ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the May 2006 issue


Company Markets 'Kosher' Cell Phone


The "kosher phone" is real and its developers are serious about looking beyond the religious enclaves of Israel. Some Arab companies even have inquired about the phone's main feature: keeping out sex lines and other worldly temptations.

"There's interest out there in a conservative phone," said Abrasha Burstyn, the chief executive officer at Mirs Communications Ltd., an Israeli subsidiary of Motorola Inc. (MOT) and pioneer of the kosher mobile that debuted last year.

The phones - carrying the seal of approval from Israel's rabbinical authorities - have been one of the most successful mergers of technology and centuries-old tradition in the ultra-Orthodox community, which is most widely recognized by the men's black garb based on the dress of 19th-century European Jews represents the main market.

The kosher phone is stripped down to its original function: making and receiving calls. There's no text messaging, no Internet access, no video options, no camera. More than 10,000 numbers for phone sex, dating services and other offerings are blocked. A team of rabbinical overseers makes sure the list of blocked items is up to date.

These are the same rabbis who have told followers to scorn television and radio. But mobile phones are considered just too essential in one of the world's most tech-friendly nations. The ultra-Orthodox account for about 7 percent of Israel's 7 million people. Now MIRS is thinking bigger. Talks are under way to introduce a kosher phone to Jewish communities in the United States and other nations.

Israeli Arabs - about 20 percent of the population - have also taken notice of the phones as a possible option for those trying to protect conservative Islamic sensibilities.

Some Arab cell-phone providers see the same attraction. They have sought information from Mirs via envoys from Jordan, which has a peace treaty with Israel but Burstyn, declined to give further details of the contacts. "This was a unique product for a unique brand of customer," he said. "But we see some potential beyond this niche market." The kosher phone is an example of demand leading the way for supply.

In late 2004, a special rabbinical panel was formed to study how to bridge the need for cellular phones and ultra-Orthodox codes. Some saw the phones as a non-threatening convenience. Others believed the sophisticated "third generation" phones offered an unhealthy freedom: the ability to download pornography or allow young people to make furtive contact with the opposite sex - which is highly restricted in ultra-Orthodox society. The conservative magazine Family called the multitasking new phones "a candy store for the evil impulse."

The rabbis' solution - find a cell phone that's only a phone. "They saw the future and were frightened," said one of Israel's most prominent attorneys, Jacob Weinroth, who was asked by the rabbis to approach Israel's four main cellular companies with the idea of the pared-down phone. "In 10 years, we may have commercials coming over the phone. The community wanted to keep the cell phones, but not allow this commercial world to enter their communities through them."

Mirs, Israel's smallest cell phone company in terms of market share was the first to take up the challenge. But instead of simply blocking the non-call services, the new phones were specially engineered with hardware to prevent upgrades or sharing chips with other handsets.

The kosher phone was ready last March, backed by an unusual sales force: 80 men and 10 women from Israel's ultra-Orthodox neighborhoods who went through a crash course in cell phones and door-to-door pitches. The classes were arranged to accommodate synagogue prayer schedules and Torah studies. "These people were figures in their community. They started spreading the word in synagogues and wedding halls," said Matanel Shalom, chief of marketing at Sales & Direct Marketing Ltd., a Tel Aviv-based company hired to market the kosher phone.

By summer, more than 20,000 kosher phones were sold. But it was just a foothold in an estimated market of at least 180,000 cell phone users among Israel's 500,000 ultra-Orthodox. Two of Israel's other three cell phone players have developed their own kosher phones. The options now come in a range of styles and colors - from staid black to enamel red.


Reprinted from the Israel High-Tech & Investment Report May 2006

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