RESTRICTED
WORLD TRADE S/NGBT/W/3/Add.32
29September 1995
ORGANIZATION(95-2854)
Original: English Negotiating Group onBasic Telecommunications
COMMUNICATION FROM ISRAEL
Response toQuestionnaire onBasic Telecommunications
Thefollowing communication iscirculated attherequest ofIsrael toMembers ofthe
Negotiating Group onBasic Telecommunications.
_______________
PartI
Definition andMarket Structure
Definition
1. InIsrael basic telecommunications andservices arelegally defined as:
- Voice telephony (notincluding cellular telephony)
- construction andmaintenance oftransmission lines
- telegraph services.
Allother services andtheirinfrastructures arenotconsidered basic services.
2. Basic services aredefined under question 1.
3. Seeanswers under questions 1and2.
Market structure
4. Packet switching.
5. Theservices above aredefined bythree categories:
(i) Basic services, asdefined under 1above, arewithin theframework ofthe
TelecommunicationsLaw,underthemonopolyofBezeq,theIsraelTelecommunications
Corp. Ltd.; (herein, "Bezeq").
(ii) Unique andessential market segments, i.e.international telecommunications services,
cellular services, andsatellite telecommunications services -have been defined as
services tobesupplied byalimited number ofoperators.S/NGBT/W/3/Add.32
Page2
(iii) Allother telecommunications services -unlimited competition; forcategories (ii)and
(iii),licences areneeded, andmayberequested from theMinistry.
6. Today, 24percentoftheBezeq shares areinthehands ofthegeneral public: 14percent
public, 10percentBritish Cable &Wireless Ltd.Atpresent therearenolegallimitations onforeign
participation.
7. (a) Competition ispermitted forallservices, except forvoice telephony, which fallsunder
themonopoly ofBezeq; andcellular telephony, which iscompetitive between two
companies atpresent andwillbeopentomore competitors atalatertime.
(b) There arecertain means ofparticipation, suchassub-contractors orpartnership through
asubsidiary ofBezeq. Inanycase, Bezeq mayenter intoanycontractor agreement
concerning theperformance ofitsservices, aslong asBezeq bears thelegal
responsibility fortheperformance ofthecontractor 'sservices.
8. TheGovernmentofIsraeldoesnotsupplyanytelecommunicationsservices,butithasagreement
withIntelsat andInmarsat, aswellasbilateral agreements withseveral countries forcooperation in
thefieldoftelecommunications.
PartII
Competition
A. Subsectors
(a) Voice telephone services
(i) Competition isnotpermitted.
(ii)-(v) Seeanswers inPartI.
(b) Packet-switched datatransmission services
(i) Freecompetition, provided thattheoperator utilizes circuits leased from Bezeq.
(ii) Allmodes ofsupply arepermitted either incoming oroutgoing, either through the
infrastructure ofBezeq, or,foroutgoing traffic, byIBSorleased lines. Inallcases,
operators 'licences arerequired, asprovided bytheTelecommunications Lawandits
regulations.
(iii) Nolimitations onmarket access, buttransfer ofshares orownership needs priorconsent
oftheMinistry ofCommunications.
(iv) National treatment forallsuppliers.
(v) Licences arerequired. Law requires thatapplicants must prove their technical
capability, financial andorganizational ability, contribution tocompetition andlevel
oftheservices incorrelation withgovernment policy concerning telecommunications,S/NGBT/W/3/Add.32
Page3
(c) Circuit-switched datatransmission services
(i)-(v) There arenoservices which arebased exclusively oncircuit switching.
(d) Telex services
(i)-(v) Telex services maybeoffered bysome licensees, butsince theservice isbecoming
obsolete, onlyBezeq isoffering theservice atpresent.
(e) Telegraph services
(i)-(v) Competition isnotpermitted. Theservices areunder themonopoly ofthe
Israel Postal Authority.
(f) Facsimile services
(i) Open tocompetition through allinfrastructures.
(ii)-(v) See(b).
