Israel Trade Commission

ISRAEL TRADE COMMISSION Commercial News from Australia August 2006

SUCCESS STORIES ECONOMIC OVERVIEW TELECOMMUNICATIONS IT HEALTH IT & HEALTH WATER DEFENCE

Dear friends and colleagues, The Israel Trade Commission in Sydney hosted a briefing on the Israeli Economy by Vered Dar, Chief Strategist and Economist at Psagot-Ofek Investment House, Israel's largest and most diverse investment house. The talk was entitled "Opportunities in the Israeli stock and equity markets". It was well-attended by business leaders from a variety of sectors. In the second week of August the Israel Mobile Association has a delegation of 8 companies arriving in Australia to present new technologies to the Australian mobile phone market. Despite the situation in the Middle East, there is still much interest in Israeli products in all areas, in particular the information and communication sectors. Israeli companies continue to make news in Australia with major successes recently in the telecom market. (See below.) Nili Shalev Israel Trade Commissioner Israel Trade Commission 6/37 York Street Sydney, NSW 2000 Tel: +61-2-9262 3943 Fax: +61-2-9262 5242 E: info@israeltrade.org.au

SUCCESS STORIES

Amdocs, Sun snare Telstra

Telstra is set to hand Israeli company Amdocs the biggest slice of its new operations support services project, estimated to cost between $300-$400 million. It is the final big part of its network overhaul. Under Telstra's present silo model, each division of the company has its own IT systems and own network operations support services (OSS). There are separate OSS for internet, fixed-line voice, traditional data services and each mobile network. Amdocs is expected to snare a deal worth up to $100 million as the main vendor of the OSS. Most big US telcos building next-generation network projects have opted for Amdocs, including Sprint/Nextel and AT&T/SBC.

Mekorot to collaborate with 2 Australian water companies

The Israeli company Mekorot has signed framework agreements with Melbourne Water and Sydney Water. The national Israeli water company has expanded its network of joint cooperation schemes with the signing of agreements with the two Australian water companies. The latest of these was with Melbourne Water, whose managing director Rob Skinner visited Israel recently and signed an information sharing agreement with Mekorot at the end of June. Mekorot also signed a similar agreement with Sydney Water Corporation two months ago. The relationship with the Australian companies started back in November 2005 with the visit to Australia by Mekorot chairman Baruch (Booky) Oren.

Ness Technologies Ranked Among Top 50 Best Managed Global Outsourcing Vendors

Ness Technologies, an Israeli company that is a global provider of IT solutions and services, recently announced its inclusion on the 2006 Top 50 Best Managed Global Outsourcing Vendors list. Ness Technologies was ranked within the top 50 outsourcing vendors among almost 900 industry competitors. Being included among the outsourcing industry's 50 best managed companies is another milestone in the recognition of its high company standards," said Raviv Zoller, President and CEO of Ness Technologies. Ness provides outsourcing services from its three offshore centers in India – in Bangalore, Mumbai and Hyderabad – and from its outsourcing centers in Israel, Eastern Europe and Asia-Pacific. Ness offers end-to-end business solutions designed to help clients improve their competitiveness and effectiveness, encompassing all technologies and IT services related to that process.

Ceragon to provide 3G solutions to Australia’s Optus

The Israeli company Ceragon Networks Ltd. has signed a contract estimated to be worth $600,000 with Optus, Australia's second largest mobile operator, to supply solutions for expanding its 3G network. Ceragon provides broadband telecommunications solutions for wireless networks. The company will supply Optus with its FibeAir 1500P wireless radios to provide efficient backhaul for Optus’s fixed and 3G networks, including support for triple-play - voice, video and data applications on a single network. Optus has 6.4 million subscribers, and is a subsidiary of Singapore Telecommunications Ltd. Ceragon recently opened an office in Australia to support its partners and promote sales.

ECONOMIC OVERVIEW

Economic forecast

Real GDP grew by 0.9% quarter on quarter in January-March. Although private consumption growth held up, business investment and export growth were disappointing. In light of this data the forecast for 2007 is for GDP at 3.2%, from 3.7% previously. The forecast for 2006 is 3.3% overall.

