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Israeli pay TV service challenged

Although Israel’s Ministry of Communications recently approved the country’s first pay TV service, movie interests in the country are challenging the decision in the courts.

The cable company Tevel plans to offer a pay TV movie channel to its subscribers in the Tel Aviv area by late April. According to Yossi Yoar, managing director of Tevel, the company has invested $ 500,000 in the technology.

However, a consortium of film importers, local cinema owners and the Israel Film Producers Assn. have submitted a petition to the Israeli Supreme Court to block Tevel’s pay TV initiative, claiming it creates an unfair monopoly.

They assert that the granting of Tevel’s license was not legal and would block other programmers access to cable TV systems. A clause in the law that created cable TV sets aside one-sixth of the cable channels for services other than TV broadcasts by the cable operators.

The consortium claims further that because the cost of basic cable TV in Israel is so high ($ 35 per month), it would be difficult to sell an additional service to subscribers — even if outside programmers were allowed to use the systems.

Another company, Telecinema, which was established to supply films to Israel’s cable TV networks for pay TV viewing, has filed for a temporary injunction to forbid Tevel from beginning its new service. Telecinema claims it has twice applied for a license to broadcast pay TV services and been turned down by the Ministry of Communications.

Potential player Bezek, Israel’s national communications carrier, has announced it intends to enter the video-on-demand market via its telephone network. The government-owned corporation is currently negotiating with Bell Atlantic and General Instruments in the U.S., Philips in Holland and Actel in France to acquire the technology. If permission by the Ministry of Communications is granted, Bezek says it could be operating its service within 12 to 18 months.

Beyond the legal problems, there is a great deal of skepticism over how successful pay TV will be in Israel. Local viewers are no longer starved for entertainment as they were when state-run Israel TV was the only game in town. Video stores and movie theaters reported sales down as much as 35% with the advent of cable TV in 1990.

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