The Ministry of Finance has been pressing Minister of Communications Gilad Erdan hard in the past few weeks to publish the tender for fourth generation (4G) cellular frequencies (LTE). As we have seen more than once in the past, the sad fact is that the Ministry of Finance understands the telecommunications industry better than the Ministry of Communications. On several occasions, the Ministry of Finance has been the driving force behind the major reforms in this market. To put it delicately, it was the Finance Ministry people who sorted out the details.
Does anyone remember, for example, that the tenders committee for allocating 4G frequencies, headed by the previous director general of the Ministry of Communications, Eden Bar Tal, and appointed by the previous minister of communications, Moshe Kahlon, undertook to submit recommendations a year ago? Is anyone being held accountable for this?
The feeling is that the telecommunications market is in the hands of people who have no clue how to manage it. Officials seem indifferent to the possibility that, very soon, mobile carriers in Israel will find it hard to provide customers with efficient service. Someone ought to explain to Erdan that some of the carriers are in real difficulty over frequencies and the incidence of dropped calls, and that the problem will only get worse.
Even if we suppose for a moment that the ministry is not perturbed by the state of the carriers and the level of service they provide, it's worth mentioning that Erdan is also minister of home front defense. During Operation Pillar of Cloud, whole areas were blacked out as far as mobile communications were concerned, because of sporadic rocket fire.
17 networks in 8 countries
Anyone who wants to understand how Israel stands in relation to its neighbors is invited to read the Mobile data usage on the rise in the Middle East study published by the GSM Association in July this year. The study found that seventeen 4G networks have been set up in eight countries.
The most advanced market, according to the study, is Israel. But it should be made clear that Israel has this status not because of a 4G network, but because of the amount of information consumed via 3G technology. Israel has a larger proportion of mobile broadband users than any other country in the Middle East. The demand for mobile broadband is huge, because of the number of smartphones in the market. If we get 4G here, it can fairly safely be assumed that Israelis will flock to it.
What's happening in Saudi Arabia, for example? A 4G network based on 4,500 sites was launched there long ago. A single carrier, called Mobily, is responsible for this. The data indicate a steep rise in traffic since the launch. Saudi Arabia is not alone. In Qatar, and even in Lebanon, advanced networks are already operating. We can only ask, where will we hide our shame?
When he took up his post, Erdan announce the appointment of an inter-ministerial team to find a solution to the problem of cellular sites. Erdan did the obvious and right thing. If you can't build sites in Israel, then releasing frequencies in a tender is not going to produce a full solution to the carriers' difficulties or a response to public demand. Although Erdan sought to appoint the team, he has not signed the team's letter of appointment, effectively freezing its work.
"Globes" has repeatedly asked top Ministry of Communications officials why the tenders committee was making no progress. The measure led acting ministry director general Shmila Maimon to summon the mobile carriers to hear their positions about the allocation of the tender. But isn't this what the tenders committee has done in more than a year of work? Is it necessary to start all over again to publish a tender? Apparently, yes.
Maimon is a thorough man. If he were to head the tenders committee, the work would presumably start from zero. This means summoning everyone and reopening the process. Will anyone ask questions about this huge waste of resources?
This means that the committee's letter of appointment would have to be rewritten, because it should already have submitted its recommendations, but it has not done so. Furthermore, Maimon does not know what will happen to him. He was appointed acting director general for three months, and the term is due to expire. What exactly is he supposed to do? Push the tender and wait for Erdan to appoint a director general for the ministry? Uncertainty and not appointing a professional director general are two serious mistakes by Erdan.
When a ministry's civil servants are weak, and the minister's team is strong, this can be papered over. But that is not the case today.
To sum up, 4G is going nowhere. Only when a major crisis happens, will they wake up. Meanwhile 443 carriers in 130 countries are already investing in 4G. 194 LTS networks have been launched in 75 countries, and 100 million subscribers worldwide use the technology. Forecasts predict that 260 LTE networks will be launched by the end of 2013. Israel, in short, is in a very bad position. We don’t need the numbers to realize this; it's enough to open leading mobile industry websites to see how far behind we lag, and how many carriers are launching LTE networks. If the Middle East, Africa, and Asia have moved ahead of us, what else can be said?
The surprising thing is that when Erdan was minister of environmental protection in the previous government, the ministry supported increasing the number of cellular antennas because it understood the simple equation, presented by every Israeli and foreign expert: more antennas means less radiation. All that is needed is an agreement on antenna sharing and maybe network sharing and giving up the crazy idea of building one 4G network in Israel, which would cover everyone, because it will never be built over the objections of the Ministry of Finance and the Antitrust Authority.
Published by Globes [online], Israel business news - www.globes-online.com - on September 2, 2013
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