Howard ends leadership issue

Now that the distraction provided by the competition for the leadership between the Prime Minister, John Howard, and the Treasurer, Peter Costello, has been resolved, attention should turn back the Coalition government's long term agenda. A good place to look is in the policy brief attached to the OECD's 2006 Economy Survey of Australia that was released at the end of July. The most significant matter is the foreign debt that is now equal to more than 50% of GDP, and, in proportion to the economy, it is almost twice as big as the foreign debt of the USA.

Reserve Bank lifts rates

The decision by the Federal Reserve Bank to lift official rates for the second time in 4 months is an admission of failure. The bank said that based on the underlying inflation this year, and the wider background of above-average global growth and strong domestic demand, the previous forecasts for the periods ahead were likely to be exceeded. Despite the impact of higher petrol prices, domestic consumption is strong, and households are still borrowing heavily.

TELECOMMUNICATIONS

Broadband connections exceed 3 million

Australian broadband connections have exceeded the 3 million mark with total subscriber numbers reaching 3,161,600 in the March quarter. The Australian Competition and Consumer Commission’s latest Snapshot of Broadband Deployment revealed 78% year on year growth for the quarter and increase of 1,384,800 users. The report noted that the bullish growth reported throughout 2004-2005 was a result of a more competitive broadband market, driven by ADSL competition. Satellite connections dropped for the first time since the September quarter in 2004, falling from 23,300 connections to 23,000.

Wireless technology connections appear to be making an impact on take up with a 34% quarterly increase to 71,600 customers. Communications Minister Helen Coonan described the broadband growth as “phenomenal” stating “Australia was already in the OECD top five for growth in broadband take-up.” Coonan said that development work on the government’s Broadband Blueprint was continuing which would support the further expansion of high-speed Internet nationally. She also urged all interested parties to put forward ideas, plans and possible project proposals to assist in developing the final design of the Connect Australia program.

Telstra prepares alternate plan.

Telstra is preparing detailed plans for an upgrade, and possible extension, of its pay-TV cable network to provide super-fast broadband services if it cannot reach a deal with the competition regulator on optical fibre. The project -- worth between $1 billion and $3 billion -- is being scoped as a Plan-B after months of talks with the Australian Competition and Consumer Commission (ACCC) over access to the mooted $3.4 billion fibre-to-the-node (FTTN) network. Telstra is planning to provide a broadband footprint across Australia using a combination of the hybrid-fibre-coaxial-cable technology used for pay-TV, next-generation DSL technology (which turns copper wires into high-speed internet services) and its new $1.1 billion third-generation network now being built by Ericsson. Telstra is anxious to extend its reach in broadband services so that it can sell new services such as movie downloads over the internet to make up for the decline in its traditional fixed-line telephony business.

Optus expands in Australian Capital Territory (ACT)

Optus is to spend $35 million on a new Canberra exchange and data centre that will also act as the main earth station for its forthcoming D2 satellite. Situated in Hume, the new facility will come online next year, adding to an existing facility at Mitchell. Optus said it would provide a boost to local capacity. The "technical centre" will expand capacity in the ACT market and provide redundant capacity for facilities in Sydney and Melbourne. "Optus is preparing for increased demand for IP technologies and satellite services over the coming years," Optus business managing director John Simon said. The first of Optus' new generation of satellites, the D1, is scheduled to be launched in September, followed by its sibling D2 next year.

Alarm bell on telco sales

The nation's $33 billion telecommunications market is about to shift into reverse for the first time since Alexander Graham Bell invented the telephone - just as the Australian Government tries to sell its remaining stake in Telstra. The continuing decline in the number of traditional fixed-line telephone services, widespread discounts in the mobile market and a new price war as operators hunt for broadband customers will result in falling sales in the sector from later this year. Optus chief executive Paul O'Sullivan said recently that industry growth could already be as low as zero. But Telstra disagrees with the assessment and is tipping 3 per cent compound annual growth over the next five years. The number of fixed-line telephone connections in Australia is forecast to drop to 9.82million by the end of this month, down from 10.12million at the same time last year and 10.28million a year earlier. A further 300,000 telephone lines are forecast to be disconnected over the next 12 months.

