The very competitive Israeli market
The Israeli telecoms market is approaching a situation where there is little room to grow in any of the established branches. Even the broadband market is approaching saturation at 68% of all households. Mobile penetration is exaggerated by the inclusion of subscribers who should properly be ascribed to the Palestinian territories but even with these subscribers discounted, penetration is well over 100%. 3G subscriptions are growing and now constitute around 25% of all subscribers.
The market is very much more competitive than most and is unusual in that the main players are largely Israeli owned - the market is very self-contained. In addition there is a very flourishing venture-capital funded ICT start-up sector with all manner of leading-edge software and equipment companies. Many major international players, including Microsoft, Cisco and Nokia, have bought Israeli start-ups and their technology.
There is very stiff competition in international calls, Internet and broadband provision, the mobile market and in the provision of digital multi-channel TV, with no one player having a dominant position in any of these markets. Three large players have close to equal shares of the mobile market. Three further large players have close to equal shares of the ISP market and of the international calls market. Two large players share the broadband infrastructure market. Two large players operate in the multi-channel pay TV market. Only the domestic fixed-line voice market has remained almost a monopoly for incumbent Bezeq and even this is now being eroded.
Several groups are jostling for position. Incumbent Bezeq provides domestic fixed-line, international, broadband infrastructure, ISP, mobile and multi-channel pay TV services through its various subsidiaries. The IDB group provides international calls and ISP services through its Netvision Barak subsidiary and mobile services through Cellcom. It is also moving into domestic fixed-line. The Eurocom group provides international calls and ISP services through Smile.Communications, has a significant, but minority, share of mobile operator Partner, has a 32% share in YES, (the DBS satellite pay TV company 49% owned by Bezeq) and again is moving into the fixed-line domestic voice market.
In April 2008 IDB subsidiary Discount Investment caused a further power shift by buying a 15% share of HOT Cable Systems Media. HOT is the operator of the only cable TV and broadband network, and as such competes with YES, and is also winning a significant share of the domestic voice market. Multi-channel TV was the one thing missing from IDB’s bundle.
Two long-awaited regulatory developments have also impacted the market in the first half of 2008. The advent of number portability in December 2007 is having a significant impact on speeding up the decline of Bezeq’s share of the domestic voice market, which is fast falling to the magic figure of 85%, below which Bezeq will have several restrictions lifted which have prevented it from bundling its services in any way, including providing VoIP. In addition the Gronau Commission has handed down its report, much of which is likely to find its way into legislation, providing a signpost for the future.
The lifting of the restrictions on Bezeq have caused it to once again start moving towards improving its infrastructure to a Next Generation Network (NGN). Infrastructure investment by the mobile operators in 3G and HSPA is also having an impact.
All of which will expand the possibilities for digital media, content and applications of all types. Israel also has the flourishing small software and content companies and the venture capital companies to make the most of these opportunities.
See:-
- Israel - Fixed-line Market, Broadband & Digital Media - Overview & Statistics
- Israel - Key Statistics, Telecommunications Market and Regulatory Overviews
- Israel - Mobile Market - Overview & Statistics
Christine (Tine) M Lewis - Research Manager - BuddeComm