(g) Private leased circuit services
(i) Leased circuits maybeusedforprovision ofanyservice withtheexception ofvoice
telephony andtelegraph (ifusedforpoint-to-point service -which requires alicence
-allservices including voice arepermitted).
(ii)-(v) See(b).
(o) Other
Private leased circuits-voice
(i)-(v) Competition isnotpermitted, unless itispoint-to-point without anytransmission to
athirdparty.
Private leased circuits-non-voice
See(f)(i)-(v).
Cable TV-related voice telephone networks andservices
(i)-(v) Voice-telephony isnotpermitted oncable TV.
Domestic/international satellite services andsatellite links/capacity
(i) Competition islimited toafewfirms, which havebeengranted alicence. Thatdecision
willbereviewed atafuture time.
(ii)-(v) See(f)(i)-(v).S/NGBT/W/3/Add.32
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Analogue/digital cellular mobile networks andservices
(i) Atpresent, competition islimited totwocompanies, duetoshortage ofspectrum
frequencies. There isapossibility oflicensing athird company, duetodemand of
theservice andthatthirdlicence willbeoffered through aninternational public tender.
(ii) Allmodes ofsupply arepermitted. Inallcases, operators 'licences arerequired as
provided bytheTelecommunications Lawanditsregulations.
(iii) Only 80percentoftheshares maybeowned byaforeign entity.
(iv) See(iii).
(v) Inaddition torequirements setforth ineachtender, see(b)(v).
Paging services
(i) Limited competition, duetoshortage ofspectrum frequencies.
(ii) Allmodes ofsupply arepermitted. Licences arerequired asprovided bythe
Telecommunications Lawanditsregulations andtheWireless Telegraphy Ordinance
anditsregulations.
(iii)-(v) See(B)(iii)-(v).
Mobile dataservices andfixed line/wireless localaccess
These twoservices arenotoffered inIsrael.
Local/long distance/international
There isnodistinction between localandlong-distance.
International switching andother international gateway facilities
(i) Freecompetitionforcall-backonly,providedthattheoperatorutilizesswitchingcircuits
ofthepublic switching system. Allmodes ofsupply arepermitted exclusively through
switched linesofBezeq. Licences arerequired asprovided bytheTelecommunications
Lawanditsregulations.
Atender willbeissued inthenearfuture fortheoperation ofinternational services,
inaddition tothepresent operator.
(ii)-(v) See(b)(ii)-(v).
B. Categories
Local/long distance/international
(i)-(v) Israeldistinguishedonlybetweendomesticandlong-distanceservicesandinfrastructure.S/NGBT/W/3/Add.32
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Wire-based
(i)-(v) SeepartA.
Radio-based
(i)-(v) SeepartA.
(v) Licences mustbeobtained fortheuseofelectromagnetic frequencies. Theyaregranted
bytheMinistry ofCommunications. Applications aresubmitted totheMinistry of
Communications andareprocessed byaregulatory committee.
Resale basis
(i)-(v) SeepartA.
3. Resale ofinternational private leased circuits capacity isnotpermitted. Resale ofswitched
voice capacity ispermitted, seeA.Sub-sector (o)Other -International switching.
4. See3.
Facilities-based
(i)-(v) See5below.
5. Theconstruction oflinesfortelecommunications services, withtheexception ofcable.TV,
isexclusive toBezeq.
Licences mustbeobtained fortheuseofelectromagnetic frequencies. Licences forfrequencies
tobeusedfortelecommunications services aregranted bytheregulatory authority toapplicants ifthere
areenough frequencies available andiftheapplicant canprove thatawire-based network cannot meet
itsneeds ormaybeextremely expensive.
Public/non-public supply
(i)-(v) See6-11below.
6. No.
7. Regulations require thatalltelecommunications services aretobemade available tothegeneral
public.
8. Private circuits providing services forhomogenous legalentities, which arenotpermitted to
supply these services tothegeneral public.
9. Bezeq, being thesolesupplier forbasicservices andinfrastructures, isobliged bylawtooffer
universal services tothegeneral public.
