Title: TelecomIsrael 2000 International Exhibition
1Telecom-Israel 2000InternationalExhibition
Conference
- The Future is Here
- Daniel Rosenne
- Director General, Ministry of Communications
- rosenned_at_moc.gov.il
2Presentation Agenda
- Telecom Israel 2000 Event
- Telecom Networks Services
- Manufacturing Industry
- Summary.
3Telecom-Israel 2000InternationalExhibition
ConferenceTel Aviv, 6 - 9 November, 2000
4Telecom-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.
5Telecom-Israel 2000Exhibition (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
6Telecom-Israel 2000Exhibition (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.
7Telecom-Israel 2000 Conference7, 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
8Telecom-Israel 2000Start-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.
9Telecom-Israel 2000Start-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
10Telecommunications Network Services
11Israel'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).
12Telecommunications 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
13The Cellular BoomIsrael Telecommunications
Services Revenues, 1995-1999 (US M)
2,000
Cellular
Fixed
1,500
1,000
International
500
CATV
0
1995
1996
1997
1998
1999
14The 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.
15BezeqThe 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.
16Bezeq Restructuring1995 -2000
- Structural separation - promoting fair
competition. - Leaner Telco
- Improving efficiency customer focus.
- Getting ready for local competition.
- Entering new markets.
17Bezeq Consortium
Bezeq International ILD Internet (100)
Pelephone Cellular Services (50)
Bezeq Fixed Services Infrastructure (Holding
Company)
18 Cellular Telephony Competition Introduced
December 1994
19Cellular 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
20Cellular 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.
21Average 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
22Cellular 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.
23International Long DistanceFacilities Based
Competition Introduced July 1997
24Facilities-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.
25Dialing 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.
26Resulting MarketEnvironment
- 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.
27International TrafficMillion Minutes/Year
1000
Outgoing
800
600
Incoming
400
200
0
1996
1997
1998
1999
28Submarine 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
29Additional Aspects
30Internet 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.
31The 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).
32Civilian 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.
33Telecommunications Competition Enhancement by
Regulatory Reform
34The 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.
35Regulatory Reform(Promoting competitive
Advantage)
- Competition in fixed services.
- Structural change of the telecommunications
sector - Liberalization.
- Privatization.
- Re-regulation.
36Proactive 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.
37Competition 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.
38Re-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.
39Licenses 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.
40Proposed 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
41License 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.
42Israel's Telecommunications Map
1994
Mobile Services
Fixed Services (Infrastructure, Transmission
Telephony)
International Long Distance Services
43Bezeq 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.
44Bezeq 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).
45Interconnection 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
46Bezeq 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.
47New NNP (National Numbering Plan)
48Existing 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.
49New 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.
50Will 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
51Competition InBroadcastingServices
52Broadcasting 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).
53Open Sky - NewBroadcasting 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.
54Competition inMulti-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.
55Manufacturing Industry
56Israel'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.
57Total 1999 Sales - 8.6 billion
Industrial Medical Systems 21
Telecommunications 42
Components 15
Defense Systems 22
58Industry 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).
59Statistical 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
60Major 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 telecommunications
- Internet Multimedia
- Telemedicine
- Microelectronics
- Network management
61Summary
62Israel'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.
63Regulation 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.
64Israel'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.
65Facing 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.
66Telecom-Israel 2000Tel-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!
67For more informationTelecom Israel
2000http//www.telecom-israel.comMinistry of
Communicationshttp//www.moc.gov.il
68The End
- Thank you for your attention