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1
State of Israel
Ministry of Communications
TelecommunicationsIndustry in Israel
august 2002
Ministry of Communications
2
State of Israel
Ministry of CommunicationsPresentation Agenda
Israel Demographics & ICT Statistics
Telecommunications Industry
Telecommunications Market Overview
3
State of Israel
Ministry of Communications
Israel Demographics&
ICT Statistics
4
State of Israel
Ministry of CommunicationsISRAEL Demographics
Population ~ 6.5 million.
Households ~ 1.8 million.
Average family ~ 3.6 persons.
5
State of Israel
Ministry of CommunicationsIsrael’s 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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State of Israel
Ministry of CommunicationsIsrael'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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State of Israel
Ministry of Communications
Telecommunications Industry
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State of Israel
Ministry of Communications
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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State of Israel
Ministry of CommunicationsTotal 2001 Sales – $14.25 billion
Source: IAEI, 2002
Defense Systems15%
Components16.7%
Telecommunications29.6%
Software21%
Industrial &Medical Systems
17.7%
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State of Israel
Ministry of Communications
Leading Israeli Telecommunications & Electronics Companies
Company Sales 2001 Line of Business (US$M)
Intel Electronics (Israel) 1614 SemiconductorsMotorola Israel 1278 Communications & SemiconductorsVishay Israel 1182 Electronics & ElectricityE C I 1170 TelecommunicationsComverce 710 Telecommunications & ElectronicsGilat Satellite Networks 505 Satellites CommunicationsTelrad 470 TelecommunicationsCheck Point 425 Software Formula 406 Software R A D 190 Telecommunications & Electronics
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State of Israel
Ministry of CommunicationsIndustry Excellence Areas
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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State of Israel
Ministry of CommunicationsStatistical Highlights
Source: IAEI, 2002
Electronics All OtherIndustries 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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State of Israel
Ministry of CommunicationsMajor R&D 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 R&D activities: Digital wireless Satellite systems Broadband & optical
technology
Internet & Multimedia Telemedicine Microelectronics Network management
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State of Israel
Ministry of CommunicationsTechnology 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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State of Israel
Ministry of CommunicationsVenture 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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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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State of Israel
Ministry of CommunicationsTelecom-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, Israel’s born products stand up.
We invite you to witness for yourself!
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State of Israel
Ministry of Communications
Telecom Israel 2002 Conference Program (preliminary)
Tuesday, 5 Nov. Wednesday, 6 Nov. Thursday, 7 Nov.
Telecom, IT & Media at the Crossroad: Challenges and OpportunitiesAfter the Hype - Sober View of the IT, Telecoms and Media Industries
Information is PowerCivilian & 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
Telecom and Content Regulation - Critical Must or Unnecessary Burden?
The New Mobile World - Will Mobile Operators Make the Change From Voice to Multimedia?
Network Infrastructure in a Competitive World - All Optical Core
Broadband Fixed & Mobile Access Networks - Will the Bottleneck Open?
Interactive Entertainment - Is There More than Sex, Shopping and Games?
Delivering Business Services - The New Generation Application Service Provider
Intelligent Buildings and Home Networking - Towards Networked Home?
Government & Business Collaboration - Government Incentives and Business Motivation Support for Technology Development
Network Infrastructure in a Competitive World - Next Generation Network: All IP Switching and Service Delivery
New Horizons for Internet Technology - What is the Next Big Thing?
Fixed Mobile Convergence - Bundling or Bumbling?
Service and Network Security in an Open Broadband World
Consumer and Business Applications - The Future of B2C Retailing and B2B Trading
Managing Customer Relationship - Adding Value Through Customer Management
The Future of Fixed Services Competition - Is There Opportunity for CLEC’s?
Israel Telecommunications Market - Will the Growth Continue?
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
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State of Israel
Ministry of Communications
Telecommunications Services Market - 2001
InternationalLong-Distance
Cable TV
Terminal Equipment& Business Systems
Internet services
FixedServices
52%MobileServices
26%
9%7%
2%4%
Total telecom services market ~ US $5 billion
21
State of Israel
Ministry of Communications
Internet Users Across The World 2001
4 4
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13 1315 15 16 16 17
19
2426 26
3033 33 33 34
3639 40 40
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48 4851 52
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Percentage of the population who have personally used the Internet during the past month
State of Israel
Ministry of CommunicationsBroad 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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State of Israel
Ministry of CommunicationsRegulatory 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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State of Israel
Ministry of CommunicationsRegulation 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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State of Israel
Ministry of Communications
From Monopoly to Competition
Pelephone(Bezeq)
Bezeq
Bezeq
MobileServices
1994 2000 2002 +
PelephoneCellcomPartner
PelephoneCellcomPartnerMIRS
FixedServices
(Infrastructure, Transmission & Telephony)
Bezeq
BezeqCable CompaniesOthers:
WirelineWireless
InternationalLong
DistanceServices
Bezeq-InternationalBarakGolden-Lines
Bezeq-InternationalBarakGolden-LinesAdditional operators
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State of Israel
Ministry of Communications
Fixed servicesDriven by Broadband Demand
Actual competition started Q2 2002
27
State of Israel
Ministry of Communications
Bezeq CallCommunications
CPE &BusinessSolutions
(100%)
yesDirect
BroadcastingSatellite(44.9%)
Bezeq Consortium
BezeqInternational ILD & Internet
(100%)
PelephoneMobile Services
(50%)
BezeqFixed Services& Infrastructure(Holding Company)
Walla!Communications
Portal & web
hosting
(36.7% by BI)
Bezeq Online
Call Center
(100%)
28
State of Israel
Ministry of Communications
Bidding for Majority Stake in Bezeq 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.
29
State of Israel
Ministry of Communications
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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State of Israel
Ministry of Communications
Cable TV firms - the new entrants
Fully digitized HFC networks (750MHz).
Cable Modem broadband Internet services (64Kb/s – 2Mb/s).
Interactive TVT- 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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State of Israel
Ministry of CommunicationsMobile Operators
CompanyPelephoneCellcomPartnerMIRS
Licensed1987199419982001
Market share28%40%28%4%Frequencies
(Mhz)800, 2000800, 1800,
2000900, 1800, 2000
800
Technology (present)
NAMPS & CDMA
TDMA & GSM
GSMiDEN
(ESMR)
FutureCDMA & UMTS
UMTSUMTSiDEN
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State of Israel
Ministry of Communications
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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State of Israel
Ministry of Communications
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: US$55M. Tender published: 28 March 2001. 18 December 2001 auction produced NIS
1,026 million.
35
State of Israel
Ministry of Communications
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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State of Israel
Ministry of Communications
International Long Distanceservices
Facilities Based Competition Introduced July 1997
1 state – owned, 2 privately – owned service providers
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State of Israel
Ministry of Communications
Submarine Optical Cables Infrastructure
LEV
EMOS CIOSCable RFCS Capacity
EMOS 1990 280 Mb/sCIOS 1994 622 Mb/sLEV 1998 5 Gb/sMN1 2001 3.84 Tb/s
MEDNautilus 1
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State of Israel
Ministry of CommunicationsThe 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 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
39
State of Israel
Ministry of CommunicationsCivilian Telecommunications Satellites
AMOS-1: TV distribution, SNG & VSAT launched May 1996. Geostationary orbit at 4
o 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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State of Israel
Ministry of CommunicationsAmos 2 SatelliteLaunch 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.
41
State of Israel
Ministry of Communications
The EndThank you for your attention
For more informationhttp:/www.moc.gov.il
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