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Israel - Market Intelligence Report

Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation.
Published: August 2007
Pages: 62

Consolidation will have significantly streamlined the playing field in Israel's telecommunications market by the end of 2006, with incumbent fixed-line operator Bezeq facing much tougher competition in the domestic and international telephony, Internet/broadband, and video markets. However, much still depends on important regulatory changes being implemented, most notably the imposition of fixed and wireless number portability and a firm decision on the part of the government over how to regulate voice over broadband (VoB) services.

The long-awaited consolidation of Israel's cable TV/telephony operators concluded in July 2006, some seven years after merger plans were first discussed. Matav Cable Systems media acquired its larger rivals Tevel and Golden Channels to create HOT-Cable Systems Media, an entity serving more than 900,000 cable TV subscribers and - through its licensed telecommunications arm, Hot Telecom - approximately 125,000 telephony and tens of thousands of higfh-speed Internet access customers. HOT-Cable Systems Media is now the single-largest provider of pay-TV and interactive mutimedia services in Israel. Its only other rival is satellite TV operator YES (controlled by Bezeq), although YES is not yet fully able to offer interactive multimedia and telephony services.

In the international telecommunications services and Internet services markets, consolidation among the largest players will see international operator Barak ITC merge with rival Global Communications and ISP NetVision, while independent ISP Internet Gold has agreed to acquire international operator Golden Lines International. NetVision and Internet Gold also offer international services, so their combined market shares of 35% for Barak/GlobeCom/NetVision and 34% for Internet Gold/Golden Lines will overshadow Bezeq's 29% share.

Bezeq is also facing increased competition in the local calls market. Until recently, it competed only with Hot Telecom, a company that served only 125,000 customers as of June 2006. However, in late-2005 and early-2006, special general licences were awarded to Golden Lines, cellular operator Cellcom Israel, and GlobeCall, allowing them to offer fixed-line telephony services. Since then, other operators such as Barak, cellular operator Partner Communications, Bezeq International, and Bezeq-owned cellular operator Pelephone Communications, have applied for similar licences.

Currently, the most controversial issue to be addressed in Israel is the licensing and regulation of VoB services, which would see operators and service providers able to offer voice services over the licensed broadband networks of Bezeq and Hot Telecom. Bezeq has been unwilling to co-operate with third parties wanting to offer such services unless also allowed to provide VoIP/VoB services itself, which the authorities have been unwilling to allow.

 


This Market Intelligence Report was produced as part of
Communications Markets Analysis (CMA).

For more information on CMA, click here.