B Communications Ltd Stock

B Communications Ltd., through its subsidiaries, provides communications services in Israel. The company is a subsidiary of Internet Gold - Golden Lines Ltd.

The company provides a range of telecommunications operations and services, including domestic fixed-line, cellular and international communication services, Internet services, multi-channel television, online television transmissions (OTT), television and radio broadcasts, satellite broadcasts, customer call centers, maintenance and development of communications infrastructures, provision of communications services to other communications providers and the supply and maintenance of equipment on customer premises, which is referred to as network end point (NEP) services.

The company’s subsidiaries include Bezeq The Israel Telecommunications Corp. Ltd. (Bezeq), Pelephone Communications Ltd. (Pelephone), Bezeq International Ltd. (Bezeq International) and YES (DBS).

Products and Services

The company provides a range of telecommunications services for its business and private customers, including domestic fixed-line telephony and fixed-line broadband internet infrastructure access services, cellular telephony services, Internet service provider (ISP), international telephony (ILD), data services, information and communication technology (ICT) solutions, multi-channel television broadcasts via satellite, customer call centers, maintenance and development of communications infrastructures, provision of communications services to other communications providers and the supply and maintenance of equipment on customer premises, also known as NEP services.

The company is permitted to offer joint service packages with its subsidiaries to private subscribers, and since July 2012, Bezeq has been permitted to offer joint service packages with its subsidiaries to business subscribers, in each case, subject to the approval of the joint service package by the Ministry of Communications and other conditions contained in Bezeq’s license. The joint service packages must be capable of being ‘unbundled’ such that each service included in a package must be offered separately and on the same terms, which prevents the Bezeq Group from offering discount on the joint service packages. Joint service packages marketed by Bezeq’s subsidiaries that include the services of Bezeq are also subject to similar limitations, including unbundling (except for a bundle offered by a subsidiary that only contains Bezeq’s fixed-line broadband internet infrastructure access service).

The company offers packages that combine a subscription to its fixed-line broadband internet infrastructure access and to the accompanying ISP service, with the ability to choose from any ISP provider in Israel, including Bezeq International. The packages are ‘unbundled’ and offered at the same price that the standalone services would cost if subscribed to separately. In addition, the company offers packages to business customers that combine Bezeq’s business data lines and the accompanying ISP service from Bezeq International. These packages are also ‘unbundled’ and offered at the same price that the standalone services would cost if subscribed to separately. Business customers are also not required to use Bezeq International as their ISP provider and have the ability to choose any ISP provider in Israel.

Domestic Fixed-Line Communications (Bezeq)

The company provides fixed-line telephony and fixed-line broadband internet infrastructure access services in Israel. Its products and services include basic telephony services on domestic telephone lines and associated services and fixed-line broadband internet infrastructure access services through its nationally deployed infrastructure network. The company also offers transmission and data communication services, services to other communications operators and broadcasting services. Its new high-speed next generation network (NGN), is the most advanced fixed-line communications network in Israel. The NGN, which covers 100% of Israeli households, uses VDSL2 technology and enables Bezeq to provide bandwidth of approximately 100 Mbps (download) speed, as well as value-added services.

Fixed-Line Telephony Services

As of December 31, 2019, the company had approximately 1.72 million active fixed telephone lines. Its fixed-line telephony services include basic telephony service on domestic telephone lines and associated value-added services, such as voice mail, caller ID, call waiting, call forwarding and conference calls. The company also offers its business customers national toll-free numbers, which provide for full or partial payment for customer calls by the business customer.

The company offers various payment plans, ranging from a monthly subscription fee per fixed telephone line and charge per second of use, to various fixed-line telephony packages comprised of monthly amounts of minutes for a fixed monthly fee. Majority of its fixed-line telephony services are subject to regulatory tariff control and the prices for such services are governed by such regulations. With respect to services that are not subject to tariff control, the company is required under the Israeli Communications Law to set reasonable tariffs for such services. In addition, it is allowed to offer ‘alternative payment packages’ for services that are subject to tariff control, with different pricing than the regulated tariff, subject to certain conditions.

Fixed-Line Broadband Internet Infrastructure Access Services

The company provides broadband internet access infrastructure services using .xDSL technology. The average speed of the company’s Internet subscribers at the end of 2019 was 67.8 Mbps. The minimum speed of the package provided for new customers is 15 Mbps. xDSL service is also provided on subscriber lines free of charge for the access line. The company is obligated to provide broadband internet access services in a wholesale Bitstream Access services (BSA) format to service providers that provide Internet services in this way to their customers, including infrastructure.

