Millions of Britons who have been told by Prime Minister Boris Johnson to avoid unnecessary travel and to work from home suddenly discovered last Tuesday that their cellular service had been cut off. The networks of the big three operators – 02, EE and Vodafone – crashed for five hours under the weight of the surge in mobile and internet use.
That incident reflects how quickly the coronavirus is moving the world into a new era of telecommunications consumption. The pandemic will continue to stoke a massive increase in the use of the internet as well as cellular telephony.
Haaretz Weekly Ep. 70
So far, Israel’s telecommunications infrastructure has shown no signs of collapse despite the increase in online traffic including video and high bandwidth content like games. Internet usage is breaking new records in Israel, all four companies in the business have reported.
Hot Telecom said the biggest increase was recorded Saturday night when traffic was 25% higher than average. Bezeq reported a 30% increase that night over the average and a similar rise on February 21, the weekend that the coronavirus epidemic first stirred broad attention in Israel. The Israeli company Unlimited (IBC) said its Saturday night traffic was 21% above the average.
That was a weekend, but business usage is also growing. Many companies, mainly big and midsize firms, have told their employees to work from home. That requires companies to upgrade their internet capacity and ensure wider bandwidth to achieve consistent service.
If the government takes even more severe measures and requires Israelis to remain at home for an extended period, the use of Israel’s telecommunications infrastructure will grow even more. The telecom industry says it is able to cope now, though in the most extreme scenario usage could grow as much as 75%.
- Israel halts online schooling for students affected by coronavirus closures
- Welcome to the coronavirus state of Israel and its standstill economy
- Coronavirus quarantine: Home alone with the hate virus
Out of concern that Israeli infrastructure may be overwhelmed, Netflix announced Monday that it would reduce network traffic in Israel over the next month following the government’s request to ease data congestion. In other words, the company will free up bandwidth. It says the change won’t affect service quality.
Israel occupies a reasonable place as far as international metrics go. Industry sources say that even if usage continues to grow, service providers can meet the challenge at this stage and are not yet testing the upper limits of their capacity. There’s no threat of the network collapsing in the short term.
Still, the big question mark is whether all the tubes and wires will be able to meet Israel’s online needs in the years to come. Israel’s network has been neglected in recent years for a variety of business and even political reasons; investment in upgrading it has effectively been frozen.
The coronavirus pandemic has quickly led to the realization that the neglect can’t continue and more and better capacity is critical.
For the companies providing the service, the surge in demand could have been a business opportunity, but the pandemic comes at a time when the firms are in serious financial straits and don’t have the resources to meet the coronavirus challenge.
“At the moment we’re just managing, but when the next coronavirus arrives the providers won’t be able to meet the demand and the infrastructure will collapse,” said an executive who asked not to be named.
Fiber optic foray
Israel is behind the world average in deploying fiber optic infrastructure, which is both faster (up to 1,000 megabits) and more reliable. Bezeq, Israel’s biggest provider by far, still relies on aging copper cable; it’s trying to increase its capacity to a maximum speed of 100 megabits with technology fixes. It could even go to 200, but the Communications Ministry won’t let it in order to coax it into investing in fiber optic.
Hot’s network uses so-called coaxial cables that can reach up to 500 megabits, but this technology is also dated and won’t meet future needs for very fast internet.
At this stage, neither Bezeq nor Hot are rushing to make the needed investment in fiber optic, which would cost them between 3 billion and 5 billion shekels ($820 million and $1.4 billion) for each of them.
Today, only two providers in Israel offer fiber optic – Partner Communications and IBC. The two companies count a few hundred thousand households with access, but the number of paying subscribers is far less – in the tens of thousands for each of them.
Unlike, Bezeq and Hot, neither Partner nor IBC is under any regulatory obligation to roll out a nationwide network. IBC, which was the beneficiary of a government grant, need only reach 40% of Israel geographically in the next 10 years. In other words, policy makers can’t count on either company to supply fiber optic to most of Israel.
Because of regulatory foot-dragging and unclear Communications Ministry policies, neither Bezeq nor Hot have fully embraced fiber optic. When Moshe Kahlon and Gilad Erdan were heading the ministry in the years through 2014, they undertook a lot of consumer-friendly actions but did little to encourage network upgrades.
The Netanyahu corruption-case angle
Shlomo Filber was the ministry’s director general when Benjamin Netanyahu took over the ministry (while serving as prime minister) and left when one of the corruption investigations into Netanyahu began. Filber spoke a lot about the threat to Israel’s telecommunications infrastructure and had a lot of ideas, but none ever led to concrete policies.
Defying the view of the ministry’s experts, Filber tried to make a deal with Bezeq: fiber optic in exchange for the ministry’s consent to end the structural separation of Bezeq’s various businesses. But after Filber turned state’s evidence against Netanyahu, his relations with Bezeq were allegedly characterized by corruption and conflicts of interest.
Today, the ministry is aiming for a comprehensive agreement with the industry and has slated hearings ahead of plans to offer financial incentives for Bezeq and Hot to invest in fiber optic. But it’s all moving very slowly. Political uncertainty after three general elections in 11 months and a rapid turnover of ministers has made it difficult to pursue long-term policies.
Bezeq, at least, has announced that it is preparing for deployment. “We’re trying to change the rules of the game. We think Communications Ministry policies are wrong, but it’s the ministry that decides and we aren’t going to argue with them,” Bezeq Chairman Shlomo Rodav told TheMarker last week.
He cited the ministry’s decision to put off any decisions on fiber optic until May because of the coronavirus. “The government needs to issue policies and let the market run with them,” he said.
Meanwhile, inside the telecom industry, regulators will soon have to decide whether they will countenance a merger between Hot and Partner and between Cellcom Israel and Golan Telecom. Mergers like these would better enable the companies to cover the cost of fiber optic deployment – by raising rates.
However, the ministry’s stance has been that the best way to encourage investment is by ensuring competition, which mergers would reduce.