Internet and e-commerce in Israel

Israel is a country in Western Asia located on the eastern shore of the Mediterranean Sea. Israel is the largest ethnic minority group in the segment denominated as Arab citizens of Israel, while minority religious groups include Muslims, Christians, Druze, Samaritans and others, most of which are within the Arab segment. Over the past three thousand years, the name "Israel" has meant in common and religious usage both the Land of Israel and the entire Jewish nation with 76% Jews populating the country. Today, we are to consider what the Internet and e-commerce industry looks like in this Jewish country. 

Israel’s telecoms and broadband sectors are considered being the largest and most robust throughout the Middle East. Thus, broadband internet in Israel has officially been available via ADSL since the late 1990s. However, it became practical to an average Israeli customer only in 2001. And of course, since this year prices have been reducing considerably. And by 2008, this Jewish country has become one of the few countries with developed broadband capabilities across two types of infrastructure, reaching over 95% of the population. 

Internet in Israel is available through the phone and cable infrastructures. Dial-up and ADSL Internet access is provided mostly by Bezeq, the only company that is currently providing ADSL in Israel, while cable internet services are offered by Hot, the only Israeli cable company, that provides TV, internet infrastructure and VoIP services. All ADSL service require and use the PPPoE or PPPoA protocols, and cable modem connections generally operate over VPNs using the PPTP/L2TP protocol. 
 Due to the country’s competition laws any ADSL or cable internet user has to pay separately to the infrastructure provider and to the ISP. Five major and some 70 smaller Internet service providers serve the Israeli Internet market. The largest Israel ISPs are currently represented by

• Bezeq International 
• Smile 012 Tikshoret 
• NetVision 013 Barak 
• Internet Rimon 
• XPhone 
• Qos 
• A2z 
• Interal 
• Kinneret 
As for the connection speed remained at 1.5 Mbit/s, with 150 kbit/s upstream for the period of 2005 and 2006, and by the year 2008 speed rose to 2.5 Mbit/s. Over 2 Mbit/s connections (with a 250 kbit/s upload speed) was presented in 2005 to the mainstream. Maximum ADSL speeds are currently at 8 Mbit/s Down / 800 kbit/s up. At the same time cable connection speed makes up 10 Mbit/s Down and 1 Mbit/s up.

Israel's national Internet top-level domain, or ccTLD, is.il. Two year registration agreement costs $129. (http://www.rwgusa.com). As for the domains of the second level, they are:
• ac.il — Academic Institutions 
• .co.il — Commercial Entities 
• .org.il — Non-commercial Organizations 
• .net.il — Israeli Internet Service Providers 
• .k12.il — Schools and Kindergartens 
• .gov.il — Government and Governmental System 
• .muni.il — Municipal Government 
• .idf.il — Israeli Defense Forces 

As for the internet penetration rate in Israel, for the period of 2000-2008 it increased by 314.4 %, according to the internetworldstat.com. Thereby, in 2000 the number of citizens connected equaled 1,270,000, that was only 18.2 % of the population. By 2008 the volume of Internet users has grown significantly to 5,263,146 level, involving 74.0 % of the population. As for today, the actual broadband penetration stands at 77%, ranked 7th in the world. 

E-commerce in the country has commenced developing only since 1999 along with broadband market, though the country has large export sector and the commercial banks serving it had developed an extensive electronic data interchange (EDI) network over the years. The volume of e-commerce transactions in Israel has been developing very slowly, compared to other advanced economies. But anyway, e-commerce industry in Israel is in process of constant developing and improvement. 

Thus, like in other e-commerce developed country, e-commerce in Israel represented mostly by B2B and B2C sectors. Variety of online stores, online banking and investment, public auctions, public tenders, payments of bills and information on government agencies exists nowadays in Israel and their number is growing. Companies are using large B2B portals to exchange documents and catalogues and even to carry out deals. B2B industry is expanding in Israel and companies are seeking new ways to attract and satisfy new businesses.

In 2001 the national telecom leader, Bezeq, launched a portal facility, that, in spite of difficult for B2B e-commerce period, led to building of a more efficient payment structure. The five leading Israeli e-commerce portals are:
• Walla!
• MSN Israel
• Y-net
• Nana
• Tapuz
  These five ones own more than 70% of Internet advertising income, so the rest of less than 30% remain for all the other portals and business web sites. According to the largest Israeli bank, Bank Hapoalim, more than half of its customers’ capital market transactions were conducted via online orders.
Most e-commerce consumers’ activities include purchasing of on-line books (amazon.com) not available in Israel, CD’s, and stocks. Computer upgrades sites and supermarket delivery sites are also appear to be among the most popular types of e-commerce activity.

As for the government participation in the processes of Internet and e-commerce development, its role in the progress is very important. In 2003 the Israeli government introduced ambitious initiative, coordinated by Accountant-General Department, to improve its technological infrastructure and systems and to promote e-government services, in a move to fully provide the public with government services at any time and from any place. This project claims to encourage the establishment of efficient intra-government communications and the creation of a common language and accessibility to information, providing citizens with integrated services, secure and reliable communications between citizens and government agencies. This initiative is also to introduce applications designed for consumers, with user-friendly interface capabilities, and with training and education functions that would expand the outreach of electronic-government to all sectors of the population.

So, this Jewish country looks to be very promising in terms of Internet infrastructure development, and subsequently e-commerce sector advance. Connection speed is rising, the number of ISPs is increasing and the volume of e-commerce providers and services is soaring. And it’s very important that the government upholds and encourages all the initiatives and projects related to this sphere.