Cellphone service in Israel still expensive, UN report shows

The much-vaunted price revolution in cellphone package prices hasn’t lived up to the hype, according to a new report by the United Nations.

The annual information and communication technologies development index (IDI) report released Friday by the UN’s International Telecommunication Union (ITU) shows that Israelis pay more for cellphone service packages, both in dollar terms and as a percentage of their income, than most Europeans, and even residents of Arab countries.

The country is falling behind in its overall communications “footprint” – the percentage of the population with access to communications and the ability to make use of advanced Internet technology, according to the report.

The IDI measures the ability of regions, countries, and individuals to use technology to communicate with others. Communications, based on the index, runs the gamut from old-fashioned fixed-line phones to super-fast 4G Internet connection tech. The report delves into the hard numbers of connectivity, providing data on the number of fixed and cellphone subscriptions per 100 users in regions and countries, percentage of households with a computer and/or Internet access, how many people are using the Internet altogether and how intensively it is being used (in terms of bytes downloaded per user), the skills which users need to access the Internet, and more.

Overall, the report issued over the weekend said, the world has gotten more connected. Between 2000 and 2015, Internet penetration increased almost seven-fold, from 6.5 to 43 percent of the global population, and the proportion of households with Internet access at home jumped from 18% in 2005 to 46% in 2015.

In perhaps the most dramatic development, there were more than 7 billion mobile subscriptions in service worldwide, up from 738 million in 2000. Globally, 3.2 billion people are using the Internet, of whom 2 billion live in developing countries.

With that, the report said, some 4 billion people in the developing world remain offline, and among the countries where the world’s poorest billion live, over 80% do not use the Internet.

Although Israel’s overall communications infrastructure and usage – consisting of Internet usage, landline phone subscriptions, cellphone service, and the skills needed to access advanced communication technology – has grown over the past five years, the rest of the world has progressed even further. As a result, Israel’s overall score in the ITU’s information and communication technologies development index (IDI) fell nine spots, from 26th place worldwide in 2010 to 35th this year.

It’s perhaps understandable that Israel has fallen in the ranks, since the country was already well-connected in 2000. However, the report indicates that Israel has fallen behind in a number of important areas.

For example, as the rest of the advanced world moves to 4G communications, Israel remains stuck at 3G. The average Internet speed in Israel, according to the IDI, is a mere 5MB per second, far lower than the numbers claimed by Bezeq and HOT, the country’s main Internet service providers. In most of Europe, the speeds on average are between 10 and 30 MB/s, while in Hong Kong the average speed is 200 MB/s, and in Singapore and Ireland – two countries that see themselves as future “Start-Up Nations” – the average is 100 MB/s.

Still, Israel did better than other Western countries, like the US, where the average speed is 2 MB/s. However, service in the US and in 37 other countries is much cheaper than in Israel, in terms of the cost of a broadband subscription versus average income.

Most disappointing, perhaps, is the very average score achieved by the country on cell service affordability – in which Israel came in 61st place. On average, the report said, cell service (voice and data) packages costs about $35 a month per line for service, or about 1.25% of the average person’s purchasing power, significantly more in dollar terms than most of Europe (except Switzerland), and about the same as in the United States – but in the US, service takes just 0.8% of an individual’s average purchasing power. In the countries of the Gulf and Saudi Arabia, the average is 0.8% and lower.

Israel’s annual average income in terms of purchasing power, the report added, is about $33,000 per year, comparable to that of Italy, New Zealand, Hong Kong, UAE, South Korea, and others – all of which required customers to spend less of a percentage of their income on cell service.

The report is especially relevant in light of the proposed merger of veteran cellphone service firm Cellcom with discount upstart Golan Telecom. Cellcom, one of Israel’s original cellphone service providers, was known, along with its fellow service providers Pelephone and Orange Israel (Partner) for high-priced packages. Many politicians – especially Finance Minister Moshe Kahlon, who is credited with bringing Golan and other low-cost competitors into the market – fear that the deal could bring back the “bad old days” of super high-priced cell service.

Israel scores a bit better on fixed broadband Internet service, with the average price for the average 5MB/s connection $34.10 a month. However, that was $10 more than Irish customers paid for their 100 MB/s connections (although they are capped at 30 GB per month of downloads, while there are no limits for Israelis, the report showed).

Still the situation in Israel is much better than it has been in the past, the report’s authors said. The report praised Israel’s regulatory authorities for reducing prices on Internet access, both fixed and cellular.

“Examples of regulatory actions that have an impact on competition and pricing include introducing mobile number portability and regulating wholesale prices for local loop access. Recent concrete examples include the Spanish regulator CNMC’s revision of the limit on wholesale ADSL prices Israel’s reduction of fixed-line interconnection rates, and new mobile number portability regulation in Kazakhstan, Senegal and the United Arab Emirates,” it said.