- Auction will be for 5G frequencies above 24 GHz
- Last 5G auction was in 2019
- Israeli mobile operators barely profitable after 2012 reform
- Fixed line networks too old, overloaded - regulator
JERUSALEM, March 22 (Reuters) - Israel is preparing for another tender to allocate more fifth generation (5G) mobile frequencies as soon as late 2021, aiming to boost the economy from new technologies while giving mobile operators a new revenue stream after years of steep declines.
Israel allocated three frequencies -- 700 MHz, 2.6 GHz and 3.5 GHz -- following an auction in 2019, and the Communications Ministry plans to offer ultra-fast broadband frequencies above 24 GHz late in 2021 or early 2022, Tal Elimelech, who heads the ministry's 5G project, told Reuters.
As in its prior tender, heavy incentives such as government grants will be provided to cash-strapped mobile companies to participate and the amounts raised are expected to be a fraction what has been seen in Europe -- hundreds of millions of euros.
More important to the country's telecoms regulator is an investment in the 5G infrastructure and vast applications that will help the public health, agriculture, education and other sectors.
"This is the main profit .. It's not just one-time income from selling the spectrum," Elimelech said, in the wake of a conference by the ministry aimed at creating a 5G ecosystem between telcos and the high-tech industry.
Fifth-generation technology, which is 10 times faster than widespread 4G, is expected to power everything from high-speed video transmissions to self-driving cars.
So far, 5G adoption in Israel is low -- estimated at just a few tens of thousands. But the ministry, which is also working with Israel's Innovation Authority, expects numbers to grow quickly in the next few years as prices of 5G-enabled phones drop in price to make it more financially viable.
Israel's mobile sector has been battered following a 2012 reform that opened the market to a wave of competition, leading to a plunge in revenue and profits at the three incumbents -- Cellcom (CEL.TA), Partner Communications (PTNR.TA) and Bezeq (BEZQ.TA) unit Pelephone.
All-inclusive mobile, texting and Internet surfing packages are available for as little as 20 shekels ($6) a month from virtual providers who use the trio of network operators.
Liran Avisar Ben Horin, the director general of the ministry, said the current environment where no one is making money is not sustainable and a new balance is needed where cost-conscious Israelis will likely need to start paying more a month for better services.
"I hope 5G will change the trend in the market and more players can make money and be financially stable," she said. "When you get good service and good coverage you might feel more comfortable about paying some kind of premium."
As long as competition was not harmed, Ben Horin said she was not opposed to more mergers in the sector after Cellcom bought smaller rival Golan.
She also expressed optimism that there will be significant integration to faster home Internet after Bezeq - the country's largest telecoms group - said it would launch a rapid nationwide rollout of its fiber optics network that the firm expects to hit 40% of households this year. read more
Cellcom and Partner have been deploying their own networks in recent years while Bezeq and the ministry were at odds over the extent of its deployment.
"During this past year, everyone understands that our (current) networks are too old and too loaded to provide us with what we need," Ben Horin said in apparent reference to people working from home during the COVID-19 pandemic.
($1 = 3.3018 shekels)
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