A group led by Swedish communications infrastructure company ViaEuropa has been chosen to build Israel’s next generation of fast communications technology — a fiber optic data network that will bring Internet speeds as fast as 1 gbps (1 gigabit, or 1000 megabits, per second) to Israeli homes and businesses. The group of five companies (one of which is Israeli) will build the FTTH network for the Israel Electric Company, which will administer Israel’s third data communications network, along with Bezeq and the HOT cable company.

Fiber cables, usually made of glass or plastic, have a wider bandwidth than copper wires, and also have the ability to conduct signals at much higher speeds and to deliver data signals without fading. That makes it ideal for the video content that entertainment providers would like to stream over the Internet. The higher bandwidths allow for the smoother streaming of video, ensuring that there are none of the “bumps” or “pauses” that generally occur at lower connection speeds.

Bezeq already uses fiber-optics extensively in its NGN network, with fiber bringing fast Internet connections to within several hundred meters of many buildings in Israel, and standard copper phone lines moving it the rest of the way. Bezeq is upgrading its network to bring fiber connections to the home, as is HOT, which is replacing its current wiring with fiber as well.

The IEC was granted a license to set up a communications network in 2011, part of the government’s commitment to increase competition in the communications sphere, Communications Minister Moshe Kachlon said in a 2011 press conference announcing the new network. Speaking at the press conference, Finance Minister Yuval Steinitz said that the project “will promote growth, along with increasing competition in the telecommunications area and improve customer service.”

But the IEC project had trouble getting off the ground; infrastructure builders were not tempted by the conditions of the tender issued by the government, and a decision on choosing a company or group to set up the IEC’s infrastructure was delayed five times, because there weren’t enough bidders. The consortium led by Viaeuropa bid on the project after conditions were changed to attract more bidders, with the infrastructure group getting a bigger stake in a corporation that will be created to build and administer the system. The group’s stake was raised from 51% to 60%, while the IEC will own the other 40%.

Construction will begin during mid-2013, Viaeuropa said, and by 2020, some 70% of the country should be covered. Altogether, the group will run 25,000 kilometers of fiber optics, with the project costing billions of shekels.

The project will pit the IEC in direct competition with Bezeq and HOT, which currently hold 59% and 41% of Israel’s broadband market respectively.