The Ministry of Communications’ strategic plan for deploying fiber-optic infrastructure for the Israeli public, which is also enshrined in legislation, consists of two pillars: (a) Bezeq is committed to deploying fiber-optic networks to 80% of the various regions in Israel, at its selection (in other words, the reasons most beneficial for it from a business perspective); (B) The deployment of fiber infrastructure to the rest of the areas in the country, which is not economically profitable, will be done through state grants (an “incentive fund”) that will be allocated through tenders in which companies interested in deploying and operating fiber infrastructure will compete.
On June 15, 2016, the Ministry of Communications published a document of principles regarding the furthering of the deployment of fiber optic networks in areas lacking economic profitability, detailing the incentive fund’s operating plan and the mechanism for dealing with business entities in the various geographical areas in which Bezeq chose not to deploy fiber infrastructure.
On May 4, 2121, the Israel Internet Association submitted its response to the Ministry of Communications’ document of principles, in which the following points were emphasized:
– The need to provide the deployment costs analysis performed by Bezeq for the review of the bidders in the tender for the deployment of fiber infrastructure in the incentive areas. This is to maximize the efficiency of the tender (and accordingly, the efficiency of the deployment procedure in the incentive areas), by reducing the degree of uncertainty of the bidders in the planned tender and saving on the costs of gathering information about the characteristics of the statistical areas at the subject of the tender.
– The restrictions of the tender to ensure the deployment of fiber in particularly unprofitable areas among the incentive areas: As stated, the incentive areas intended to be handled by the incentive fund and the tenders for which there is tender competition, are generally not economically viable, given high paving costs and/or low profit potential. However, it is clear that even among the statistical areas defined as incentive areas there is a degree of lack of profitability. Therefore, it is likely that the planned tender (or at least in its first launch) will not receive any bids for deployment in remote geographical areas or particularly sparsely populated areas, which are often also characterized by low socio-economic status and level of services. Therefore, the Israel Internet Association calls on the Minister of Communications to exercise his authority under Section 14D(e) of the Communications Law and to order and include a limited number of “mandatory areas” that tender participants are required to include (or at least bids with a wide geographical scope). This is to ensure that the deployment progress in the incentive areas will not be made solely in accordance with the relative economic profitability of the geographical areas.
The need to examine 5G mobile internet infrastructure as a better alternative than deploying fiber in remote or sparsely populated areas: Given the existence of a scientific and professional consensus that 5G mobile technology can provide a complete (and sometimes better) alternative to fixed fiber infrastructure, eliminating the need for complex and costly paving activity for every home or neighborhood, the Ministry of Communications must re-examine the necessity of distributing the fiber infrastructure to all households in Israel. That is, even if the Ministry of Communications believes that there is a need to deploy fiber infrastructure across the country, it can exclude localities where the economic profitability of the deployment or operation of fiber is particularly low “in exchange” for ensuring the existence of 5G cell coverage in those localities in the near future. Economically, too, this move is likely to maximize the public interest in nationwide access to ultra-high-speed Internet infrastructure, as a more effective and efficient use of the incentive fund.