The Information Technology Landscape in Israel
Privatization and Deregulation
Since becoming a member of the GATS telecom agreement Israel has undergone a
complete makeover of its communications and information technology sector.
These changes have led to a more open market for trade that has led to
greater competition and Foreign Direct Investment in sector especially in
fixed and wireless telephony. The following outlines the progress made by
Israel.
Domestic Fixed Telephony
In 1984 the Ministry of Communications granted a general license to Bezeq, the government owned national telecom operator, giving creating a monopoly in the domestic telephony market. In 1996 Israel began its regulatory reform in order to comply with the 1997 telecom agreement. Reforms allowed for unlimited number of competitors in all three sectors of telephony (fixed domestic, fixed international and mobile).Bezeq officially lost exclusive domestic rights in June 1999 and in February 2001, Ofek, the first competitive local exchange carrier (CLEC) was granted an operating license. Ofek plans to begin operations in 2002, other CLEC licenses are currently pending.
Regulatory reform also introduced facilities based
competition for all carriers and well as the creation of a Universal Service
Fund in order to grant total access in the country.
International Fixed Telephony
Competition was introduced in July 1997. Prior to this reform
the national telephone operator Bezeq had a monopoly on international
telephony traffic. There are now 3 operators, Golden Lines, Barak and Bezeq
International. Since the introduction of competition the number of
competitors has increased dramatically.
The following chart depicts the increase in international traffic as a
result of the regulatory reform that allowed for competition, greater
services and lower prices in Israel.
Source: Israel Ministry of Communications
Wireless Telephony
Israel introduced cellular competition in 1994 and supports
all three wireless standards, CDMA, TDMA and GSM. In 1997 reform opened the
cellular market to foreign competitors, prior to this date there was one
national provider with limited services. Competition provided not only
choice of cellular operator but also offered and array of new services
including regional pricing plans, pre-paid services and low cost options for
low usage users giving the Israeli consumer service at low cost quality
service not provided prior to reform.
The following table looks at the
telecommunications market in Israel before and after reform. The
deregulation and liberalization of the telecommunications has transformed
the market in Israel from a once solely government owned entity with poor
service to an open competitive market ranked among the advanced
telecommunications markets in the world.
Source: Ministry of Communications Israel