10. Aslongastheprivate network isconstructed within closed premises (i.e.campus etc.)no
licensing isneeded. Alsothesame applies forahomogenous legalentity.S/NGBT/W/3/Add.32
Page6
11. Pay-phone service inthepublic domain issupplied onlybyBezeq; intheprivate domain -the
service isopentocompetition, provided theoperators haveobtained type-approval forthetelephone
setsused.
PartIII
Regulatory issues
Relationship between regulatory andoperational functions
1. TheTelecommunications Law, 5742 -1982, empowers theMinister ofCommunications to
enactsecondarylegislationconcerningenactmentofalltelecommunicationsaspects;interalia,technical
specifications fortelecommunications equipment andtypeapprovals.
TheIsraeli Standards Law5713-1953empowers theIsraeli Standards Institute tobethesole
authority offormulating standards inallaspects, toenact thenecessary rules forthegeneral public,
andtoenforce them.
Itisanaccepted practice thatregulations concerning aspects oftypeapprovals arereviewed
byallparties concerned, prior totheMinistry 'srequesting approval oftheEconomics Committee of
theKnesset (Israeli Parliament).
Furthermore, Article 53A(b) oftheTelecommunications Lawrequires theMinister toconsult
withindustry sources before issuing specifications.
2. Yes.
3. Only atthenational (ministerial) level, according totheTelecommunications Lawandthe
Standards Law. Alldecisions oftheMinistry maybecontested before theHigh Court ofJustice.
Frequency allotment orassignment
4. Assignment ofradio frequencies isgranted byanintra-governmental committee headed by
theMinistryofCommunications.LicencesaregrantedbytheMinistryofCommunicationsinaccordance
withtherequirements forutilizing thefrequencies asprescribed intheterms ofallocation.
5. Yes.
Numbering andidentification codes
6. Atpresent thesubject ofnumbering fallsunder theresponsibility ofBezeq, withnointervention
oftheregulatory authority atall.Thismaychange inthefuture.
7. Notrelevant atpresent.
Standards, typeapproval andequipment attachment
8. Standards aresetbytheInstitute ofStandards inaccordance withrecognized procedures.
TheMinistry ofCommunications isresponsible forformulating typeapprovals andtechnical
aspects ofterminal equipment andpublishing them. Seealso1above.S/NGBT/W/3/Add.32
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9. ItisacommonpracticeattheInstituteofStandardstoinvitethepartiesconcerned,eithernational
orforeign, toparticipate intheformulation ofstandards.
AsfortheMinistry ofCommunications, see1above. TheMinistry didnotconsult foreign
parties, butitisconstantly updating itself onthecurrent standardizations andtypeapprovals inother
countries.
10. Allkinds ofterminal equipment which canbeconnected totheBezeq national network must
carry typeapprovals.
Self-certification isallowed bylocalmanufacturers, provided thattheyfulfilalltechnical aspects
drawn upbytheMinistry andthattheyareunder constant supervision oftheMinistry.
Atpresent therearenomutual recognition agreements ontelecommunications equipment with
anycountry, buttheGovernment would welcome suchmutual agreements withforeign countries.
Type approvals arerequired foranyforeign-produced terminal equipment.
11. See10.
12. Notrelevant; thebasic supplier istheoperator ofthepublic network.
13. Yes,provided theyaretype-approved (see10).
Interconnection
14. TheTelecommunications Lawauthorizes theMinister, interalia,toorder oneoperator toallow
interconnection ofitsnetwork tothefacilities ofanother operator; bothoperators aretonegotiate the
proper system ofreimbursement. Should theynotreach anagreement, theMinister maydecide on
theproper pricefortheinterconnection, based oncostswhich include operating, expenses, andproper
return ofequity.
15. See14.
16. Yes.
17. See14.
Competitive safeguards
18. Inthose areas which areopen tocompetition, should there beaservice which Bezeq wants
tooffertothepublic, thenitisobliged totransfer ittoasubsidiary, inorder toallow faircompetition.
