JERUSALEM, Israel-In the southern town of Ashkelon stands a larger-than-life black marble grave stone that is as much a monument to the teenager buried in the plot as it is to the cell phone he loved to cradle: the stone, in fact, is a replica of his mobile phone. The epitaph above the grave of Guy Akrish, a 17-year-old killed in a road accident: “Hello, this is Guy, how are you doing?”
The case of Guy Akrish, though somber and extreme, reflects Israel’s intense love of mobile communications. From the Sea of Galilee in the north to the beaches of Eilat in the south, the high-pitched ring of cell phones is ubiquitous.
On the fast track to follow Finland in surpassing the 50-percent cellular phone penetration mark, this nation of 2 million cell phone users has pushed penetration to roughly 32 percent. As a result, Israel is seeing feverish-and more sophisticated-competition as it prepares for the arrival of the third competitor on its cellular landscape. Partner Communications Co. Ltd., a division of Hutchison Telecom Ltd., is launching the nation’s first GSM (Global System for Mobile communications) network on 7 October.
Even Israeli state-run telephone company Bezeq Ltd., disturbed by heavy cell-phone use in Israeli homes and offices, has gotten into the fray. Despite its 50-percent investment in Tel Aviv-based Pele-Phone Communications Ltd., the country’s first cellular operator, Bezeq has been running an intense advertising campaign against wireless substitution.
The effort to get Israelis back to Bezeq’s landline services so far has focused on price, and Ami Erel, Bezeq’s chief executive, promises the company will tackle voice-quality issues in the campaign’s coming phases.
“There are a large amount of users moving from landline to cellular, and Bezeq has to protect its revenues,” Erel said. “We are one of the first telcos in the world to go after cellular aggressively.”
Erel isn’t completely dismayed by the success of the cellular operators, however: “The cellular companies are among the top 10 customers of Bezeq; we terminate traffic for them, and they terminate traffic for us.”
In the second quarter, Tel Aviv-based Bezeq’s revenues fell 4.3 percent on the loss of market share to new competitors in the international telephony market, which the Israeli government opened to competition last year. But revenues from providing cellular-transmission services rose, and Erel said he anticipates counting Partner as another of Bezeq’s large customers.
As Erel describes it, Bezeq’s recent approaches to the market illustrate the “two-sided” relationship the telco has with Israel’s cellular operators.
The campaign to get Israelis back to their fixed lines appears to be working, said Dan Rozenne, director general of the Israeli Ministry of Communications.
Three years ago, after Herzlia-based CellCom Israel Ltd. sent the cellular market here skyrocketing with an early promotion of unprecedented two-and-a-half-cent per minute rates, landline usage minutes began a steady decline, from 8,248 per year in 1995, to 8,213 in 1996, to 7,880 last year, Rozenne said. He added that fixed-line usage probably would stabilize this year, a likely result of the Bezeq campaign.
Marketing changes
One outgrowth of Israel’s growing cellular competition, Rozenne said, is that service offerings and marketing strategies will certainly become more sophisticated than the mass-market price-based campaigns of several years ago. Cellular carriers, including Partner, are talking more about segmentation and plans for different user profiles.
Pele-Phone, for example, has been investing heavily in database software to better track its customers’ usage habits, said Gil Bul, Pele-Phone’s marketing director. In addition, to supplement its N-AMPS (narrowband Advanced Mobile Phone Service) network, the company has launched CDMA (Code Division Multiple Access) service in northern Israel. Pele-Phone also is offering prepaid service.
CellCom, meanwhile, in early August began offering an upgrade program for customers who want to step up to a sophisticated extended full rate coding phone, said Shalom Manova, CellCom’s chief operating officer and deputy chief executive officer. The company, which uses IS-136 TDMA (Time Division Multiple Access) technology, introduced the phones in March.
Partner, meanwhile, is resting on the laurels of its GSM technology, partly for the roaming capabilities with relatively nearby GSM-dominant Europe. Most of the Arab world uses GSM networks, and Ericsson Israel Ltd., which is building out Partner’s network, also won the bid to build out a GSM network in Palestinian Authority areas in the West Bank and Gaza.
Partner and Paltel, the Palestinian telco, already are negotiating a national roaming agreement, said Bo Andersson, president of Ericsson Israel.
