Transcript מגמות בטלקום - הניסיון האמריקאי

STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Regulation in Transition
Daniel Rosenne
Director General, Ministry of Communications
[email protected]
Were we stand?



1984 – MFJ (interexchange competition).
1994 – Cable Act (national framework for cable
regulation).
1996 – Telecom Act (LEC competition).
US reality, 2000:



MINISTRY OF
COMMUNICATIONS
US telecom history:


STATE OF ISRAEL
5% of total local lines served by CLECs.
3.5 million broadband subscribers (2.3 M cable modem,
1.2 M xDSL).
Israel, 2000:


September 2000 – LEC competition.
“Legal standstill”- restriction on cable entry into LEC
and LEC entry into cable. Law update – on its way.
Israeli Regulation
Philosophy







STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Consumer’s are the focus.
Competition is essential.
Interconnection is the key.
Facility based competition is the preferred way.
Unbundling is interim “competition promotion”
method.
Cable companies should be regulated as common
carriers.
“Hands off” regulation of new services (e.g.
internet).
Transform from sector specific “ex-ante” to
general anti-trust “ex-post” regulation.
STATE OF ISRAEL
Presentation Agenda
MINISTRY OF
COMMUNICATIONS

Telecom Networks & Services
 Cellular Telephony
 International Long Distance
 Internet

Regulatory Reform
 Incumbent Tariff
Rebalancing
 Frequency allocations
 National Numbering Plan

Summary.
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Telecommunications
Network & Services
STATE OF ISRAEL
Israel's Telecommunications
MINISTRY OF
COMMUNICATIONS

2.8 million main telephone lines
(47% penetration).

3.5 million cellular customers, on three
networks: Pelephone, Cellcom &
Partner/Orange.
(58% penetration).

1.1 million cable-TV connected households.
(3 operators, 70% of passed households,
92% household coverage).
Telecommunications
Services Market - 1999
Cable International
Internet
TV Long-Distance services
7%
10%
Cellular
Telephony
2%
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Terminal Equipment
& Business Systems
2%
Fixed
Services
35%
44%
Total telecom services market ~ $ 4.2 billion
The Cellular Boom:
STATE OF ISRAEL
Israel Telecommunications Services
Revenues, 1995-1999 ($US M)
MINISTRY OF
COMMUNICATIONS
2,000
Cellular
Fixed
1,500
1,000
International
500
CATV
0
1995
1996
1997
1998
1999
The Existing Regulatory
Environment

STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Separation between regulation and operation
(since 1984).
Regulation responsibility - Ministry of Communications.

General operating licenses issued to Bezeq,
cellular operators & facility-based international
long-distance service providers.

Special licenses issued by the Ministry of
Communications for value-added services.

Exclusive rights of Bezeq in fixed services
canceled as of 1 June 1999.
Bezeq
The Israel Telecommunication Corp Ltd.
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS

Israel's national telecommunications
operator.

Annual sales - NIS 9.3 billion.

11,500 employees (8,500 in Bezeq, the
mother company).

5% royalties on income.

Regulatory environment:
 Price cap tariff regulation (CPI - X
formula).
 Universal service obligations.
STATE OF ISRAEL
Cellular Operators
MINISTRY OF
COMMUNICATIONS
Pelephone
Cellcom
Partner/Orange
800 MHz
800 MHz
900 MHz
NAMPS & CDMA
TDMA
GSM
1987
1995
1999
BellSouth
Safra Brothers
Discount Investments
PEC
private investors
Hutchison
Matav
Elbit.com
Tapuz
free float
Bezeq
Motorola
Average Number of
Monthly Usage Minutes
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
1995
1996
1997 1998
1999
687
687
679
699
732
Mobile
Pelephone 530
Partner
430
320
300
295
427
Fixed
Bezeq
(Q4)
Source: Bezeq Eurobonds Prospectus, August 2000; Partner annual report 1999
Facilities-Based International
Service Providers

STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Golden Lines (012)
Telecom Italia, SouthWestern Bell,
Aurek, Globscom & Meitar/Kahn.

Barak (013)
Sprint, Deutsche Telekom, France Telecom, Clalcom
& Matav.

Bezeq International (014)
The incumbent carrier, 100% owned by Bezeq.
STATE OF ISRAEL
Dialing Parity Rules

MINISTRY OF
COMMUNICATIONS
Per-call carrier-selection prefixes (01X).
For each of the international service providers.

CPS (Carrier pre-selection) - subscribers
can choose a preferred provider for ‘00’
prefix and ’188’ international operator
services.

Competitive practices –


CPS balloting.
Consumers’ data provided by Bezeq & Cellular
operators on non-discriminatory basis.
International Traffic
[Million Minutes/Year]
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
1000
Outgoing
800
600
Incoming
400
200
0
1996
1997
1998
1999
Internet Services
Profile
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS

~30 Internet service providers, more than 1 million
users, 600,000 dial-up & 5,000 directly connected
customers, 30,000 domains.

Typical tariffs: ~ $12 monthly fee, including 10
usage hours, ~ $1 for each additional hour.
Unlimited access at < $1 per day.

IIX (Israel Internet eXchange) non-profit peering
point.

“Hands-off” overall regulatory policy.

High growth ~ 50% annual.
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Telecommunications
Competition Enhancement
by
Regulatory Reform
Regulatory Reform
(Promoting competitive Advantage)
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS

Competition in fixed services.

