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Issue 7: Developing Countries - Israel

Politics and Technology Converge: Case Studies on the Effects of Regulatory Reform on VSAT Adoption in Developing Countries

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C: COUNTRY CASE STUDIES - ISRAEL

Telecommunications Regulation in Israel

The state of Israel has transformed itself from a government-dominated, monopoly-oriented market into one that it describes as competitive, customer-focused and technology-driven.

One of the most developed industries in Israel is telecommunications. The communication sector over the past two decades led the country in a push to open its market to competition. Modernization has been possible by following a path of corporatization, liberalization and re-regulation with the controlled introduction of new operators and services.[63] Among the sectors opened to competition was the field of satellite communications.

In 1999, there was a major structural rebalancing of the regulated tariffs. The objective was to reduce cross subsidies inherent in the government-controlled system and make the tariffs more transparent. In 2001, the Knesset enacted the Communications Act, a pro-competition legislation.[64] These regulatory changes were necessitated by Israel's participation in the WTO (World Trade Organization) telecommunications services negotiations, where it committed itself, as a signatory to the GATS multilateral agreement, to an open, competitive and transparent telecommunications industry.

The pro-competition regulatory changes in Israel have made the country's telecommunications industry attractive to foreign investors. Several multinational telecommunication companies have invested in the Israeli market, including Bell South, Sprint, Deutsche Telecom, France Telecom, Telecom Italia, and Hutchison-Hong-Kong. Other multinationals including Motorola, Intel, Alcatel, Ericsson, America Online, Cisco, Lucent, IBM, Compaq, Nortel, 3-Com and ADC have invested in Israeli high-tech companies or operate their own R∓D and/or manufacturing facilities in Israel.[65]

Satellite communications is an area in which Israel has been actively involved. Israel launched its own geostationary satellite Amos-1 in 1996.[66] Amos-1 was designed and built by Israel's prime contractor and satellite integrator, Israel Aircraft Industries (IAI). It carries seven Ku-band transponders, and is used primarily for direct-to-home television broadcasting, video distribution and VSAT services. A second satellite, the Gurwin-II TechSAT, was launched in July 1998. The Gurwin-II provides communications, remote sensing and research services.

Gilat Satellite Networks is Israel's principal service provider and Earth system developer. Gilat is competitive in designing and selling Earth terminal equipment, particularly VSATs.

VSAT Service Providers

There are four major companies that provide satellite communications services in Israel. These are Gilat Satellite Networks providing interactive broadband data services, R.R. Satellite Communications providing satellite services for television and radio, Shiron Satellite Communications providing two-way multimedia and communications and Stellar Satellite Communications providing data communications for GPS, vehicle tracking and fleet management.[67]

Gilat Satellite Networks is a world leader in VSAT satellite communication systems providing end-to-end enterprise networking and rural telephony solutions to customers across the globe.[68]

VSAT Applications

Business: Israeli banks, fast food chains, retail operators, and hotels are utilizing VSAT technologies for voice and data communications, database updates and replications, financial management and corporate training. Some Israeli corporations are using VSATS for backup systems and disaster recovery.[69]

Military: One beneficiary of VSAT technologies has been the Israeli military. Information and communication technologies are changing the way military conflicts are conducted. Satellite-based VSAT technology is providing military commanders with improved command, control and communications capabilities vital to support military operations. The advantage of this technology for the military is that a wide range of diverse communications solutions can be deployed quickly and economically.

VSAT technologies provide a secured network of voice and broadband data services for command and control. The development of portable VSAT terminals has enabled the military to carry reception/ transmission equipment into the field.

Internet: Israel is a leader in developing Internet applications and products, for which Israeli companies have earned an international reputation. The Internet in Israel currently has more than one million users, 30,000 domains, 800,000 dial-up and 5,000 direct-connect customers. Thirty percent of households and 60 percent of businesses use the Internet. They are served by four major and about 30 smaller Internet service providers who utilize the VSAT technology for high-speed connection.

Cross-Border Communication

Demand for VSAT applications such as Internet, telemedicine, distance learning, banking, multimedia and paging is increasing throughout the Middle East region. These applications require a more liberalized regulatory environment. The market demand for VSAT technology has encouraged Middle Eastern satellite provider Arabsat to establish VSAT standards on compatible platforms to facilitate cross-boundary linkages.[70]

A major hurdle to market access in the Middle East is strict regulation. Most traffic is controlled by government-owned VSAT networks. Private transborder traffic is rare, and private VSAT ownership is scarce.[71]

Ghana | China | India | Brazil | Israel | Lessons for Africa

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