Ericsson welcomes back local talent to top role

Ericsson announced recently that Australian, Bill Zikou, President of South East Europe for Ericsson will take the reigns as Managing Director for Ericsson Australia, New Zealand and Pacific Islands. Mr. Zikou will be responsible for continuing the strong growth of the business and cementing Ericsson’s position as an end-to-end communications systems and services provider throughout the region. Mr. Zikou returns to Australia after five years serving as the head of Ericsson businesses in Greece, Yugoslavia, Romania, Moldova, Bulgaria, Cyprus, Albania and Malta. Mr. Zikou has 30 years of telecommunications industry experience, having attained extensive experience in the sectors of manufacturing, sales and marketing, as well as services. 

Telstra goes mobile in New Zealand

Telecom New Zealand is facing increased competition in voice, broadband and mobiles after Telstra announced recently that it would spend US$30 million building a new high-speed wireless network in New Zealand in 2007. Telstra subsidiary ‘TelstraClear’ said that it would build a third-generation mobile network in Tauranga and then establish a national network.

3G rings up a billion

THIRD-GENERATION mobile services in Australia have passed $1 billion, having doubled over the past six months as customers seek high-end services such as video calls. The boost has come as Hutchison moved its Orange customers on to its exclusively next-generation "3" service and Telstra and Vodafone pushed heavily subsidised 3G handsets to big-spending customers. Chief executive of Hutchison in Australia, Kevin Russell, said recently that 3G services had grown from around 5 to 6 per cent of the total mobile revenue market at the start of 2006 to around 12 per cent today. With mobiles generating more than $10 billion a year, that equates to roughly $1.2 billion. But the news came with a warning that margins in the mobile industry are likely to fall as voice services get cheaper and operators struggle with new data services

IT

Acer signs up the NAB

The corks are popping at Acer with the news the company has signed what it is tipping as the "largest corporate contract in Australia for 2006" with National Australia Bank. The vendor will ship desktop and notebook PCs, as well as LCD monitors, to the National over the period of the 12-month contract. The value of the deal was not released, but is understood to be in the tens of millions of dollars. "While many major vendors are shipping their facilities overseas, the market is voting with its feet on dealing with Acer because we have local assembly and local, dedicated support offerings which are not out sourced to overseas facilities and call centres," said Acer national corporate sales manager Frank Ugolini, in a dig at the company's competitors. "Winning this contract cements Acer position as a dominant player in the corporate segment."

Mobile ticketing technology

Waving your mobile phone over a scanner to enter a concert or game will soon be common thanks to an alliance rolling out mobile ticketing technology. Scottish ticket and coupon specialist Mobiqa is pushing into Australia. Last month it signed a deal with Tickets.com to provide its mobi-tickets at major events throughout the Asia-Pacific region. Mobiqa has also partnered with Australian mobile services group MessageNet, which will provide the local gateway and sales channel for Mobiqa's products. MessageNet commercial director Stuart Wait said Mobiqa had a proven track record "of doing real things with real customers", and had a presence in 28 countries. "Mobiqa is probably the only company globally offering a robust mobile ticketing and couponing system," he said. The mobi-ticket is a unique barcode sent via SMS or MMS direct to the customer's phone.

Jobs go in NSW grand plan

NSW has unveiled its grand vision for electronic service delivery and IT streamlining, saying it will carve $565 million over four years from the state's $1 billion annual IT and communications budget - including $20 million saved through the loss of around 200 jobs. Unveiling the strategy in Sydney, NSW Commerce Minister John Della Bosca said the overall aim of the program was to improve the delivery of government services. This would be done by improving the public's access to e-government services, and by consolidating and improving government procurement and systems, and funnelling the money saved back into "front line" services. NSW Government chief information officer Paul Edgecumbe said that consolidation of systems and purchasing across agencies, particularly on back end systems such as human resources, payroll and email, would mean cuts in the state's IT workforce.

