After fourteen years as VP Engineering at Pelephone, Doron Kurtz left his post last week. The leaving ceremony was attended by many colleagues, managers, suppliers, and of course staff, and it seemed that all came to show gratitude to one of the most experienced and highly esteemed figures in the telecommunications industry, both personally and professionally. Kurtz's retirement presented a good opportunity to hear from him how he sees the Israeli mobile telephony industry in relation to what is happening around the world.
After the Mobile World Congress in Barcelona, what are the global trends in the industry in your view?
"I think that several outstanding things could be seen at Barcelona. Firstly, at the end-user equipment companies. Today, many of the smartphones are based on similar capabilities and the manufacturers are trying to introduce new things to distinguish themselves, such as 360° cameras and VR. But you can see that the telephones are becoming more and more similar; everything is becoming higher quality and there is a commoditization of the end-user equipment world. The second thing is all the wearable products that are developing greatly, although it's still impossible to gauge what will happen with that.
"On the network side, you could see three main things at the exhibition. One is the fifth generation, that offers the potential of very high speeds and faster response times. Another is the Internet of Things: web-connected cars, smart homes, smart electricity meters, and so on. In the fifth generation what you could see was that there is no standard yet but most of the operators like Verizon, DoCoMo and many others are working on trials with the manufacturers of fifth generation, to examine different directions the technology might take. High involvement of operators expedites the standard process.
"At the same time it was interesting to see how the fourth generation is reaching huge speeds with LTE Advanced and its next generation LTE Advanced Pro, the idea of which is that some fifth generation developments will be incorporated in the fourth generation. That's the essential idea.
The second direction is the architecture of the virtual network NFV or SDN. All the manufacturers displayed the architecture for the fifth generation. There is one network for radio, but behind it are many dedicated virtual networks for different services such as telephony, emergency networks, IoT, and so on."
This is still at the vision stage?
"No. AT&T is already implementing it, and in 2016 25% of its network will be a virtual network. The company has promised that in 2020 75% of its network will be virtual. When an operator that big sets this as a goal, along with all the big networks, it pulls everyone along, and we will see this being implemented more and more. Instead of dedicated platforms, the networks will switch to being based on servers and computers."
The laws of economics work
How do we look in comparison with the rest of the world?
"We are not at the forefront of mobile because a substantial lag has been created with the launch of the fourth generation and that has an impact. It's not just fourth generation; today there are 100 countries that have launched LTE Advanced, which of course doesn't yet exist in Israel. The frequencies in Israel were allocated last summer when networks around the world were set up rapidly in the years before that. In Israel this possibility did not exist. In this instance, unlike with the third generation, with the fourth generation there was a late launch and the task of the regulator now is to try to get us back on track. I'm happy to hear the director-general of the Ministry of Communications talking about the need to make progress with the technology.
"Clearly there is fierce competition in the Israeli market. The prices of mobile packages are very low and they don’t make it possible to make extensive investments and to introduce new technologies and carry out trials.
"In the end, the laws of economics work. Nothing comes from nothing. When the cost of a mobile package is so low, so that it does not take into account long-term costs, it's bound to have an effect.
"Operators around the world are merging or large groups are taking over more and more operators, the reason being that in the end the more subscribers you have on a given network, the more efficient it becomes, assuming of course that you're talking about a network with rational prices.
"This phenomenon is taking place all over the world, and independent operators are being acquired by groups. This gives economies of scale because they can streamline their whole cost structure."
In Israel, we wanted to deal with this by consolidating networks. Is that an efficient solution in your view?
"Consolidating networks is a solution that makes it possible to reduce the cost of the network by dividing it among several operators. The idea is that you set up one network that serves more than one operator and the cost is divided between the operators. This is one of the possible solutions but it's complicated in other ways because when two entities share one network they may have different considerations or be going in different directions. It's generally not enough, because still, with unified networks, operators barely survive, so you understand that it's not enough. In the end, the price of the services has to be economic."
If you were now head of the Ministry of Communications, what would you think the ministry ought to do?
"That's a delicate subject."
Why?
"There are two parts to this. As far as the technological part is concerned, the ministry should be looking a step ahead and, in terms of allocation of frequencies, be ready for any technology that might come along. On the business level, the aim is to ensure fair competition. This means that the rules of the game should be clear and equal, and I won't add anything beyond that. I prefer to be discreet."
You have been in the industry so many years, what do you take away with you?
"I have been in my job for fourteen years, and when you look at what mobile was like fourteen years ago, there were no smartphones and data speeds were low, and today you go to the exhibition in Barcelona and see 100,000 visitors and in a huge area. You look back at which companies came then and how many companies there are there today. It's amazing, and it gives you a true perspective on the revolution we have been through. This industry will continue to be fascinating."
Published by Globes [online], Israel business news - www.globes-online.com - on March 8, 2016
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