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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