Transmission and Data-Communication Services

Data communication services are network services for point-to-point data transmission, data transmission between computers and between various communications networks, services to connect communications networks to the internet, and remote access services. The company offers transmission services, including at high speeds, to communication operators and their business customers over various interfaces. There is also a decline in use of Bezeq’s transmission and data communication services.

Cloud and digital services

This category includes virtual server services; Bcyber service; smart home, smart business and smart city services; private virtual PBX (IP Centrex) services; and B144 service, which is Bezeq’s advertising platform for digital advertising and marketing platform to small businesses, BCam, Wi-Fi, SMS and remote backup.

Other Services

The company provides services to other communications operators, including cellular operators, international call operators, HOT, NEP operators, ISPs, domestic carriers, and Palestinian communications providers. Among the services provided by the company are infrastructure services, infrastructure upgrades, connection to its network, billing services, leasing of space, and services in leased premises.

Broadcast services

The company installs, maintains, and operates networks or subnetworks for various customers (the Ministry of Defense, HOT Telecom, radio and television broadcasting companies, cellular operators, international call operators, local authorities, municipalities, and government bodies). The company has agreements with HOT Telecom to provide installation, maintenance and network hosting services using Bezeq’s infrastructures.

Cellular Telephony (Pelephone)

Pelephone is a cellular telephony services provider in Israel. Pelephone provides cellular telephony services, sells handsets and other end-user equipment, and provides repair services for handsets sold by Pelephone.

Services

Package services provided by Pelephone include basic telephone services (voice), including basic voice services, call completion and auxiliary services, such as call waiting, follow-me, voice mailbox, voice conference call and caller ID, MMS multimedia messages; browsing and data communications services, such as Internet browsing using 3G and 4G mobile devices; messaging service, a service for sending and receiving SMS text messages and multimedia MMS messages; Internet of Things services, such as smart building networks with command and control systems); roaming services with roaming coverage in approximately 220 countries worldwide and incoming roaming services for the customers of foreign operators staying in Israel; expanded repair and warranty services; for a monthly fee entitling the customer to mobile handset repair and warranty services, or for a one-time payment at the time of repair; added value and supplementary services, such as Pelephone cloud backup services, anti-virus and cyber security services, etc.; and push to talk services, enabling organizational communications at the push of a button. Pelephone provides part of these services under hosting agreements with other cellular operators that use Pelephone’s network, so that they could provide services to their customers.

Bezeq International

ISP, ILD, Data Services and ICT (Bezeq International)

Bezeq International provides ISP services in Israel and ILD and international and domestic data transfer and network services. Bezeq International provides communications solutions that include ISP and related value-added services, international and domestic telephony, PBX supply and support, ICT, cloud computing services, data communications and information security, website server hosting and related managed services. Bezeq International also owns the JONAH high-speed submarine optical fiber communications cable system connecting Israel and Europe, which provides increased bandwidth (capacity and speed) and has positioned Bezeq International as the sole ISP in Israel to own and operate an advanced international network.

ISP Services

In the Internet services sector Bezeq International provides Internet service provider (ISP) services for private and business customers, including requisite terminal equipment and support over DSL based transmission, configuration and cable infrastructure. and access services to Bezeq’s Internet infrastructure (as part of the wholesale market); hosting services offering site and server storage services at a designated installation, including value added services (monitoring and control); information security services; Internet and LAN network connection security using required terminal equipment or software, including monitoring; data services, including international IP based data communication solutions for business customers with global deployment; and high speed Wi-Fi services, including public hotspots. Bezeq International also markets packages that include DBS's Sting TV, an internet-based television services platform (together with internet access services). In 2019, Bezeq International expanded marketing of packages that include yes content services, in addition to Sting TV, together with ISP services and Bezeq International's home phone line, and DBS also began marketing Bezeq International's ISP services. The packages are subject to the detachability obligation Bezeq International provides these Internet services primarily via its exclusive wholly-owned Jonah submarine cable between Israel and Italy, launched in 2011. Bezeq International owns a submarine cable.

Voice (telephony) services

In the voice services sector Bezeq International provides international direct dialing services to business and private customers; toll-free dialing overseas for business customers; international call hubbing and routing services - transferring international calls between foreign telecommunication providers (worldwide); phone-card services enabling prepaid and postpaid dialing from Israel overseas and from abroad to Israel, and the 1809 service that allows dialing from Israel to other countries. Furthermore, Bezeq International provides domestic telephony services.

