Data communications is the telecommunications market growth engine, with a forecast annual growth rate of 31.2% through 2007. Wireless data communications revenue accounted for almost half of the data communications total. The survey predicts this segment will average 43% growth per year through 2007.
According to the survey, Israeli telecommunications market revenue amounted to $3.78 billion in 2002, $2.6 billion of which, amounting to two thirds, came from cellular communications, and $1.17 billion from fixed-line communications. The latter figures reflects a 3.3% decline in spending on fixed-line communications in 2002, attributable to increased use of cellular telephony, lower rates for fixed-line calls, and the adoption of broadband hookups by Internet users.
Annual growth in fixed-line communications revenue is expected to average only 1.9% in the coming years, compared with 5.4% growth in the cellular communications market.
IDC Israel research manager Gideon Lopez told "Globes" that the reason for the wide gap between 2001 and 2002 was the saturation in the cellular market. New cellular subscribers numbered only 864,000 in 2002, compared with 1.071 million in 2001. Lopez added that the type of new subscriber had also changed; as the market approaches saturation, new subscribers tend to be users of emergency services and children, and to include an ever-increasing proportion of prepaid users. These categories produce less revenue.
The survey indicates that cellular market revenue grew from $2.52 billion in 2001 to $2.603 billion in 2002, a 3.3% increase. Cellular revenue rose 8.9% in 2001.
The big profits in the cellular market in 2002 were the cell phone manufacturers and marketers, who sold nearly two million phones. 420,000 subscribers were recruited to the new interim generation networks, including 410,000 to Partner Communications (Nasdaq: PTNRLSE:PCCD) and Cellcom's GPRS networks, and 10,000 in the Jerusalem region for Pele-Phone's 1x CDMA network.
After years of continuous growth in the voice services market, revenue slipped 1.1% in 2002. This market is expected to remain unchanged through 2007, with 0.3% average annual growth.
IDC Israel believes that opening the international communications market to competition will lead to market restructuring and consolidation. IP-based communications will revolutionize the market. "The trend towards using IP-based communications for internal enterprises and international communications in the Israeli business market is accelerating, and overtaking systems of the conventional telephony providers," Lopez noted. "This trend will broaden, to the and negatively affect Israel's Telecommunications giant Bezeq
An IDC Israel survey estimated that the Israel telecommunications market grew 1.2% in 2002, compared with 7.5% in 2001. The study reports and analyzes data from 2001-2002, and provides forecasts for the line and wireless telephony markets in 2003-2007, divided into voice and data communications.