Transcript License auctions

STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
License Auctions
Update
Daniel Rosenne
Director General, Ministry of Communications
[email protected]
STATE OF ISRAEL
Presentation Agenda
 The Telecommunications
Environment:
 Market overview
 Fixed services
 Mobile services
 License Auctions:
 Fixed wireless access
 2G/3G mobile.
MINISTRY OF
COMMUNICATIONS
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Telecommunications
Market Overview
STATE OF ISRAEL
Israel`s Telecommunications
MINISTRY OF
COMMUNICATIONS
 2.8 million main telephone lines
(45% penetration).
 4.4 million mobile customers, on four
networks: Pelephone, Cellcom,
Partner/Orange & MIRS
(70% penetration).
 1.2 million cable-TV & 0.1 million DBS
connected households.
(Cable: 3 operators, 70% of passed households, 95%
household coverage).
STATE OF ISRAEL
Internet Services
MINISTRY OF
COMMUNICATIONS
 ~40 Internet service providers, 1,000,000
dial-up & 8,000 directly connected
customers, 50,000 domains.
 Penetration ~ 35% of households, 50% of
businesses.
 IIX (Israel Internet eXchange) non-profit
peering point.
 “Hands-off” overall regulatory policy.
 High growth ~ 50% annual.
Telecommunications
Services Market - 1999
Cable International
Internet
TV Long-Distance services
7%
10%
Mobile
Services
2%
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Terminal Equipment
& Business Systems
2%
Fixed
Services
35%
44%
Total telecom services market ~ $ 4.2 billion
The Mobile Boom:
STATE OF ISRAEL
Israel Telecommunications Services
Revenues, 1995-1999 ($US M)
2,000
Mobile
Fixed
1,500
MINISTRY OF
COMMUNICATIONS
1,000
ILD
500
CATV
0
1995
1996
1997
1998
1999
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Fixed services
Driven by Broadband Demand
Actual competition expected during 2001
Fixed Services
Competition
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Prolonged Delays:
 Politics: May 1999 elections.
 Cable companies disputes:
 Fulfillment of universal service obligation.
 Competition - DBS services, content.
 Finance Ministry seeking payment for granting
telecom license.
 Justice Ministry seeking limits on content control.
 Union disputes - safeguarding ‘employee rights’.
Rough Road Ahead:
 Telecom law change underway, allowing cable
companies entry into telecom.
The Birth of
New Entrants
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 Regulation allowing fixed services
licensing - published September 2000.
 FWA tender - published October 2000.
 ‘Ofek’ fixed services license - granted
February 2001.
 Cable companies restrictions removal Telecom Law update due during 2001.
 Roll out of several competitive fiberbased backbones - IC1, Israel Railways,
Ofek, Shavit, Cellcom.
Ofek New World
Israel’s first licensed CLEC
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 Owned by Eurocom group (50.33%) & Arison
investments (49%).
 Fixed services general license – as of 1 February
2001.
 Plans for modern IP based infrastructure, utilizing
1000 Km fiber cables.
 Covering 27 “natural zones” (out of 52).
 Will offer wide range of telephony & broadband
data services, for business & households.
 Plans for $ 1Bn investment, 1500 employees.
IC-1
(Israel Coasting one)
 Repeaterless submarine
system along the Israeli
coastline.
 Seven landing points:







Nahariyya
Haifa
Netania
Herzliyya
Tel Aviv
Rishon LeZion
Ashkelon.
 48 fibers in a double ring
festoon arrangements.
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Mobile
Services
Competition Introduced
December 1994
STATE OF ISRAEL
Mobile Operators
MINISTRY OF
COMMUNICATIONS
Pelephone
Cellcom
Partner/Orange
MIRS
800 MHz
800 MHz
900 MHz
800 MHz
NAMPS
&
CDMA
TDMA
GSM
iDEN
(ESMR)
1987
1995
BellSouth
Bezeq
Safra Brothers
Motorola Discount Investments
(Shamrock)
PEC
private investors
Trunking - 1994
1999 Cellular - 2001
Hutchison
Matav
Elbit.com
Eurocom
free float
Motorola
Ampal
STATE OF ISRAEL
Cellular Telephony
MINISTRY OF
COMMUNICATIONS
 Rapid growth - 125,000 subscribers in January
1995. In November 1999 the number of mobiles
(2.9 million) exceeded the number of fixed lines.
 Key expansion stimulators:
 Perceived low tariffs: ~ US $0.11 to 0.23/minute
air time, ~ $11 to 29 monthly charge.
ARPU (Average Revenue Per User) - US$50 to 60.
 Calling party pays (CPP).
 Nationwide coverage & “Land-line”quality.
 Competition & marketing innovations.
STATE OF ISRAEL
Average Number of
Monthly Usage Minutes
MINISTRY OF
COMMUNICATIONS
1995 1996 1997 1998 1999 2000
Fixed
Bezeq
Mobile
Pelephone
Partner
687
687
679
699
732
530
430
320
300
295
427
361
(Q4)
(Q4)
Source: Bezeq Eurobonds Prospectus, August 2000; Partner reports
Mobile Competition:
key trends - 2001
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 New services:
 SMS, WAP, wireless internet.
 Content: news, media & data services.
 Location based services.
 New pricing models:
 Regional pricing plans.
 Pay as you use programs.
 Low cost position for low usage segments.
 Churn reduction plans.
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
License
Auctions
Licenses For New
Operators
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 General licenses for fixed domestic
services (infrastructure, transmission &
data, telephony) are issued to applicants
meeting economic and know-how criteria.
 General licenses requiring spectrum
resources (mobile, FWA) shall be issued
through public tenders.
Proposed New Frequency
Bands Allocations
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Band
Application
Allocation
2 GHz
2G/3G Mobile
175 MHz
3.5 GHz
N-FWA/WLL
72 MHz
26 GHz
B-FWA/LMDS
1200 MHz
Fixed Wireless
Access Auctions
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 Up to 3 operators, selected in combined MSR
(Multiple Simultaneous Round) auction.
 Frequency Allocations, for each operator:
 26 GHz Broadband: 2 x 196 MHz.
 3.5 GHz Narrowband: 2 x 12 MHz.
 Participation of Bezeq & cable operators in the
auction is excluded.
 Roll-out obligation: 3 years.
 Tender published: 12 October 2000.
 Applications deadline: 20 March 2001.
2G/3G Mobile
License Auctions
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 MSR (Multiple Simultaneous Round)
combined auction for 4 licenses, allowing
usage of the following frequency packages:
 2G FDD: 2x10 MHz.
 3G FDD: 2x10 MHz.
 3G TDD: 5 MHz (for 3 packages only).
 Reserve price: US $ 100M. 25% reduction
for new operators.
 Tender publication: 28 March 2001.
Applications deadline: 17 July 2001.
2G/3G Auction:
Frequency Allocations
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Allocation per License [MHz] : Allocation Date
Frequencies
[MHz]
License A
License B
License C
License D
1710-1785
2X6.2: 1/2001 2x6.4: 1/2001 2x10: 1/2001 2x10: 1/2002
& 1805-1880 2x3.8: 1/2004 2x3.6: 1/2004
1920-1980
& 2110-2170
2x5: 1/2001
2x5: 1/2004
1900-1920
or 2010-2025 5: 1/2005
2x5: 1/2001
2x5: 1/2001
2x4.7: 1/2004 2x5: 1/2004
-
5: 1/2004
2x5: 1/2001
2x5: 1/2004
5: 1/2004
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
For more information
http://www.moc.gov.il