Competition Building to Provide Israeli DTH

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Tel Aviv, Israel -- The race to provide direct-to-home
television in Israel is heating up, following Israel Digital Broadcasting Co.'s
promise to invest $400 million in a service after winning the country's second DTH
license late last month.

IDBC is owned by Israeli businessmen Prosper Abitbol and
Arik Ben Hamu. Hamu is a U.S. citizen and the chairman and CEO of cable-modem-maker 3Com
Corp.

Miriam Abitbol, IDBC's lawyer, shrugged off criticism
of IDBC's perceived weakness compared with DBS Services Ltd., the country's
other DTH-license winner.

DBS Services has unveiled little about its plans for DTH.

IDBC's DTH service will be known as
"News@t." The company is the exclusive licensee of Canal Plus'
"MediaHighway" and "MediaGuard" technologies for Israel, Jordan and
the Palestinian Authority. Under that agreement, Canal Plus will also provide IDBC with
support on technology, content and marketing issues.

But can Israel, with a population of only 6 million,
support two satellite companies? DBS Services said it can't, but Abitbol said it can.

"We see room for two operations because the licenses
are nationwide, unlike the cable-television licenses, which are regional. We're not
going to be just 'cable from the sky,'" Abitbol said.

Izhak Ishhorowitz, of the Center for Technological Analysis
and Forecasting at Tel Aviv University, was a bit more skeptical. "It's a big
jump from one multichannel provider -- cable -- to three. But if each satellite platform
takes 25 percent of cable's 1.1 million subscribers, it's possible."

At the same time, IDBC didn't rule out the possibility
of a merger with DBS Services.

"If we did merge, it would be on a 50-50 basis, and
with Canal Plus' technology," Abitbol said. DBS Services declined to comment.

Any decision on a merger would have to come by next month,
when IDBC must pay $US7.5 million to receive its license, or it will lose its hard-won
approval.

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