International data services

Bezeq International provides international data communication solutions for business customers, including customized global deployment. The services are provided through Bezeq International’s submarine cable and the optic cables deployed from Israel to Europe over which Bezeq International has long-term user rights, and through its business partnerships with major global telecom providers, such as British Telecom, which provide its customers access to their global network services. In addition to the foregoing services, Bezeq International offers its licensees to provide Bezeq International’s services and ISP licensees the use of its international capacities (through leasing or by purchasing indefeasible rights of use), over Bezeq International’s submarine cable, and the user rights it acquired in European terrestrial infrastructures and in other international networks.

Business Sector-Data Services and ICT

Bezeq International provides ICT solutions for business customers. Customer ICT solutions include communications solutions, such as server and web hosting services, technical maintenance and support services, system and networking services, outsourcing and out-tasking services, security and risk management solutions, IP based services, cloud computing services, online backup services, market and advertising services for businesses over a digital platform (Bigger) and equipment sales. Bezeq International has adopted a solution model with a single contact person, responsible for dealing with the customer (one service provider, one responsibility).

Bezeq International markets and maintains communication systems for the entire the Israeli market, and PBX exchanges, telephony networks and IP communications, mainly for its business customers. As part of its service contracts, Bezeq International provides maintenance services for various PBX exchange manufacturers. These services are given for gateways, PBX exchanges and NEP for lines used as both internal and external lines.

Multi-Channel and OTT, Pay Television (DBS)

In March 2019, the Boards of Bezeq and DBS approved an outline plan for DBS switching from satellite broadcasting to online transmission (OTT) in a gradual, prolonged process, expected to be spread over a period of up to seven years. DBS intends to monitor market conditions, competition and the technological environment, and would periodically review the feasibility of the outline plan and the need, if any, to make adjustments in it, in the pace of its execution or in the manner of its implementation, taking into account the needs of its customers and DBS’s regulatory obligations.

DBS provides subscribers of its satellite broadcasts online VOD services through the internet (OTT). These services are provided for a service subscription fee (most subscribers have special offer subscriptions that exempt them from this fee), while some of the content is provided for an additional charge. Connecting Satellite Subscribers to VOD services requires the use of specific types of decoders. In recent years, the number of satellite subscribers connected to VOD services and the consumption of VOD services has increased due to the increased supply of available content, increase in available band width at subscribers' homes and significant increase in use of decoders.

DBS also operates its online OTT yesGo service, allowing satellite subscribers to view satellite broadcasts of the channels included in this service, which they have purchased for home television viewing, as well as VOD content, through various terminal devices.

To allow reception of DBS services online, dish antennas are installed on buildings and various types of decoders are installed in the subscriber’s home: decoders enabling reception of SD broadcasts only, and decoders, some of which are PVR converters for recording content, some are HD Zapper decoders for receiving HD broadcasts, and some combine all the foregoing features (HDPVR decoders). DBS also markets PVR decoders that enable higher resolution viewing, known as 4K or UltraHD.

Majority of the PVR decoders also enable MultiRoom service through which, through a home network, content recorded on such decoders could also be viewed through other (HD Zapper or HDPVR) decoders in the subscriber's home. The majority of satellite subscribers use decoders of various types (HD Zapper, HDPVR, PVR and PVR 4K decoders).

Pursuant to the provisions of the Communications Law, the terms of DBS's broadcasting license and the Council's decisions, its satellite broadcasts include a basic package or one of the core packages that every subscriber is required to purchase, as well as additional user selectable channels, either as packages or as individual channels.

Sting TV Services

In 2017, DBS launched its online television service under the name, StingTV, which includes linear TV channels and VOD content. The service is based on the Android TV operating system which allows content to be viewed via a streamer, smart TV and other terminal devices. The service is made up of various content packages, with each package containing linear channels and VOD content, and subscribers could join one or more of these packages, according to their choice.

Marketing, Sales and Customer Service

Under the structural separation limitations, each of the Bezeq Group companies maintains independent marketing and sales operations.

Domestic Fixed-Line Communications (Bezeq)

Bezeq has marketing, sales and service systems for its business and private customers, which include customer managers for the business sector, combined sales and service call centers around the country, technical support centers for private and business customers, Bezeq stores throughout Israel offering sales and services, as well as a virtual online shop.

Bezeq markets its services mainly through advertising in the mass media, telephone sales centers, customer managers and an array of independent dealers which are mainly ISPs, outsourced sales centers, and ISPs which, upon establishment of the wholesale market, primarily market service packages based on Bezeq’s wholesale BSA services. Bezeq also has independent service and sales channels on its website (adapted to surfing from mobile phones), an application (Bezeq Sheli, My Bezeq), and also offers an interactive voice response.

