Israel’s telecommunications market in 2008 was estimated at $7.5 billion. According to the Ministry of Communications the telecom market grew by 5.4% in 2007 and 4.3% in 2008. 2009 numbers have yet to be released. The biggest contributor to the sector’s growth is the Internet, which grew by 15%. The cellular field also showed positive growth and increased by 7%, representing 56.7% of total telecom income.
Israel has one of the highest mobile penetration rates in the world and one of the highest household broadband penetration rates. Israel has very competitive fixed-line voice, broadband and digital media market sectors. The Israeli company Bezeq has the vast majority of the domestic fixed-line voice services, but new licences being granted for VoIP service provision changing the market. In early 2009, Partner, Netvision, Xfone and Bezeq International all acquired VoIP licenses and began providing competitive domestic telephone services. The International fixed-line voice market is already very competitive and recent mergers have created strong players.
Market competition is fierce, both between cable and DSL infrastructures and between ISPs. Competition is also fierce between Bezeq’s satellite TV subsidiary YES and cable TV operator HOT. Israel’s very high broadband penetration rate provides great potential for triple play and digital media related technologies.
Israel’s mobile communications market is one of the most competitive in the region, with four operators in a saturated market. The difficulties of growth through new customer acquisitions and voice tariff competition have led operators to focus on mobile data, regularly launching new value-added products and extending their offerings to provide bundled services including fixed-line. Third generation services have been launched by the three major operators and subscriber numbers are significant.
Israel’s Ministry of Communications serves as the primary sector regulator. The Ministry’s objectives over the short-to-medium term include expanding competition in the fixed market, by licensing new competitors without universal service obligation; preparing a policy on VOIP communications based on VOB (Voice over Broadband) technology; promoting Wimax technology and developing a Wimax policy; promoting the deployment of advanced cellular services and promoting cellular market competition.
Israel’s very high broadband penetration rate provides great potential for triple play and digital media technologies. Internet Protocol Television (IPTV) is a hot area today, but the service is still in the early stages of development.
Another area of development is the Fixed Mobile Convergence (FMC) market. A market survey conducted by BBDO Consulting shows that over 65% of fixed and mobile operators will have implemented FMC services into their products over the next three years. There are a number of Israeli companies offering FMC solutions allowing for dualmode handset service. Bezeq’s long-term goal is to merge its activities with those of its subsidiaries to become one group that provides cellular, wireline (local and international calls), IPTV, and Internet services, over converged fixed-mobile infrastructure. However, regulations currently require structural separation between service providers. This means a complete separation between cellular, international calls and local calls operators; i.e., separate infrastructures, subscriber base and management.
The cellular market segment is the main growth engine within the Israeli telecommunications market. All four operators in Israel provide digital technology countrywide coverage and modern 3G services. Pelephone uses CDMA2000 technology. The second operator, Cellcom, uses the American IS-136 TDMA, European DCS 1800 and UMTS. Orange (Partner Communications), the third operator, uses GSM technology DCS 1800 and UMTS. The last licensed cellular operator is MIRS, which uses iDEN ESMR technology. The penetration rate of mobile phone subscription exceeds 100% (over 7.7 million mobile subscribers). The cellular market continues to search for new and innovative applications such as value added services for its customers. Israel is a highly urbanized, technologically-literate society. Israelis are used to having world-leading technology in many fields, and mobile phones are no exception.
Opportunities are in the IP Networks – Voice, Video, Data and Multimedia, FMC, IPTV, Wi-Fi, WiMAX and VOB. As the Israeli telecoms industry continues to expand and increase in revenue and with the introduction of new technologies, the market will continue to offer many opportunities for U.S. exporters.