In 1989, cable TV was introduced in Israel. The Israeli TV airwaves never had much to offer: Channel 1 (produced by the Israeli Broadcasting Authority and considered poor and old-fashioned) and Channel 2 (before it got commercial). It's no surprise cable TV gained instant popularity. Slowly but surely, the cables were laid out to major cities and suburbs, eventually connecting around 66% of the households to cable TV (as of September 1997). The Russian immigrants were an especially loyal consumer group, willing to shell out the full monthly price just for the 3 Russian-speaking channels.
An empire's fall
Year 2000 was time for another Israeli monopoly to end -- the multi-channel TV business. For 10 years, ever since the introduction of cable TV in Israel, five companies (Tevel, Matav, Gvanim, Arutzey Zahav and Idan) had a franchise, a restriction on competition, which allowed them to monopolize the market. It made sense when it was given, since cable infrastructure was non-existant and the cable companies had to invest enormous resources to lay down the cabling.
In the way of all monopolies, prices grew, the offers remained static and the so-called "cable families" got enormously rich and controlling (especially after the five companies were consolidated into just three).
"Yes", a company which received a franchise from the Ministry of Communications to operate a satellite-based TV service, changed that.
"Yes" begun operations in 2000, after financial difficulties and growing pains which were putting its launch into question. The customer reponse was overwhelming! The company could hardly handle the flood of installation requests. Shortage of decoder equipment and technicians caused installations to be delayed for months!
All went in the usual monopoly breakdown route -- all of a sudden, people saw that, for the same price, service could be a whole lot better:
- digital broadcasts
- many more channels (world-wide, Cartoon Network, 4 dedicated movie channels, 4 music channels and all the goodies our friends in US are long used to)
- multiple channel packages ("pay for the channels you actually watch")
- service to borderline settlements and Kibbutzs which weren't connected to the cable infrastructure due to commercial considerations
Ministry of Communications forbid the cable companies from introducing similar features for some time, in order to give the newcomer time to stand on its feet. Eventually, the cable companies came out with similar offers; turns out all they've needed was a good shake, to hint them they're not alone on the market.
Some of Yes success can also be attributed to its stylish brand image, which reminds of Orange brand's image. In a country where "foreign" is associated with "quality" and "prestige", they chose an English name and are producing English-speaking advertisements mocking up Hollywood movies, adding the popular foreign scent to their brand. As a result, the viewer imagines Yes as strong foreign corporation rather than a local business ran by your next-door manager.
The competition is fierce and both competitors have serious commercial backing. The cables came out with broadband Internet offer (which Yes can't offer due to its one-way operation -- and Bezeq, 50% shareholder wouldn't want it to compete its ADSL offers anyway). Yes added more interactive services. Both are striving to purchase more exclusive foreign productions, often overpaying the major US studios up to 5 times just to gain that exclusivity.
All in all, Yes is another success story of Israel's slow de-monopolization.
- http://www.moc.gov.il (Ministry of Communications)