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Telecommunications Industry in Israel august 2002

Telecommunications Industry in Israel august 2002. Ministry of Communications. Presentation Agenda. Israel Demographics & ICT Statistics Telecommunications Industry Telecommunications Market Overview. Israel Demographics & ICT Statistics. ISRAEL Demographics. Population ~ 6.5 million.

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Telecommunications Industry in Israel august 2002

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  1. TelecommunicationsIndustry in Israel august 2002 Ministry of Communications

  2. Presentation Agenda • Israel Demographics & ICT Statistics • Telecommunications Industry • Telecommunications Market Overview

  3. Israel Demographics&ICT Statistics

  4. ISRAEL Demographics • Population ~ 6.5 million. • Households ~ 1.8 million. • Average family ~ 3.6 persons.

  5. Israel’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

  6. 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

  7. Telecommunications Industry

  8. 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.

  9. Total 2001 Sales – $14.25 billionSource: IAEI, 2002 Software 21% Telecommunications 29.6% Defense Systems 15% Industrial & Medical Systems 17.7% Components 16.7%

  10. Leading Israeli Telecommunications & Electronics Companies CompanySales 2001Line of Business (US$M) 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

  11. Industry 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.

  12. 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 R&D [%] 12 2

  13. Major R&D 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 R&D activities: • Digital wireless • Satellite systems • Broadband & optical technology • Internet & Multimedia • Telemedicine • Microelectronics • Network management

  14. 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.

  15. 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%).

  16. Telecom Israel 2002 Exhibition and Conference:The Future is Here Tel-Aviv, 4-7 November, 2002 For more informationTelecom Israel 2002:http://www.telecom2002.co.il

  17. 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, Israel’s born products stand up. • We invite you to witness for yourself!

  18. 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 CLEC’s? 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 Israel’s Technology Fixed Mobile Convergence - Bundling or Bumbling?

  19. Telecommunications Market Overview

  20. Telecommunications Services Market - 2001 Cable TV International Long-Distance Internet services Terminal Equipment & Business Systems 4% 2% 7% 9% Mobile Services 52% Fixed Services 26% Total telecom services market ~ US $5 billion

  21. 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

  22. 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%.

  23. Regulatory Policy • Public interest - the main issue • Competition - the key for innovation, entrepreneurship, investment & growth. • Key action areas: • Liberalization. • Re-regulation. • Privatization.

  24. 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.

  25. 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

  26. Fixed servicesDriven by Broadband DemandActual competition started Q2 2002

  27. yes Direct Broadcasting Satellite (44.9%) Bezeq Call Communications CPE & Business Solutions (100%) 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)

  28. 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. 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.

  30. 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.

  31. Mobile ServicesCompetition Introduced December 1994

  32. Mobile Operators

  33. 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).

  34. 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. 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.

  36. International Long DistanceservicesFacilities Based Competition Introduced July 19971 state – owned, 2 privately – owned service providers

  37. 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

  38. 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 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. 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.

  40. 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.

  41. The End Thank you for your attention For more information http:/www.moc.gov.il

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