HEALTH IT & HEALTH

Hospitals not ready for e-records

An IDC healthcare study has found that most hospitals have a mix of paper and electronic data and require a lot of assistance migrating to a totally paperless workflow. Current legacy environments, with front-end patient administration systems that are on average six years old present a challenge both in terms of workflow/process and data/storage management during refreshes. There is a need for proper governance for IT investment, accountability for e-health records management, and assurance of privacy. Fewer than 5 per cent of hospitals surveyed have instituted formal processes for monitoring IT investments and post-project assessments of benefits and return on investments. Healthcare organisations also face issues to do with a general lack of platforms for storage of electronic records and other digital information.

Joint medicines regulatory agency between OZ & NZ

The governments of Australia and New Zealand have agreed that the joint medicines regulatory agency now taking shape will be fully funded through fees and charges paid by the industry. Public consultation on the first series of documents detailing the Australian New Zealand Therapeutic Products Authority is under way, with submissions invited by 15 August. The paper outlining proposed fees and charges is one of six setting out rules for licensing prescription medicines, over-the-counter drugs, herbal and complementary medicines, medical devices and blood products in both countries. The new agency is expected to begin operations in the second half of 2007.

Macquarie Bank injects profit motive into aged care

Macquarie Bank announced last month that they wanted to bring its private-sector disciplines to the fragmented industry which is dominated by not-for-profit operators. The first targets for the Macquarie treatment are the 14 loss-making aged care homes they bought in 2005 from the Salvation Army. The investment bank wants to turn them into money-making operations. After buying that portfolio, together with another 12 facilities from the Moran Health Group, Macquarie private equity fund ‘Macquarie Capital Alliance Group became the country’s third biggest private-sector provider. Macquarie’s overhaul of the Salvation Army portfolio is likely to produce an increased number of beds managed per site, and the consolidation of some sites to improve efficiency. The demographics of the aged-care business are compelling. In 2000, 2.4 million people in Australia were aged over 65, which made up 12.4% of the population. By 2021, this figure is predicted to rise to 18.4%, or 4.2 million people, including 1 million people over the age of 80.

WATER

Prime Minister Howard urges water recycling

The Prime Minister John Howard recently said that Australia needed a revolutionary approach to tackle the country’s urban water shortage, and will urge the states in the country to recycle. Mr Howard told a business lunch in Sydney that Australia should “drought-proof” the large coastal cities, and that the country should not tolerate the water restrictions that are already in place in several states. He said that he would encourage the states to consider interstate water trading, and placed the emphasis on recycling and capturing storm water. He stated that these methods were much better strategies than desalination.

$80m more for water project

The Queensland government has allocated an extra $80 million to speed up the $800 million desalination plant on the Gold Coast to help solve the water crisis in the state. The government has asked the Gold Coast City Council to expand the capacity of the desalination plant from 55 megalitres of water a day to 125 megalitres a day. Brisbane’s dam levels are below 30%, and the region’s water supplies are likely to run out by mid 2008 unless there is significant rain. Desalination, which removes minerals and impurities from seawater, has been criticized as an expensive way to create drinking water. In February this year, the New South Wales government announced that it had abandoned its plans for a desalination plant in Kurnell in Sydney

DEFENCE

$51 billion military plan unveiled

The Federal Defence Department will spend $5 billion annually on new equipment and communications in the coming decade under an updated $51 billion military capability plan. The forward spending program will include $3.7 billion for new helicopters as well as $1billion earmarked for military satellite communications and $240 million for unmanned aerial vehicles. The new defence capability plan, unveiled by Defence Minister Brendan Nelson yesterday, is bolstered by an additional $2.4 billion funding announced in the May budget for the five years beyond 2010.

"This brings our equipment acquisition and capability development strategy over the next decade into line with our increasingly complex security situation," Dr Nelson said, adding that 58 projects worth $11.5 billion had been approved since the last defence capability plan was released in February 2004. So far this financial year, 24 projects worth $7.2 billion have been approved.