Cellular Telephony (Pelephone)

Pelephone’s distribution network includes 400 points of sale at which it is possible to enroll for Pelephone’s services. The point of sale network includes stores and stalls operated by Pelephone, retail chains that market Pelephone products and 24 customer service and sales centers deployed around the country that engage in sales, repair of devices and customer retention. In addition, Pelephone operates an internal and external telemarketing network. As a rule, these dealers are paid a commission on sales. In the past year Pelephone continued expanding its distribution network. Pelephone’s subscriber service network includes online channels, including Pelephone’s website and 8 call centers.

ISP, ILD, Data Services and ICT (Bezeq International)

Bezeq International has sales channels for the private market, including customer recruitment and retention call centers, a country-wide direct sales network (providing ‘door to door’ and point of sale services), a technical support and customer service network and a distribution channel system that includes external marketing and dealership centers. The business market sales channels include customer recruitment centers and business and administration service and solution centers for business customers. Bezeq sells Bezeq International services as part of joint service bundles.

Multi-Channel Pay Television (DBS)

DBS customer service operations are carried out primarily in-house and outsourced call centers, as well as by self-service via interactive voice response, DBS’s website and set-top boxes. Field technical support and installations are performed by DBS technicians and subcontractors. DBS’s sales operations are carried out through door-to-door sales personnel, call centers and third-party dealers.

Networks

Domestic Fixed-Line Communications (Bezeq)

Bezeq has a Next-Generation Network (NGN) based on a core IP network and deployment of an optical fiber network to street cabinets (a network topology known as Fiber to the Curb,), and also based on an access network (a system that connects NEPs on the subscriber's premises to the network and engineering systems). The connection from the home to the access network is based on copper cables and the connection from the access systems to the backbone is based mainly on optic cables. In addition, some of the peripheral equipment (equipment installed at the subscriber, such as routers) is owned by Bezeq and leased to the customer. In the NGN, download broadband speeds of approximately 100 Mbps and added value services could be provided using VDSL2. Other advantages of the new technology are simplification of the network structure and better management ability. As at the end of 2019, the company deployed optical fibers directly to 120,000 buildings and in certain areas to a point at the center of a group of buildings. All in all, the connection potential is approximately 1.5 million households and businesses.

Bezeq’s IT

Bezeq’s IT system supports four main areas: marketing and customer Management, engineering infrastructures of the telecommunications networks, company resources management, and company-wide systems. The IT system is large and complex and supports critical work processes and handles very large volumes of data. This system consists of various systems and subsystems some of which are information systems, which started being developed many years ago, while others are modern and were developed and applied recently. Most of the systems operate in open computer environments.

Cellular Telephony (Pelephone)

Pelephone’s cellular telephony license is valid until September 8, 2022. Pelephone operates communications networks using the 4G LTE, UMTS/HSPA and the 4G LTE technology is based on GSM standards. Pelephone’s network infrastructure is based at two switch farms that are connected to approximately 2,200 sites. Pelephone’s network is interconnected with the networks of Bezeq and HOT in various locations across Israel. Pelephone’s network is also connected to all of the cellular networks in Israel, the eight Israeli ILD operators, the fixed-line telephone network of Paltel and the cellular network of Wataniya, and indirectly to the cellular network of Jawwal in the Palestinian Authority. Pelephone’s transmission network is made up of leased lines (fiber optic) from Bezeq and Pelephone’s own microwave links. Pelephone’s UMTS base stations are connected using a hybrid connection (ATM for voice calls through Bezeq’s SDH network and IP for data calls through Bezeq’s metro Ethernet network).

Frequency usage rights

Under its mobile telephony license and the Wireless Telegraph Ordinance, Pelephone has rights of use of frequencies in the 850 MHz and 2100 MHz spectrums for operating its UMTS/HSPA network, and in the 1800 MHz spectrum for operating its LTE technology network.

Trademarks

Pelephone’s primary trademark is ‘Pelephone’.

Software, Computer Systems and Databases

Pelephone uses software and computer systems, some under purchased licenses and others which were developed by Pelephone's IT department. Majority of these licenses are limited in time and are periodically renewed. The primary systems used by Pelephone are Oracle Applications’ ERP system and Amdocs’s customer management and billing system. Pelephone is also upgrading its CRM system (customer management) on the Salesforce cloud platform.

