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STATE OF ISRAEL MINISTRY OF COMMUNICATIONS License Auctions Update Daniel Rosenne Director General, Ministry of Communications [email protected] gov. il
STATE OF ISRAEL Presentation Agenda l The Telecommunications Environment: n Market overview n Fixed services n Mobile services l License Auctions: n Fixed wireless access n 2 G/3 G mobile. MINISTRY OF COMMUNICATIONS
STATE OF ISRAEL MINISTRY OF COMMUNICATIONS Telecommunications Market Overview
Israel`s Telecommunications STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l 2. 8 million main telephone lines (45% penetration). l 4. 4 million mobile customers, on four networks: Pelephone, Cellcom, Partner/Orange & MIRS (70% penetration). l 1. 2 million cable-TV & 0. 1 million DBS connected households. (Cable: 3 operators, 70% of passed households, 95% household coverage).
Internet Services STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l ~40 Internet service providers, 1, 000 dial-up & 8, 000 directly connected customers, 50, 000 domains. l Penetration ~ 35% of households, 50% of businesses. l IIX (Israel Internet e. Xchange) non-profit peering point. l “Hands-off” overall regulatory policy. l High growth ~ 50% annual.
Telecommunications Services Market - 1999 Cable International Internet TV Long-Distance services 7% 10% Mobile Services 2% STATE OF ISRAEL MINISTRY OF COMMUNICATIONS Terminal Equipment & Business Systems 2% Fixed Services 35% 44% Total telecom services market ~ $ 4. 2 billion
The Mobile Boom: STATE OF ISRAEL Israel Telecommunications Services Revenues, 1995 -1999 ($US M) MINISTRY OF COMMUNICATIONS 2, 000 Mobile Fixed 1, 500 1, 000 ILD 500 0 CATV 1995 1996 1997 1998 1999
STATE OF ISRAEL MINISTRY OF COMMUNICATIONS Fixed services Driven by Broadband Demand Actual competition expected during 2001
Fixed Services Competition STATE OF ISRAEL MINISTRY OF COMMUNICATIONS Prolonged Delays: l Politics: May 1999 elections. l Cable companies disputes: n Fulfillment of universal service obligation. n Competition - DBS services, content. n Finance Ministry seeking payment for granting telecom license. n Justice Ministry seeking limits on content control. l Union disputes - safeguarding ‘employee rights’. Rough Road Ahead: l Telecom law change underway, allowing cable companies entry into telecom.
The Birth of New Entrants STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l Regulation allowing fixed services licensing - published September 2000. l FWA tender - published October 2000. l ‘Ofek’ fixed services license - granted February 2001. l Cable companies restrictions removal Telecom Law update during 2001. l Roll out of several competitive fiberbased backbones - IC 1, Israel Railways, Ofek, Shavit, Cellcom.
Ofek New World Israel’s first licensed CLEC STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l Owned by Eurocom group (50. 33%) & Arison investments (49%). l Fixed services general license – as of 1 February 2001. l Plans for modern IP based infrastructure, utilizing 1000 Km fiber cables. l Covering 27 “natural zones” (out of 52). l Will offer wide range of telephony & broadband data services, for business & households. l Plans for $ 1 Bn investment, 1500 employees.
