Rural broadband and its implications for the future of
Universal Service
The Israeli Case
OECD, Porto, October 2004Uri Olenik
Director GeneralMinistry of Communications
State of Israel
Ministry of Communications
Presentation Agenda– Broadband & universal service
regulation
– Broadband & rural broadband penetration in Israel
– Public Internet Access (PIA)
– Rural area solutions for broadband
– Conclusions
State of Israel
Ministry of Communications
Regulation
• Can regulation help to increase broadband penetration in rural areas and achieve universal coverage?
• Free and competitive markets promote wide geographical coverage, growth, efficiency & customer satisfaction.
State of Israel
Ministry of Communications
EU Regulation
• The EU framework does not include broadband as part of the Universal Service Obligation (USO).
• We believe this assumption needs to be challenged and reexamined.
State of Israel
Ministry of Communications
Broadband regulation in Israel• Facility-Based Competition :
1. ADSL Access provided by the incumbent (up to 2.5Mb/s downstream).
2. Cable Modem broadband Internet services provided by cable TV firms - the new entrants (up to 3Mb/s downstream).
• Unlicensed usage of the 2.4 & 5 Ghz WLAN technology as a step to maximize the internet usage.
State of Israel
Ministry of Communications
Broadband Universal Service Obligation (USO)
• USO by two players; both have countrywide infrastructures.
• The critical stage: defining USO in the license before granting it to the operators.
State of Israel
Ministry of Communications
Broadband Universal Service Obligation (USO)
• Actual coverage: by the end of 2004 -99% of incumbent’s lines.
• Special exceptions committee.
• Israel is one of the few countries that has adopted a broadband USO.
State of Israel
Ministry of Communications
3G Regulation in Israel• In the coming years 3G UMTS networks will be
able to offer internet access of up to 2Mb/s and a wide variety of services & content.
• Commercial networks have been launched all over Europe and in Israel.
• Cellular penetration is much higher than the penetration of computers; thus 3G may prove to be a very essential medium for increasing broadband penetration.
• Our conclusion: 3G geographical USO.
ISRAEL Demographics• Population ~ 6.7 million.
• Households ~ 1.9 million.
ISRAEL telecommunication statistics 2004
phone lines tohouseholds
mobile per 100inhabitents
households tocable tv
digitalmultichannel tv
internet tobusinesses
internet tohouseholds
broadband tohouseholds
43% 55%75% 72% 75%
95% 95%
Penetration
11State of Israel
Ministry of Communications
Broadband• 920,000 broadband lines (600,000 ADSL
lines; 320,000 cable modems).
• Broadband subscriber growth ~50% last year.
• Broadband household penetration 43%.
• Broadband penetration per 100 inhabitants 14%.
Broadband Subscribers Growth in Israel
38 k
150 k
600 k
430 k
57 k
210 k
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2001 2002 2003 Oct. 04
0%
10%
20%
30%
40%
50%
ADSL CABLE MODEM Households' Penetration
320 kSub. Competition
begins
Pen
etra
tio
n
Households` Broadband Penetration (end of 2003)
Source: ECTA data, MoC Israel * Oct. 2004
2%8%10%11%11%
15%16%19%19%22%25%25%27%31%
14%14%
*43%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Greec
e
Irelan
d
Luxe
mbo
urg
Italy
Germ
any
UK
Portu
gal
Franc
e
Spain
Finlan
d
Austri
a
Sweden
USA
Nether
lands
Denmar
k
Belgium
Israel
03
Israel
04
Korea
OECD Broadband Penetration at end of 2003
0
5
10
15
20
25
Korea
Canad
a
Ice
land
Denm
ark
Belg
ium
Nethe
rland
s
Switzer
land
Japa
nSwed
en
United
Sta
tes
Fi
nland
Austri
a
Nor
way
Fr
ance
Germ
any
Spain
United
King
dom
Por
tuga
l
Italy
Austra
lia
Luxe
mbo
urg
New Z
ealan
d
Hunga
ry
Ire
land
Poland
Czech
Rep
ublic
Mex
ico
Tu
rkey
Greec
e
Slovak
Rep
ublic
Broadband Subscribers per 100 inhabitants
Source: OECD - Information Computer and Communications Policy Committee (ICCP)
State of Israel
Ministry of Communications
Public Internet Access (PIA) in Israel• The importance of PIA: service provision to
inaccessible population due to coverage or cost problems.
• Relatively easy implementation of public broadband access all over Israel – In light of USO of two infrastructures.
• Public access is somewhat less crucial Israel:
– Beginning end 2004: no rural areas without broadband coverage;
– High broadband penetration.
State of Israel
Ministry of Communications
Public Internet Access (PIA) in Israel• PIA is accessible in education institutes,
public libraries, community centers etc., but much remains to be done.
• Several examples of PIA existing projects:
– Tapuah (Apple) the Israeli society for the Advancement of the Information Age;
– Lehava (Flame) governmental project -bridging the digital divide within the Israeli society;
– Connecting high schools to broadband by ADSL.
State of Israel
Ministry of Communications
PIA Projects in IsraelApple
State of Israel
Ministry of Communications
Solutions for Rural Areas• Israeli vendors` solutions helped to reach
rural and remote areas.
• Israel’s broadband USO & internet public access models work well in a small, populated country.
For larger countries, which are less populated, other models are much more suitable.
• For such countries, Israeli companies including Gilat Satellite Networks , Alvarion, Spacecom, and IP Planet network offer several proven and successful solutions for rural areas.
State of Israel
Ministry of Communications
Conclusions
• In Israel, the USO and competition, as well as particular country features, have made high broadband penetration to rural & remote areas a practical goal.
• PIA may be successfully provided by both governmental and business non-profit initiatives.
• For rural & remote areas in bigger, less populated countries developing broadband is more suitable by successful cost-effective satellites and wireless solutions .
State of Israel
Ministry of Communications
ConclusionsWide geographical competition is the best way to improve the incumbent’s coverage,grade of service, price performance and overall penetration to the benefit & welfare of the society.
Such regulation, we believe, can help increase the level of competition in the field of broadband access and narrow significantly the digital divide within the country.
Thank you for your attention
For more informationhttp:/www.moc.gov.il
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