ISP, ILD, Domestic Services and ICT (Bezeq International)

Bezeq International has deployed a high-speed submarine optical fiber communications cable system connecting Israel and Europe. This high-speed optical fiber system named JONAH, covers 2,300 kilometers across the Mediterranean, is redundant (utilizes two equipped fiber pairs) and leverages Alcatel-Lucent’s submarine communications networking technology. The cable system could operate at 100 gigabits-per-second data transmissions to enable data capacity of approximately 7.0 Tbps between Tel Aviv and Bari, Italy.

PBX services

Bezeq International markets and maintains communication systems for the entire Israeli market, and PBX exchanges, telephony networks and IP communications, mainly for its business customers. As part of its service contracts, Bezeq International provides maintenance services for various PBX exchange manufacturers. These include services for gateways, PBX exchanges and NEP for lines used as both internal and external lines.

Multi-Channel Pay Television (DBS)

DBS is the sole DTH provider in Israel. DBS operates a hybrid platform of satellite and IPTV OTT. DBS’s IP platform, enables DBS to provide its VOD service, using OTT technology, with an interface in HD quality incorporated into the electronic program guide. DBS owns the satellite dishes and other endpoint devices that carry and receive the signals from such satellites to subscriber residences and set- top boxes. In addition, DBS leases some of the set-top boxes and cards that decode the coded signals received from the satellite to its subscribers, while other set-top boxes and cards are provided to subscribers for a deposit (an immaterial number of set-top boxes are sold to subscribers).

Suppliers

Bezeq’s key suppliers include Alcatel-Lucent Israel Ltd., Juniper Networks, Dialogic Networks (Israel) Ltd., Heights Telecom T. Ltd, Adtran Holdings Ltd., IBM, and VMware.

Suppliers of Pelephone are Apple Samsung. Pelephone’s purchases from each of the suppliers, Apple and Samsung, in 2019 accounted for more than 10% of Pelephone’s purchases.

Bezeq International uses capacity purchased from Med Nautilus and the Cyprus Telecommunications Authority.

DBS purchases the decoders for its satellite services under supply agreements with the decoder manufacturer and decoder vendor that imports and supplies DBS with HD Zapper and 4K PVR decoders, where the types of decoders must match DBS’s broadcasting and distribution system.

DBS purchases from Synamedia development, integration, encryption, maintenance and warranty services with regard to the operating system of the satellite transmission network and acquires similar services from Synamedia with regard to the OTT system, based on framework agreements signed by DBS and Synamedia in January 2020.

DBS engages in agreements for licenses, development services and technical support with NetCracker Technology Solutions Ltd and NetCracker Technology EMEA Limited (NetCracker). DBS is dependent upon NetCracker’s system and services due to their importance for managing and monitoring services and content purchased by subscribers and for billing its subscribers.

Regulation

The Israeli Communications Law and the Communications Order provide that the control on Bezeq requires a control permit from the Ministers. As part of its acquisition of Bezeq, the company, Searchlight, Fuhrer, SP2, SP1, applied for authorization for a control permit of Bezeq, pursuant to the Israeli Communications Law and Communications Order.

The Radiation Supervisor of the Ministry of Environmental Protection publishes information on the Ministry’s Website concerning active cellular broadcast facilities and Pelephone publishes information on its Website regarding the Specific Absorption Rate levels emitted from cellular phones and Ministry of Health regulations regarding preventive steps to be taken when using cellular phones.

The cellular services provided by Pelephone are subject to the provisions of the Communications Law and its regulations. The Telegraphy Ordinance regulates the use of the electromagnetic spectrum, including Pelephone’s use of radio frequencies as part of its infrastructure.

Competition

Fixed-Line Telephony Services market

Bezeq and HOT Telecom both own nationally-deployed fixed-line telephony infrastructures and are in competition with each other, which is manifested by HOT combining Internet infrastructure, telephony and cable television, and cellular services as well, to households. HOT also markets telephony services to business customers. Bezeq also faces competition from license-holders for domestic fixed-line communication services, including VoB, which provide the service on Bezeq’s broadband access service, including the wholesale BSA service.

Transmission and Data Communications sector

The major competitors are Bezeq International, Cellcom, Partner and Hot Net.

Communication Solutions for the business sector

In the ICT sector Bezeq International competes with competitors, such as Binat, Teldor, IBM and others.

Pay Television Services market

DBS’s main competitors are HOT, Cellcom, Partner and Netflix.

History

The company was founded in 1999. It was incorporated under the laws of the state of Israel in 1999. The company was formerly known as Gold E Ltd. and changed its name to Goldtrade Electronic Trading Ltd. in 2000; then to Smile.Communications Ltd. in 2006; and then to 012 Smile. Communications Ltd. in 2007. Further, the company changed its name to B Communications Ltd. in 2010.