IC-1 (Israel Coasting one) l Repeaterless submarine system along the Israeli coastline. l Seven landing points: n n n n Nahariyya Haifa Netania Herzliyya Tel Aviv Rishon Le. Zion Ashkelon. l 48 fibers in a double ring festoon arrangements. STATE OF ISRAEL MINISTRY OF COMMUNICATIONS
STATE OF ISRAEL MINISTRY OF COMMUNICATIONS Mobile Services Competition Introduced December 1994
STATE OF ISRAEL Mobile Operators MINISTRY OF COMMUNICATIONS Pelephone Cellcom Partner/Orange MIRS 800 MHz 900 MHz 800 MHz NAMPS & CDMA TDMA GSM i. DEN (ESMR) 1987 1995 Bell. South Bezeq Safra Brothers Motorola Discount Investments (Shamrock) PEC private investors Trunking - 1994 1999 Cellular - 2001 Hutchison Matav Elbit. com Eurocom free float Motorola Ampal
Cellular Telephony STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l Rapid growth - 125, 000 subscribers in January 1995. In November 1999 the number of mobiles (2. 9 million) exceeded the number of fixed lines. l Key expansion stimulators: n Perceived low tariffs: ~ US $0. 11 to 0. 23/minute air time, ~ $11 to 29 monthly charge. ARPU (Average Revenue Per User) - US$50 to 60. n Calling party pays (CPP). n Nationwide coverage & “Land-line”quality. n Competition & marketing innovations.
Average Number of Monthly Usage Minutes STATE OF ISRAEL MINISTRY OF COMMUNICATIONS 1995 1996 1997 1998 1999 2000 Fixed Bezeq 687 679 699 732 Mobile Pelephone 530 430 320 300 295 Partner 427 361 (Q 4) Source: Bezeq Eurobonds Prospectus, August 2000; Partner reports
Mobile Competition: key trends - 2001 STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l New services: n SMS, WAP, wireless internet. n Content: news, media & data services. n Location based services. l New pricing models: n Regional pricing plans. n Pay as you use programs. n Low cost position for low usage segments. l Churn reduction plans.
STATE OF ISRAEL MINISTRY OF COMMUNICATIONS License Auctions
Licenses For New Operators STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l General licenses for fixed domestic services (infrastructure, transmission & data, telephony) are issued to applicants meeting economic and know-how criteria. l General licenses requiring spectrum resources (mobile, FWA) shall be issued through public tenders.
Proposed New Frequency Bands Allocations Band Application STATE OF ISRAEL MINISTRY OF COMMUNICATIONS Allocation 2 GHz 2 G/3 G Mobile 175 MHz 3. 5 GHz MHz N-FWA/WLL 72 26 GHz B-FWA/LMDS 1200 MHz
Fixed Wireless Access Auctions STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l Up to 3 operators, selected in combined MSR (Multiple Simultaneous Round) auction. l Frequency Allocations, for each operator: n 26 GHz Broadband: 2 x 196 MHz. n 3. 5 GHz Narrowband: 2 x 12 MHz. l Participation of Bezeq & cable operators in the auction is excluded. l Roll-out obligation: 3 years. l Tender published: 12 October 2000. l Applications deadline: 20 March 2001.
2 G/3 G Mobile License Auctions STATE OF ISRAEL MINISTRY OF COMMUNICATIONS l MSR (Multiple Simultaneous Round) combined auction for 4 licenses, allowing usage of the following frequency packages: n 2 G FDD: 2 x 10 MHz. n 3 G TDD: 5 MHz (for 3 packages only). l Reserve price: US $ 100 M. 25% reduction for new operators. l Tender publication: 28 March 2001. Applications deadline: 17 July 2001.
2 G/3 G Auction: Frequency Allocations STATE OF ISRAEL MINISTRY OF COMMUNICATIONS Allocation per License [MHz] : Allocation Date Frequencies [MHz] License A License B License C 1710 -1785 1/2002 & 1805 -1880 2 X 6. 2: 1/2001 2 x 6. 4: 1/2001 2 x 3. 8: 1/2004 2 x 3. 6: 1/2004 1920 -1980 & 2110 -2170 2 x 5: 1/2001 2 x 5: 1/2004 2 x 5: 1/2001 2 x 4. 7: 1/2004 1900 -1920 or 2010 -2025 5: 1/2005 License D 2 x 10: 1/2001 2 x 10: 2 x 5: 1/2001 2 x 5: 1/2004 - 5: 1/2004
STATE OF ISRAEL MINISTRY OF COMMUNICATIONS For more information http: //www. moc. gov. il