Israel has become a competitive 3G market, with the launch of CDMA2000 1xEV-DO by the country's third operator, Pelephone, on 5 September 2004. The service is currently only available in the central region of the country but the operator is looking to make the service available in all Israel's major urban areas in Q1 2005. The launch comes three months after the country's largest operator Cellcom launched its W-CDMA network in Tel-Aviv. Israel's second largest operator Partner is set to launch its own W-CDMA network before the end of 2004.
In addition, Israel has become only the fourth country in the world, behind Korea, Japan and the USA, that has seen the commercial launch of 3G services over competing technologies. Whereas W-CDMA, as deployed by Cellcom and Partner, is the technology of choice for the vast majority of operators within the EMEA region, CDMA2000 1xEV-DO is the standard favoured by CDMA operators in Asia and the Americas (although in August 2004 Eurotel in the Czech Republic launched CDMA2000 1xEV-DO over a CDMA-450 network for data services only). Although theoretically download speeds of up to 2.4Mbps are possible over CDMA2000 1xEV-DO, the standard user experience is likely to be closer to 300Kbps. W-CDMA offers theoretical download speeds of approximately 384Kbps.
Pelephone subscribers will be able to access 3G content through the operator's new 'Zoom TV' portal, which offers video content such as sports highlights, music videos, news updates and comedy clips. Video calling, once viewed as the 'killer application' for 3G networks, has not been introduced yet. A Pelephone official told EMC that Pelephone was looking to data services, such as those it is offering over CDMA2000 1xEV-DO, to account for 20% of its revenues for 2005. The figure as of the middle of 2004 stood at 'between 10 and 15%'.
The Zoom TV portal was developed in conjunction with Korea's SK Telecom, which has had an agreement with Pelephone to develop content and supply SK-branded handsets since April 2002. SK was largely responsible for developing Pelephone's 'Escape' offering for the youth market that was launched early in 2003. Escape subscribers are reported to have a higher ARPU than other segments of Pelephone's network. In addition to the SK-branded CDMA2000 1xEV-DO handsets, Pelephone is also being provided with handsets from fellow Korean manufacturer Samsung.
Pelephone's ability to leverage SK Telecom's 3G expertise (SK Telecom had 5.6 million registered CDMA2000 1xEV-DO subscribers at the end of August 2004) will be crucial in the early stages of 3G competition in Israel; Partner has made much of its ability to draw on the experience of its major shareholder, Hutchison Whampoa, which owns significant stakes in seven of the 39 operators around the world that have so far launched W-CDMA services
Pelephone is cautious about its short-term forecasts for 3G, predicting that the services will take off in 2005, when all three major operators in the country have launched 3G services and W-CDMA and CDMA2000 1xEV-DO handsets become more widespread and come down in price. While Cellcom has been reluctant to divulge subscriber figures for its W-CDMA offering, it was reported in the Israeli media that at the end of August 2004 there were only 1,000 devices operating on its network.
Despite W-CDMA's dominance within the EMEA region, Pelephone is confident of being able to effectively compete against Cellcom and Partner. "EV-DO is the only technology we could have used," a senior Pelephone official told EMC. "Besides, subscribers do not care about technology. We are confident that from a technology point of view, we can meet all the subscribers' needs."
Yet Pelephone has suffered in the past as a result of its technology migration; its decision to migrate to CDMA in 1999 rather than GSM (the option favoured by Cellcom in July 2002) is seen as one the factors that has contributed to its decline in market share, which has declined from 37.27% at the end of 1999 to 29% at the end of 2003. Pelephone has suffered by not being able to offer roaming to GSM subscribers from Europe and elsewhere. Observers believe that, while the launch of new data services over CDMA2000 1xEV-DO may boost Pelephone's revenues in the short to medium term, history could repeat itself in the long term with Pelephone's inability to offer 3G roaming with European operators causing it to eventually trail behind the W-CDMA networks of Cellcom and Partner.
EMC World Cellular Data Metrics tracks GPRS and CDMA2000 subscriber numbers, SMS traffic data, MMSC contract awards, MMS launch status and tariffs, EDGE deployments and other mobile data indicators including MMS traffic for key operators worldwide. For more information on EMC World Cellular Data Metrics see: http://www.emc-database.com/WCDM
