"The western world is shifting to an Internet economy. The basis for this is broadband communications, whose advantage lies in its ubiquitous rapid Internet transmission capability". This keynote sentence formed part of a comment by Minister of Communications Binyamin Ben-Eliezer. He was responding to the Ministry of Finance's decision not to knuckle under to his pressure to extend the cable TV companies' concessions, thus facilitating an arrangement for opening up the multi-channel television market to competition. This would also have resulted directly in the inland communications market, too, being opened up to competition.
Sometimes in the form of veiled allusions, and sometimes expressly, Ben-Eliezer accuses the Ministry of Finance and its incumbent, Avraham Shochat, of delaying procedures for opening the market up to competition. Regardless of the essence of the argument between the Ministries of Finance and Communications, he is surely aware of the importance of the bottom line: the advent of fast Internet into Israel is being prejudiced or significantly delayed and the goal of transforming Israel into an Internet nation being torpedoed.
Available information is shocking. Israel, the world's No. 2 in Internet technology development, is currently estimated to have 700,000 Internet surfers, a penetration rate of only 12% of the population. The United States, No. 1 in the scale, has 100 million surfers, representing a 50% penetration rate.
So why are they into it and we not? Why is it that in the United States, large areas of which, constituting more than 50%, lag technologically behind the State of Israel, it goes without saying that the way to find the nearest open pharmacy is over the Internet, while in Israel we still find it in the paper? It's not that the information is not available on the Internet. It's just that Israelis are not yet imbued with surfing culture and use of this wonderful media.
There is no secret about the answers to these questions. They are obvious: infrastructure, education and regulation. The question is what is to be done about it and how seriously the matter should be emphasised. Last week, MK Michael Eitan and Knesset chairman Avraham Burg, both veteran, big-time Internet surfers, took an initial step in the right direction by organising Internet day in the Knesset, where questions were asked and some attempt was made to provide answers. No practical measures were instituted.
We would point out, in all fairness, that some of the large Internet penetration rate in the US is due to the fact that that country has the backbone, so there is hardly any difficulty accessing the network, even on narrow bandwidth.
Proximity to the Internet backbone, and infrastructure availability, have made the US surfer an easy consumer. Anyone who has not had the frustrating experience of facing his computer, cursing and waiting for the site to materialise on the display screen, and then continuing to fume and rage with every repeated try, every new page, has no notion of what surfing in Israel means. When surfing is smooth and rapid, penetration into a diverse range of population strata is likewise smooth and rapid. That is why the US surfer did not wait for broadband, as, perhaps, his Israeli counterpart is doing, in order to assimilate Internet culture.
The Israeli solution should have been broadband surfing. The party to blame for the fact that broadband is not an accomplished fact is the Ministry of Communications, which, as early as three years ago, refused to allow the cable TV companies and cable modem developers to offer their customers broadband Internet services. It did approve an endless series of technological experiments, none of which was commercial. Many of the world's Internet and cable TV providers are using technologies invented by Israeli companies such as Net Game, Gad Line, ComBox, New Media Communication, and others. These have not yet been vouchsafed to Israeli customers, because the Ministry of Communications, possibly out of its traditionally adversarial relations with the cable TV companies, did not approve the service.
In Israel today, the whole communications delay stems from the dispute between the Ministries of Finance and Communications on extending the cable companies' concessions. This dispute is preventing any settlement in the multi-channel television content market, and consequently delaying inland communications competition in Internet, telephony and data communications. Is the Ministry of Finance right? Possibly. Is the Ministry of Communications right? Maybe. The bottom line, however, is injury to the State of Israel. In this day and age, the injury is critical, focusing on the jugular vein connecting Israel to the Internet nation.
It is already commonplace to say that the Internet revolution is the industrial revolution of the twentieth century, which has now given way to the twenty-first. But it's nonetheless true. Unless things start moving in the right direction, State of Israel could lose its window of opportunity, still open for the time being, and remain behind. The greater the delay, the greater will be the gap between those nations that have accomplished the Internet revolution and those still panting in the rear. Let there be no mistake: there is a great deal of talk about the Internet in Israel, but not much is being done, and we are still behind.
Published by Israel's Business Arena January 17, 2000