Embassy of India, Tel Aviv

Commercial Wing

Tel Aviv, Israel

29 October 2014

The Telecommunications Sector in Israel

Overview

The telecommunications sector has gradually morphed into an economic growth engine and fertile ground for commercial activity that indirectly influences almost every sector in the State of Israel. Over the years, relevant Israeli Ministries strove to develop this sector even more and to progressively liberalize and privatize the market. These policies continued to evolve during the mid 1990’s, as the Israeli telecommunications sector transitioned from government owned monopolies to a new competitive business structure, driven by a wide array of new companies.Israel’s standing in the global telecommunications market advanced tremendously during the 2000’s, as Israeli companies revolutionized protocols such as WiMAX, VoIP, and TDMoIP.These developments increased the sector’s annual revenues up to $7.5 billion in 2011 (Source: Israeli Ministry of Communication).

The telecommunications industry in Israel is comprised of a wide array of companies with different fields of expertise: semiconductor development, hardware engineering, system integration and software design. More specifically, over 300 companies are exporting: fiber-optic intelligent cable solutions, home networks, storage area networks, IP networks (data, voice, multimedia), wireless local loops, video conferencing, video networks, firewalls, 3G applications, VPNs and routers (Source: Israel Export Institute).

Mobile

  • Israel has a high mobile-phone penetration rate, at an estimated 123 subscriptions per 100 people in 2013. Subscriber numbers will rise slowly in 2014-18. The relatively low cost of usage, an affinity with technological products and strong social ties help to boost demand for mobile telephony.
  • Mobile-phone usage (call minutes per month per phone) is the third-highest in the OECD (after the US and Canada), at 205 minutes in 2011. Average revenue per user (ARPU) fell sharply in 2011-13 as regulators imposed cuts in interconnection fees and other charges.
  • Moreover, the entry and expansion of several new providers (following a government decision to end the oligarchy enjoyed by the three big established companies in 2012) has led to intensified price competition; after declining sharply in 2013, ARPU fell further in year-on-year terms in the second quarter of 2014, by 5.4% at Cellcom, 8% at Partner and 7.1% at Pelephone.
  • There are currently five mobile-phone operators in Israel, as well as a number of mobile virtual network operators (MVNOs). All of the five main operators provide countrywide coverage and advanced network services. Cellcom is the largest mobile provider in the country, with 3.1m subscribers at the end of 2013. However, this represents a 3% decline from a year earlier, reflecting the impact of increasingly fierce competition in the local market.
  • Cellcom operates a high-speed packet access (HSPA) 3.5G network, enabling advanced broadband multimedia services. It also offers fixed-line services. Cellcom merged with Netvision, the country’s largest Internet service provider and international telephone carrier, in 2011.
  • Samsung was the most popular make of handset in Israel in 2013, accounting for 34% of all smartphones sold; however, this was down from 43.7% in the previous year. Apple’s iPhone was in second place, with market share edging up to 27.7%, from 26.7% in 2012. Sony’s market share also improved, rising to 8.3% (from 7.6%). Nokia and LG shared fourth place, each with 6.7% of total sales; both companies saw their market share rise markedly compared with the previous year, when they stood at 2.9% and 3.7% respectively.

Selected Israeli Telecom Companies in the Global Market

Amdocs – Amdocs is a global provider of services to more than 250 communication companies in more than 80 countries. The company focuses on CES (Customer Experience Solutions), business support systems (BSS), operational support systems (OSS) and network control and optimization offerings for multiple lines of business, including wireless, wireline, broadband, cable and satellite services.

Gilat Satellites Systems - Gilat Satellite Networks is a leading provider of products and services for satellite-based broadband communications. The company develops a wide range of high-performance satellite ground segment equipment and VSATs, with a focus on the consumer and Ka-band market. During the last 25 years, the company has provided over a million products to more than 85 different countries.

ECI Telecom - provides communications products and services to carriers and service providers, cable/multiple system operators, wireless/cellular service providers, utilities and carrier of carriers, and government and defense entities worldwide. The company focuses on solutions for multi-play services, business services, voice services, wireless, cellular backhaul, optical networking, Carrier Ethernet networks, TDM to Ethernet evolution, migration to all IP, network security, carrier of carriers and wavelength services.