Allprices ofbasic services areregulated; cross-subsidies frommonopolized services tocompetitive
services arenotallowed.
19. Asstated above, Bezeq hasthemonopoly onbasic services. Assuch, itisregulated asset
forth under 18above.S/NGBT/W/3/Add.32
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20. TheTelecommunications Lawstates thatanylicence andchange thereof must contribute to
competition inthefieldoftelecommunications. TheMinistry hasnocommon regulations concerning
anti-trust policy andacquisition byother companies. Yet,theTelecommunications Lawprovides that
alicensee (=telecommunications operator) mustfulfilcertain prerequisites inorder toobtain alicence.
Theseprerequisitesarecontinuousrequirements.Thegrantingoflicencescanberemovediftheoperator
becomes, interalia,anti-competitive, ornotfittohandle telecommunications services.
21. Atpresent, Bezeq isnotengaged inmanufacturing telecommunications equipment. Itslicence
doesnotallow ittodiversify intoother business activities, without thespecific written permission of
theMinister.
Price-related measures
22. TheGovernment setsthetariffs ofthestateoperator (Bezeq) which ismonopoly-based. The
mechanism ofthesupervision ofthetariffs isthePrice Cap. Updating ofthetariffs works according
totheConsumer Price Index andtheforeign currency rateslessayearly efficiency rate(currently
6percent).
TheGovernment 'spolicy isthataccounting ratesaresetonlybytheinternational operator
without government involvement.
There isnocontrol onthetariffs ofprivate suppliers except those suppliers whoreceived their
licences subsequent tothepublic tender andwhose tariffs werepartoftheircommitment within this
framework.
23. See22.
24. Thepolicy oftheMinistry isnon-discriminatory onalltelecommunications services provided
byBezeq, anditallows Bezeq toofferdiscounts based onreduced costswhich arearesult ofeconomies
ofscale.
25. See22,buttheGovernment doesconsider theviewpoints ofBezeq while setting thetariffs.
26. Prices ofBezeq aredetermined onthebasisofcosts. Costallocation isbased onaneconomic
model which includes allkinds ofcosts andexpenses andincomes which isattributed perservice.
TheGovernment 'spolicy istoprevent cross-subsidies among various services.
27. There arenodifferent rules applying tothepricing ofnewservices, buttheGovernment
endeavours tobasetheprices ofnewservices oncosts andtheprinciple ofequal pricing.
Rights ofwayfortheconstruction ofinfrastructure
28. Bezeqandthecellularnetworkoperatorsarepermittedtobuildtheirowninfrastructurefacilities.
Theprocedures aresetforth intheTelecommunications Lawandtherespective licences of
thevarious operators. Thelawpermits licensees toconstruct lines while theordinary rules on
construction donotapply, buttherearecertain aspects ofrulesofconstruction which doapply tocellular
operators intheevent thattheirtelecommunications licence doesnotgrant them aspecific righttoit.
Allother operators arerequired toadhere totheordinary rules ofconstruction.
29. Thelawdoesnotdistinguish between national orforeign operators inthisrespect.S/NGBT/W/3/Add.32
Page9
Newtelecommunications services
30. Thegeneral licence ofBezeq states thatifBezeq wants tointroduce anewservice, itmust
present fulldetails totheMinistry, including interalia,cost,technologies andprescribed tariffs. The
proposed services mustbechecked bytheMinistry inorder toensure thatitdoesnotcontradict any
policy orcompete unfairly withanyexisting service offered byanyother service provider, andthat
theoffered service isnotcross-subsidized. Iftheresults oftheexaminations prove tobesatisfactory,
other suppliers havetoapply assetforth intheregulations concerning applications forlicences.
Itisnotpossible tosupply newservices prior tothegranting ofalicence.
31. Licence granting foranewservice or-inthecaseofBezeq -permission granting foranew
service, includes thedetermination whether thatnewservice isbasic orvalue-added andincludes all
thenecessary procedures which thelicensee hastofulfil forthatpurpose.