4 Oct 2011Israel Broadband Overview

Israel has pursued a gradual liberalisation and privatisation policy in its telecoms sector since 1984. These efforts included adoption of a regulatory regime suitable for a multi-operator environment and competitive local exchange carrier (CLEC) licences for infrastructure, transmission, data and telephony services.

In 1984, all government operated telecommunications facilities were transferred to Bezeq which was granted a regulated monopoly for the provision of telecommunications services. In 1994, Bezeq was told to form subsidiary companies to provide services in market sectors other than domestic fixed line telephony in an attempt to promote competition. These subsidiaries included mobile operator Pelephone and Bezeq International Ltd.

At the end of 1994, the mobile market saw new entrant Cellcom, followed by Partner in 1998 and Mirs in 2001. Competition in the international telephony and data markets picked up in 1997 with the entry of Barak and Golden Lines, one of the effects being a fall in the cost of international calls by over 70 per cent.

Bezeq’s exclusive monopoly on fixed telephony services ended in June 1999. In September 2000, the Minister of Communications enacted regulations for the licensing of new operators in the fixed services market. Bezeq’s infrastructure also faced competition from the cable companies which were granted licences to provide broadband telephony access in March 2002. As a result, broadband penetration among households had grown from about 4 per cent in 2002 to approximately 88 per cent in mid-2010, with 99 per cent of homes passed. In addition, broadband prices had fallen significantly.

CLECs have been allowed to compete in the fixed telecommunications market without Universal Service Obligation (USO) since September 2004. Since then four of these licences were issued to 012 Telecom, Globcalll Telecommunications, Cellcom fixed Telecommunications services, and Partner fixed Telecommunications services.

Today, Israel’s telecommunications market is rather competitive with high mobile and fixed broadband penetration rates and well developed pay-TV services. The country’s economy was affected by the Global Financial Crisis but quickly bounced back. In mid-2010 Israel become a member of the OECD.