Israeli Cablers Promise More Installs

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Tel Aviv, Israel -- The country's large cable
companies are mollifying the government concerning its long-standing complaint that the
MSOs are not serving households in more remote regions.

The systems' clear motivation appears to be gaining
the government's blessing on their ability to offer Internet service.

Yossi Doar, managing director of the country's
second-largest MSO, Tevel Israel International Communications Ltd., announced last week
that his company would connect all homes in its franchise region -- and serve everyone
requesting its service -- by October 2000. He expects it to cost Tevel about $1 million.

The announcement follows a new government requirement that
cable operators must hook up every household requesting cable service or face a daily fine
for every would-be subscriber who remains unconnected.

Tevel's decision may also mark the end of a
long-running legal battle between the regulators and the cable companies, which, for the
first 10 years of their 12-year concessions, have steadfastly refused to hook up many
outlying communities on economic grounds.

Until now, the only recourse available to regulators was to
refuse to renew cable licenses, which come up for renewal two years from now. The
franchise agreements stipulate that anyone who wants cable must be able to receive it.

The issue was the catalyst for a decision by then-minister
of communications Limor Livnat to license direct-to-home TV, which is now due to launch in
April.

Golden Channels, the largest of Israel's three
operators, is also embarking on a campaign to hook up as many subscribers as possible.

Golden Channels spokeswoman Edit Herzeg explained, "We
want to hook up all of the outlying settlements because of competition from DTH, and
because we want to offer Internet. But it's very expensive -- hundreds of thousands
of dollars to connect no more than 150 settlements of between 50 to 100 households
each."

Herzeg said Golden Channels expects 72 of those settlements
to be wired by March. She added that uncertainty over whether their licenses would be
extended contributed to an unwillingness to invest further.

Shani Kogan, telecommunications-research analyst for
Nessuah Zannex Ltd., commented, "The cable operators aren't doing this out of
the kindness of their hearts."

He noted that there has been talk that the operators
won't be granted licenses to offer Internet service unless they hook up peripheral
communities. "This area has always been a major dispute with the authorities. With
licenses soon due for renewal, it had to resolved," he said.

Attention has been shifting recently from competition
between cable and DTH platforms to competition between would-be Internet and telephony
providers in anticipation of the privatization of government-controlled Bezeq Israel
Telecom, which is due next year.

Doar said he views Tevel's initiative as "another
step toward ending Bezeq's monopoly."

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