Israel Legalizes DTH; Cable Ops Appeal

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Tel Aviv -- Israel has finally passed legislationlegalizing direct-to-home satellite services, a move that's prompting outcries fromthe country's entrenched cable industry.

The amendment to Israel's Bezeq Act TV legislationprovides for the expansion of the government's Council for Cable TelevisionBroadcasting into the Council for Cable Television and Satellite Broadcasting. Throughthis body, the Ministry of Communications is now authorized to grant licenses for DTH.

Current government free-market thinking favors licenses forevery group that meets basic conditions regarding financial ability, professional recordand the nature of services offered, but there is a possibility of awarding only a limitednumber of licenses.

While the Communications Ministry boasts that it isproviding competition to the cable companies and wider viewer choice, it is only nowstarting to prepare a regulatory framework and to decide exactly how to award licenses.

Meanwhile, the cable industry is continuing its vigorousopposition to the amendment in the Supreme Court.

Gustavo Traiber, general manager of the Israel CableTelevision Association, warns that his industry will meet the rules allowing DTH on twofronts. It will continue its legal argument that key promises have been broken to cableoperators regarding what they perceived as licenses that guaranteed them exclusivity inthe multichannel realm.

At the same time, Israeli cable operators are alsoexploring digitalization, passing more homes in outlying areas, and improving theirprogramming, marketing and advertising efforts.

The government is aiming to grant DTH licenses in May orJune, and assumes the new licensees will be ready to launch their services six to eightmonths later. It is intended that DTH providers will offer fast Internet and dataservices, in addition to digital TV.

Eli Nissan, media consultant for the Ministry ofCommunications' Broadcasting Regulatory Administration, said a number of issues willbe assessed in light of what he admits is a market of limited potential. Cable already has67 percent penetration in Israel, which has a population of about 6 million.

Other issues that will be contemplated includecross-ownership rules, compatibility with user-end equipment, the price licensees will beallowed to charge for subscriptions and the tiering of services.

Nissan believes DTH services will snare subscribers inareas that haven't been passed by cable, and that some of the homes that are passedby cable but don't subscribe to it may opt for DTH. To encourage the new DTH industryin a limited market, Nissan stresses that the government is considering a program-accessrule similar to the one operating in the United States, which guarantees DTH providersaccess to cable-originated channels.

Promised Nissan: 'We have to have such a rule here. Wewill do whatever we can to make DBS [direct-broadcast satellite] viable here.'

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