Shalom Manova, Cellcom vice president in charge of Engineering & Application, is the man responsible, for better or for worse, for all that happens within the Cellcom network from a technical standpoint. This includes coverage, broadcast quality, reception, etc. Right now is a critical period for two main reasons: Cellcom has a client base of 450,000 subscribers and is about to raise air time tariffs as of January, 1997, as permitted according to the terms of its license. The ramifications are that Cellcom will no longer be able to claim its prices are the lowest in the world, and indeed prices will no longer be an amazing bargain compared to Pelephone’s.
The second reason is technology-related. Cellcom is simultaneously undergoing four engineering revolutions which customers will feel this year. The first is replacing switcher processors, which will add 60-70% to switching capacity. The second is a system software replacement, installing the new IS-136 Standard 4MTXO program, which has already been adapted to Cellcom’s eight switching centers and is now in the testing stage. The third is the SS7 signaling system, which enables installation of so-called smart features such as caller identification. The fourth will connect Cellcom’s system to an intelligent network, which will enable far more sophisticated services than those currently available.
"Globes:" What are the differences between your digital system and an analog system, such as Pelephone’s, in terms of noise interference?
Shalom Manova: "In an analog system, electromagnetic noise enters the transmission and is sent as part of the official signal. I refer to interference from traffic lights, lightening, high-tension wires, etc. Digital systems are different. We cut out the noise, and although we use a lower frequency, it maintains its integrity. What we lose in high frequency range, we compensate for using amplification. So you don’t hear those noises when you use the Cellcom network."
How do you know what people hear over the Pelephone network?
"We use their telephone instruments as samples on our own measuring equipment. We test their system in both night and daytime conditions, as they probably do ours."
Are there other external factors which affect cellular network quality?
"Yes, primarily interference caused by accessories. I think is was right for Cellcom to encourage customers to buy only our [approved] accessories. We also don’t sell other brands, even though we could have made millions off them. Regrettably, some clients are tempted to buy other systems, and in most cases, the quality is low affecting transmission and reception quality in car phones."
From the outset, your strategy was cellular handsets. You didn’t even sell car phone systems.
"The strategic decision, made even before the system went into operation, was to provide personal communications services (PCS), in contrast to cellular service providers who focus on car phone coverage. In line with this philosophy, Cellcom set up a dense urban cell system (base stations) and did not market car phone systems or the amplifiers which characterize other systems. We sold only a portable communications instruments, allowing customers use both inside and outside the car."
Both Cellcom and Pelephone have hundreds of thousands of subscribers, and there is demand for both services, even though the quality isn’t perfect. Is this extraordinary growth due to the crazy Israeli consumer, who loves to play with gadgets, regardless of service or technical quality?
"I wouldn’t put down Israeli consumers. Quite the opposite. Israeli consumers are intelligent and know how to make economically and technologically sound decisions. Many companies turn to Cellcom today, wanting to change their wireless communications systems over to us. They know the difference. We had a visit this week from a man, whose company uses 47 Pelephone instruments, but he wants to move over to us because he can’t work with them. What more could you want?"
This December you begin pilot testing the Cellcom intelligent network. What are the first services you intend to offer, after installation?
"The first service will be a personal identification number and a virtual privacy network (VPN)."
Let’s say you’re a company owner with 60 cellular telephones and you decided to get VPN service. What does it give you?
"You can conduct internal communications over 60 instruments as if each one was an extension of a central switchboard."
Do I pay for air time for conversations conducted between those virtual extensions?
"Of course you pay. Air time is our business, but we can arrange pricing differently."
Where does the caller identification service stand?
The service will be called Calling Line ID (CLI). We recently expanded the pilot program to the Bezeq network, and will begin marketing in December. The pilot, conducted among company employees, was an impressive success. It relies on a new signaling system installed in the Cellcom network."
This service displays the caller’s phone number on your handset screen before you pick up the call. The caller’s name may also be displayed if its on the Cellcom phone list. You sent out a questionnaire, asking all subscribers if they would agree to having their number included in the service, or if they’d rather it was unlisted. What happens to the customers who didn’t fill out the form?
"Whoever is not interested in the service will contact us, and will be taken off the list."
It was recently reported that the IDF is examining a Cellcom system. Can you give some details?
"The military is examining Cellcom equipment. If they conclude that Cellcom is better both technically and economically, they will do as they see fit."
How does the [recently approved] exposure of Israel’s international telephone market affect you?
"First of all, in the technical arena we must prepare for call transmission to three sources, using both an 00 permanent ID number and a variable three-digit ID number. We will offer to provide the companies with billing services."
Will you try to reach an agreement with the international phone service providers, so that your subscribers will pay reduced rates?
"It would be worth their while to negotiate and strike a deal with the cellular companies as our call volume, for each of us, is very great. We are ready to negotiate with any of the international phone service providers."
Are you afraid of a third cellular service provider entering the market?
"Cellcom’s attitude towards the third cellular service provider is not born out of fear. There are other weighty parameters, such as whether there is a need for a third cellular service provider. In Israel today, the most competition in the communications sector is in cellular communications.
You mean the little competition there is.
"That characterizes the present situation. Customers do have the opportunity to choose between option A or option B. Therefore, if the third service provider is there for competition’s sake alone, their entry is unnecessary. Another need has to be identified."
Perhaps to maintain low call rates?
"If that’s really the intention, is it possible? Their activity must be based on surveys of Israel’s cellular market potential, and studies of whether a third service provider with national coverage can really offer prices more attractive than Cellcom’s, which are the lowest in the world."
Your prices won’t be the lowest for much longer. In early 1997, only a few weeks away, you plan on doubling your rates. Maybe that third provider can maintain today’s low rates.
"The third cellular service provider’s activity will also be based on business plans. Cellcom won the second cellular service provider tender based on its low consumer price rates, that were considered were suicidal in world market terms. The possibility of a similar thing happening in the near future looks less and less likely."
How many cell sites do you have today?
"We have over 350 cell sites, and intend to install a few hundred more."
How many central switching stations do you have in your system?
"We have eight switching stations and plan to install another two in 1997."
How much money has Cellcom invested to date?
"So far, $500 million."
And a few hundred more cell sites means a few hundred million more. All this, compared to your original planned investment of $300 million. Isn’t this the road to economic ruin?
"No. We have proved after two years of activity that by creating a broad customer base, and working efficiently, you can reach economic achievements no one even dreamed of."