Israels DBS Services Calls It Quits

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Tel Aviv, Israel -- DBS Services, the country's first
-- and only -- direct-to-home satellite TV company, said last week that it is returning
its $7.5 million government license and canceling its plans to provide digital DTH
service.

The company alleged a "secret agreement" between
the government and cable operators, allowing the latter to offer tiering on terms so
favorable that DTH operators would be unable to make a profit.

The parties involved couldn't be reached for comment.

Although DBS hadn't yet launched its service, the
pullout should benefit Israel's three cable companies, which are facing their own
problems.

Golden Lines, Matav Cable Systems Media Ltd. and Tevel
Israel International Communications Ltd. were heavily criticized in the annual State
Comptroller's Report two weeks ago.

The report said the systems didn't provide service to
all who requested it, as required by their licenses, and they stopped providing three
channels without government permission, failing to replace them with channels of similar
quality.

The cable companies' woes were compounded when a law
firm here filed a $250 million class-action suit against them and the Communications
Ministry, claiming that the systems exploited their monopoly status to collect
unreasonable fees, and that they are providing poor service. The Antitrust Commission has
threatened to join the suit.

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