Following its cautious entry into the fixed-line telephone market, HOT Telecom has stepped up its marketing activities in an attempt to further penetrate Bezeq's market share.
"While they were quiet for some time, there's no question that HOT has increased its activities and we are now feeling their presence more strongly," said Richard Gussow, senior analyst at Excellence Nessuah. "But it's still early days and Bezeq still has around 94 percent of the market."
In order to open the telecommunications market to competition, the Communications Ministry has limited the services Bezeq can offer until its share drops to 85%, at which point the ministry will no longer consider it a monopoly.
Gussow said he expects the market to reach that point around mid-2007, especially since other operators such as Cellcom, 012 Golden Lines and Globcall have entered the market.
Since its initial launch of service in November 2004, HOT has won over 130,000 telephone subscribers and only over the last few months has it stepped up its marketing activities.
In so doing, HOT has focused on those areas of business where it has an advantage over Bezeq, namely its ability to offer special deals such as unlimited calling and bundled services.
"We had a sharp increase in customers after our commercial launch in March/April," said Yossi Lubaton, vice-president of marketing at HOT. "The momentum dropped after Bezeq workers blocked repairs to HOT lines [in protest of Bezeq's marketing limitations], but we see it rising again now as confidence in our system returns."
Admitting to initial technical teething problems, Lubaton said the company recently invested in its network, which was now operating at a much higher technical standard.
With a "more mature and reliable system" in place, HOT is relying on word of mouth to complement its marketing activities. Its current campaign offers unlimited calling within the 077 network for a monthly fee of NIS 39.
"We are trying to create communities of HOT subscribers by rewarding customers who have friends on the network," Lubaton said.
The company has invested NIS 3m. in the campaign, which focuses on newspapers and billboards. It follows another promotion for its 'triple play' services where, for the first time in Israel, a company has been able to offer a combination of telephone, TV and Internet services.
"The main advantage HOT has over Bezeq is its ability to bundle these services," analyst Gussow said.
While HOT has not yet released figures about the success of its triple-play campaign, it did express confidence in the Israeli consumer's early adoption of new technologies.
"We are not exposing our percentage of triple-play users but when we do I am sure they will place Israel among the highest in the world," Lubaton said. "This is where we will focus our attention in the future."