Cellular

סלולרי

Mobile telephones were first introduced in Israel in 1986. For the first eight years of operation, the growth of mobile telephone services in Israel was slow. There was a single operator, Pelephone, offering analog service and prices were relatively high. It was not until the end of 1994 and the launch of the second mobile operator Cellcom with digital service (TDMA), that growth in mobile phone usage in Israel increased significantly. Within two years, subscriber numbers had increased by more than seven times.

Since the end of 1996, there has been continued strong growth in the Israeli mobile telephone market. Market data from industry sources indicate that the total market size was over 9 million subscribers in 2009, representing a penetration rate of over 120% of the Israeli population. This phenomenon of a subscriber having more than one cellular phone at their disposal is only found in the most advanced cellular markets globally.

There are currently in Israel four mobile telephone network operators:

Partner (Orange): Partner Communications Company Ltd. was Israel’s first GSM Operator known for its GSM / HSPA based services and the development of wire free applications under the preferred orange™ brand. The company is publicly traded and its main shareholder is Scailex. Partner commenced full commercial operations in January 1999 and currently has 3.0 million subscribers. The Company uses its competitive GSM advantage to provide its customers with seamless roaming in 136 countries worldwide, using over 303 networks. The Company also provides roaming services to thousands of customers roaming on its network in Israel daily. Partner has over 270 points of sale that are split between direct, indirect and door to door sales channels.
Pelephone (PCL): Pelephone was established in 1986 by Motorola and was the first to introduce cellular communications in Israel. The "Pelephone" name was quickly accepted in Israel as the generic term for cellular handsets. In 1994 Motorola and Bezeq, Israel’s single incumbent operator, signed an agreement to create Israel’s leading cellular provider. Pelephone is now a full subsidiary of Bezeq and considered to be one of its strongest assets. The Company currently boasts 2.8 mm subscribers. Pelephone launched on early 2009 a new high-speed-GSM network that replaced its previous CDMA 1x and EVDO digital systems. Pelephone is considered to have the most advanced cellular multimedia offering in Israel. Pelephone boasts a direct and indirect sales channel of 88 stores and service centers.
Cellcom: With 3.3mm subscribers Cellcom is Israel’s largest nationwide mobile network based on GSM and HSDPA technologies, which enable subscribers to travel the world and use GSM/GPRS based roaming cellular services.. Cellcom integrated EDGE in 2005, a middle-generation GSM/GPRS based technology, enabling data communication services at up to 100 Kpbs and compatible with video and Internet applications. Lastly, the company will be phasing in UMTS in 2006. Cellcom has over 390 sales and service points throughout the country.
Mirs: MIRS Communications Ltd. is Israel’s leading provider of integrated wireless cellular communications services. MIRS’ unique technology includes: dispatch two-way radio (walkie-talkie), cellular, mobile internet and intranet services – all from a single handset based on Motorola’s Iden technology. MIRS provides comprehensive communications services to its 450,000 subscribers, especially to leading businesses, public and governmental organizations in Israel, and represents a 22% market-share in the business sector. With only a small overall market share, MIRS focuses its energies regionally and is represented by 32 certified resellers.

In addition, the Palestine Telecommunications Co. Ltd. or Paltel, operates a GSM mobile telephone network under the name “Jawwal” in the Palestinian authority administered areas of the West Bank and Gaza Strip, as well as a fixed-line network. Paltel’s GSM network competes with Israel’s GSM network in some border coverage overlap areas.

The competition between the cellular operators is not about usage price but rather about advanced services. According to IDC analysts, the operators should attract revenues from services provided on non-wireless platforms in order to expand the market, rather than create an unwelcome scenario in which revenues from voice services are transferred to revenues from data services. The average revenue per user from a cellular subscriber in Israel (ARPU) is approximately $42 per month, 20% of which is for data services. Data services are expected to rise by 25% annually until 2011. IDC includes in its research revenues from SMS services as revenues from data services.

In 2008, almost two billion SMS messages were sent. This is an increase of 15% compared with 2007. I

The following are some of the unique characteristics that differentiate the Israeli market from other developed mobile telecommunications markets:

High Mobile Phone Usage: Israeli usage of mobile phones is very high compared to Western Europe. Estimates show the average mobile phone usage in Israel to be approximately 295 minutes per month, among the highest in the world. This high usage is due in part to a very high car phone and car kit penetration rate in Israel.
Calling Party Pays: In Israel the only party that pays for the mobile call is the originator. Mobile telephone network operators do not charge subscribers to receive calls on their handsets, except while roaming. This encourages higher rates of mobile telephone usage.
High Mobile Telephone Penetration: Since Cellcom’s launch in 1994, the market has sustained a rapid annual rate of growth from a 2.6% penetration rate at a year-end 1994 to a penetration rate in Israel of over 120%. This represents over 9 million subscribers; however, it also includes a significant number of dormant subscribers as well as other subscribers who are not included in the Israeli population figures such as Palestinians, new immigrants, and foreign workers.
Favorable Geography: Israel covers an area of approximately 8,000 square miles (20,700 square kilometers) and its population tends to be centered in a small number of densely populated areas. In addition, the terrain of Israel is relatively flat. These factors facilitate the roll out of a cellular network in a cost-effective manner.
Strong Potential for Value Added Services: Published market data shows that the relatively young Israeli population (over 40% of the population is under 25 years of age) has the ability to accept and use high technology products. This characteristic of the Israeli population facilitates extreme growth in the Israeli mobile telecommunications market as well as the acceptance of new value-added services as they become available to the networks.

High Technology Environment: Israel is second only to the United States in the number of high technology start-up companies and has more scientists and engineers per capita than any other country in the world. This environment benefits the operators in testing new technologies and in developing advanced wireless services for their subscribers.

To summarize, attractive demographics, high technology literacy and a keenness to utilize advanced services and applications, describe an aggressive Israeli cellular market that is ready and willing to absorb a range of handsets and services that will change the way people live and work.