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Strong Israeli cable stunt DBS growth.

For a country which for the past 23 years has had only one government-operated TV channel, the trial broadcasts to 400 subscribers of cable TV in the Tel Aviv suburb of Rishon Lezion last year was just short of a minor revolution. Eventually subscribers will be able to receive local and nationally produced programs, CNN, WORLDNET, SAT-3 channel, two stations from Spain, a station from Italy, two from France and eight British ASTA channels.

The past year has been the year of cable TV in Israel and by any indicator it has been a resounding success. The medium now reaches 100,000 households with a penetration rate of 55 per cent. Estimates are that by 1992 the number of subscribers will double, and will stabilize at 700,000 within five years. Ehud Mirom, director general of Israel Cable Programming, a consortium of four cable operators created to jointly purchase programs, contends that despite cable TV in Israel being 15 per cent more than the basic service in the U.S., and as a percentage of total purchasing power much higher, the level of market penetration has been 15 per cent above the industry's original expectations.

Although the Cable TV Law of 1986 states that a foreign investor can own only up to a maximum of 49 per cent of any cable TV company, the industry has attracted such internationally recognized leaders as Shamrock Holdings, United International Holdings, and Southwestern Bell from the U.S., Zurich-based Rediffusion, and Tonna Electronics from France. It's estimated that within the next five years more than $500 million will be invested in the industry, the majority of that coming from foreign sources.

David Harnik of the Cable TV Council, says the attraction of these firms to the relatively small Israeli market is the speculation that the penetration rate will be close to 70 per cent (84 per cent homes have a TV set). "For the U.S. companies they are all looking for new market opportunities," he says.

Much of the programs for cable TV will come from ICP who buy and package programming into four channels areas: children, sports, family and movies.

An even better indicator of Cable TV's success is what the industry is already doing to Israel's video rental business. The number of films rented out by video libraries has dropped between 25-40 per cent since cable TV was introduced less than eighteen months ago. There are more than 600,000 VCRs in Israel, covering 45 per cent of all households,

Boaz Zafrir, general manager of one of the largest video chains, says "nearly every store in districts where cable TV is strong has felt a sharp decrease in demand." But, not all areas of "pay TV" in Israel are enjoying the success cable TV has been having.

The Ministry of Communications believed that if satellite TV came on the scene too early it would endanger cable's future viability. According to the cable TV law of 1985 satellite transmissions must go through the cable TV stations and not be on DBS. Companies, such as SuperTV in Haifa, want to bring satellite TV services to Israel and pay for them with advertisements from local firms. In response, the Communications Ministry amended the Cable TV law to prohibit advertisements from being "aimed" at Israeli audiences. Critics of the move say it was because the government has no way of regulating or taxing the industry.

The government claims that the issue is not one of an "open sky policy". The Ministry of Communications believes many companies selling satellite services are merely trying to skirt the government's technical specifications and quality of programming guidelines.

Currently the only way to circumvent the government's restrictions is to broadcast from overseas and then bring the signal down near Israel, such as in Cyprus where it can then be received by the 130,000 Israeli homes which already own a satellite dish.

ISTV (International Superstar TV) in Tel Aviv, is preparing just such a plan. It has received permission from British Telecom to uplink a signal in England, downlinking it in Cyprus.

"When the satellite market begins to develop, the price of dishes will drop from $2,500 today to under $1,500," said Avi Friedman, general manager of SuperTV. "With an average of 10 apartments in each building, for a one-time fee of $150 a family could receive satellite broadcasts forever."
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Title Annotation:direct broadcast satellite television
Author:Snow, Richard
Publication:Video Age International
Date:Oct 1, 1991
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