Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

14 Shevat 5761 - Febuary 7, 2001 | Mordecai Plaut, director Published Weekly








Produced and housed by
Shema Yisrael Torah Network
Shema Yisrael Torah Network











Ofek to Invade Bezeq's Home Turf
by Yated Ne'eman Staff

Last week, the Israel Government awarded the Ofek company a license to set up a phone network to compete with government- owned Bezeq in providing phone service for private homes and businesses. The new venture, backed by Eurocom and Arison Investments, holds out the promise of reducing the costs of local communications and improving available services.

The new company has a broad license to offer a number of services, including voice, video and high speed data communications. Ofek plans to use the latest IP technology, with Nortel as the main supplier of network apparatus and Cisco providing the central exchange. IP is the communications protocol underlying the Internet.

The license culminated four years of preparation and an investment of $20 million by Ofek. Shaul Elovitch, president of Eurocom Israel, said it was a day he had been dreaming of for years. Ofek's license application was made possible after the regulations covering the opening of the market to competition were published in September 2000.

Ofek is to set up a domestic telecommunications network covering 29 of the country's 50 areas, 14 more than the minimum required by their contract. The license agreement was signed by Communications Minister Binyamin Ben Eliezer allowing Ofek to take on the national telephone monopoly.

Ofek CEO Reuven Sgan-Cohen has announced that the company will cover all the main urban and industrial centers, plus part of the outlying areas. Ofek plans to have its alternative network up and running within the year. The system will be based on wireless access to subscribers' homes for telephone lines and high speed Internet services.

The Ofek network will operate on high capacity fiber optic cables and the company has already signed a lease agreement for 500 km out of its expected total of 1000 km of optical cable.

Ofek is one of several potential companies that could capture some of Bezeq's domestic telephone market, among others are Cellcom, Barak and Golden Lines (Kavei Zahav). Cellcom is engaged in advanced talks with Ofek for a joint venture and sources close to the talks say the chances of the two reaching an agreement are high.

Ofek's service, based on Internet Protocol running on a fiber optic transport with infrared (IR) or wireless LMDS as its primary last mile technologies (to bring the information from the trunk lines to the individual homes), will offer customized communications packages to individual homes and businesses.

Customers will be able to choose voice-only services, or voice plus fast Internet and data communications, with the cost of the Internet service dependent on the speed requested. With the Ofek service, which will be launched in nine months, each home phone outlet will have the possibility of being defined for a different purpose, giving parents the ability to restrict outlets in children's rooms to a certain number of calls per month or a limited number of hours on the Web.

The company plans to operate on a money-back-if-not- satisfied basis.

Ofek, which is also bidding in the wireless LMDS tender scheduled to close in March, has spent most of the last four years planning a network primarily based on that technology.

The request for the fixed access license was a step to get Ofek into the market early, and the fiber optic backbone it is setting up now will eventually be combined into the LMDS network it plans to build.

LMDS at this point is one of a few ways Ofek can provide last-mile access to customers, since laying fiber optics to every home is a costly and timely endeavor. Sgan-Cohen said that the company has already been experimenting with IR technology in Ariel, where it has been operating a pilot system since mid-2000 and has been pleasantly surprised at the results.

Both the IR and LMDS systems -- whose stamina in difficult environments has been questioned -- withstood the heavy rains and fog of this winter, Sgan-Cohen said.

A failure to win the LMDS tender would be a blow to the company, which is counting on developing its network with the wireless technology that insures quick deployment and pay-as-you-grow capability. Ofek is already building a similar network in Greece.

Overall, the company plans to invest $1 billion in its network and to employ a staff of 1,500, 10 times what the company has at present.

While acknowledging that the competition with Bezeq was sure to be tough, Sgan-Cohen was optimistic that Ofek's advanced technology would have a market advantage, especially among the fifth of the population already surfing the Net.

Bezeq general manager Ilan Biran welcomed the opening of the communications market to competition and called on the Minister of Communications and the government to fulfill their commitment to Bezeq and immediately implement privatization.

The cable companies welcomed the granting of the license to Ofek, but believed it did not constitute real competition between cable companies and Bezeq. The cable companies issued a joint statement in which they claimed they are equipped with the infrastructures for providing services in competition with Bezeq. They said the LMDS technology, which Ofek is scheduled to use after the March tender, does not constitute a real alternative to Bezeq in the next few years. They called on the government to speed up the process for granting them a license as well.


All material on this site is copyrighted and its use is restricted.
Click here for conditions of use.