Ceragon Networks - Ceragon designs and manufactures high-capacity communication systems for wireless backhaul – addressing the segment of the cellular market that connects a typical cell tower or towers to an operator’s core network. Ceragon provides wireless devices based on microwave with speeds ranging from 5 Mbit/s up to 2 Gbit/s per radio channel.

Audiocodes - AudioCodes designs, develops and sells advanced Voice-over-IP (VoIP), converged VoIP and Data networking products and communications applications for Service Providers and Enterprises. The company’s products include: IP Phones, Session Border Controllers (SBC), Media Gateways, Multi-Service Business Routers (MSBR), Residential Gateways, Media Servers, mobile communications solutions, value added applications and professional services. W:

Alvarion - Alvarion provides wireless-based end-to-end solutions including HW infrastructure and SW based applications. It has designed and manufactures a range of Wi-Fi solutions, wireless-based Point-to-Point and Point-to-Multipoint technologies.The company holds over 25,000 sites in over 95 countries and their products include 4G CPEs, BrezzeACCESS (Wireless broadband access solutions for license-exempt frequencies serving the variety of applications and BreezeMAX Extreme (WiMAX 16e wireless broadband technology). W:

RAD Data Communications - RAD's research, development and engineering includes operations, administration and management (OAM) and performance management; service assurance; traffic management; fault management; synchronization and timing over packet; TDM pseudo wire; ASIC and FPGA development; hardware miniaturization; SFP form-factor solutions;and business DSL.

m-Wise - develops, manufactures, markets, and supports software and hardware-based content and service delivery platform. The company markets its wireless application platform under the brand, MOMA platform, which is an end-to-end application.

Kayote Networks - Kayote Networks, Inc., a telecommunications service company, provides voice over Internet protocol (VoIP) interconnectivity and interoperability services. It offers various services that enable providers to exchange Internet telephony voice traffic. The company provides VoIP Traffic Manager (VTM) platform, a hosted switch that enables Internet telephony service providers, international long distance providers, cable MSOs, and carriers to outsource some or all of their VoIP traffic and operations. Kayote Networks, Inc. was founded in 2003 and is based in Passaic, New Jersey.

Multinational Corporations in Israel

Several leading multinational telecom corporations operate in Israel through subsidiaries and R&D centers.

Domestic Communications Market - 2013

Market / Company
Domestic Fixed Services / Bezeq
Hot Cable Co.
012 Telecom
Cellcom
Partner (Orange)
Globcall
BIT
Mobile Telephony / Pelephone
Cellcom
Partner
Hot Mobile
Golan Telecom
Ramy Levi
Alon Cellular
Home Cellular
International Services / 012 Smile
Barak-Netvision
Bezeq International
Xfone 018
Telzar
Golan Telecom
Hallo 015
Mirs International
Internet Services / 012 Smile
Bezeq International
Barak-Netvision
Golden Lines

A. Fixed Services

Domestic Telephony Operators / 2 general licenses (Bezeq, Hot),
5 special licenses (Cellcom-netvision 013, Partner-
012, Bezeq int.,)
Fixed Phone Lines / 2.9 million
Total Revenues / $1.5 billion (2011)
Digital Telephone Network (%) / 100%
Home-Pass / 99%
Broadband Infrastructure Operators / 2 (Bezeq and HOT)+a 3rd, FTTH network being
deployed (using Electric Corporation
infrastructure)

B. Cellular Telephony

Opening of Competition / 1995
No. of Operators / 5 network operators + 9 MVNO licensees (of
whom 3 are already operating as of December
2012)
Country Coverage / 99% of the Israeli population
Total Revenues / $2.91 billion (2012)
No. of Subscribers / 9,964,000
Penetration Rate / 132%
Average ARPU / $93
Average MOU / 426
Date of UMTS Spectrum Auction / December 2001, July 2011
No. of UMTS Licenses / 5
UMTS Frequencies Band Price / $45 million (per operator)

C. Internet & Broadband

No. of ISP / 70+ (3 major players)
Broadband Subscribers / ~1,800,000 (~1,100,000 ADSL, ~700,000 Cable)
Broadband Penetration / 80% of households
Broadband Penetration per 100 Inhabitants / ~25%
Broadband Home-Pass / 99%
Average Speed / 10 Mb/s

(Daniel Shkedi)

Marketing Officer

Embassy of India in Israel| October 2014 |The Telecommunications Sector in Israel / 1