Structural change of the
telecommunications sector:
 Liberalization.
 Privatization.
 Re-regulation.
STATE OF ISRAEL
Proactive Re-regulation
MINISTRY OF
COMMUNICATIONS

The end of the access monopoly:
 Facility-based competition.
 Alternative infrastructure: fiber, copper, cable,
fixed wireless, satellite.

Simple interconnection rules:
 Non-discriminatory access, carrier preselection & dialing parity.
 Non-discriminatory interconnection tariffs.
 Minimum compatibility requirements.

New numbering plan & frequency
allocations.
Bezeq Tariff
Rebalancing - April 1999
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS

One step rate rebalancing, almost
eliminating cross-subsidies between
services (voice traffic still subsidized telephone access).

New price-cap regime - productivity gap
(x-factor) of 7% (6% in 1999, will be adjusted if Bezeq output
deviates from predictions).

6% average rate decrease (21% decrease on voice
traffic, 16% increase on fixed monthly payment. Typical tariffs - NIS 0.208
for local call, NIS 36.1 monthly payment, 532 NIS for line installation).

ROE (before tax) - 10.5%.
Bezeq Tariff Update May 2000
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS

Annual efficiency factor update (6%).

Elimination of regional tariffs (replacing
traditional 3 x 3 tariff matrix [3 distance zones, 3 time zones]
with simple tariff matrix – local calls or urban-toll calls during
peak hours, unified tariff for off-peak hours).

Per-second billing (replacing traditional “meter
pulse” with per second billing and minimum charge per call).

Alternative tariff plans (Customer choice
between number of alternative tariff plans, bundling local call
minutes in exchange for monthly fee).
Bezeq’s
Interconnection Rates
Time
of
day
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Termination
Origination
Local Urban National
Toll
Toll
Peak
1.4
-
2.9
1.5
Interim
0.9
-
0.9
0.9
Off-peak
0.6
-
0.6
0.6
0.7-1
1-2
1.7-3
EU
benchmarks
Per minute rates, per second billing; US cents, $1 = NIS 4.16
STATE OF ISRAEL
Bezeq Privatization
MINISTRY OF
COMMUNICATIONS

Government holds 55% of Bezeq
shares (remaining shares - publicly
held).

In August 2000, government formally
approved selling 50.01% of Bezeq
shares to a single strategic investor.

Privatization planned to be completed
by spring 2001.
Licenses for new
operators
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 General
licenses for fixed domestic
services (infrastructure, transmission,
data services & telephony) will be
issued to applicants meeting economic
and know-how criteria.
 General
license requiring limited
spectrum resources (mobile, FWA)
shall be issued through public tenders.
STATE OF ISRAEL
License Auctions
MINISTRY OF
COMMUNICATIONS

Fixed Wireless Access:
 Broadband (26 GHz) & Narrowband (3.5 GHz).
 Up to 3 operators, selected in MSR (Multiple
Simultaneous Round) auction.
 Participation of Bezeq & CATV operators in the
auction will be excluded.
 Tender process planned to begin october 2000.

Additional Mobile Competition:
 2G (DCS-1800) & 3G (UMTS).
 Allocations for new & existing operators.
 Tender process timetable - to be announced.
Will We Have Enough
Telephone Numbers?
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Numbers [Millions]
Number Type
Old NNP
New NNP
Geographic
56
160 - 320
Mobile
8
80
Logical
New Services
10
160 - 80
100
Future Use
-
240 - 160
“Open Sky” - New
Broadcasting Policy
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
 Creating competitive broadcasting market.
 Key policy ingredients  Public broadcasting - new definitions (goals,
structure, finance).
 Commercial broadcasting - introduction of
second commercial television channel &
commercial country-wide radio stations.
 Multi-channel subscriber television - direct
broadcasting satellite, in competition with
cable television, began services in July 2000.
 Digital Television - cable & satellite.
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
Summary
STATE OF ISRAEL
Israel's Regulatory Policy
MINISTRY OF
COMMUNICATIONS

Structural changes - achieving strategic
advantage in competitive global markets.

Competition - the key for innovation,
entrepreneurship, investment & growth.

Key action areas:
 Liberalization.
 Re-regulation.
 Privatization.
STATE OF ISRAEL
Regulation Philosophy
MINISTRY OF
COMMUNICATIONS

Free and competitive markets promote
growth, efficiency, customer satisfaction &
economic advantage.

Market restructuring, in transition from
monopoly to open and free market, during a
short time period, requires active and
balanced regulatory intervention.

Once competitive marketplace is achieved,
a strong regulator will provide unnecessary
intervention, and should be abolished.
STATE OF ISRAEL
Facing Exciting Events



MINISTRY OF
COMMUNICATIONS
Broadcasting:

Tender for second commercial TV channel.

Tender for Independent cable/satellite channels.
Telecommunications:

Tender for 3 fixed wireless access licenses.

Tender for additional cellular operator & 3G frequencies.

Broadband – Digital Cable, Bezeq’s ADSL.
Market re-structuring:

Bezeq privatization.

Further IPO’s.
Telecom-Israel 2000
Tel-Aviv, 6-9 November, 2000
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS

Important international exhibition & conference.

A showcase of hottest technologies and
applications.

The place to see how new technologies, products,
services and issues are reshaping the world of
communications.

The future is here - Wherever you look, across the
globe, Israel’s born products stand up.

We invite you to witness for yourself!
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
For more information
Telecom Israel 2000:
http://www.telecom-israel.com
Ministry of Communications:
http://www.moc.gov.il
STATE OF ISRAEL
MINISTRY OF
COMMUNICATIONS
The End
Thank you for your attention