Service Area - a geographical area in which a General License holder is obligated, by the terms of its License, to establish, maintain, or operate a Public Telecommunication Network, and to provide Telecommunication Services to the general public by means thereof;

Type Approval- approval which is given in accordance with this Law to a model of Terminal Equipment for the purpose of connecting it to the General License holders telecommunications network, including a said approval attesting that the primary characteristics of the Terminal Equipment in respect of which the approval is given correspond to a model of Terminal Equipment in respect to which a prior Type Approval had been given;

Means of Control, in a corporation - any one of the following:

(1) the right to vote at a general meeting of a company or a corresponding body of another corporation;

(2) the right to appoint directors of the corporation or its general manager;

(3) the right to share in the profits of the corporation;

(4) the right to share in the surplus assets of the corporation at its dissolution, after discharge of its liabilities;

Telecommunication(s) - the broadcasting, transfer or reception of signs, signals, writing, visual forms, sounds or information by means of wire, wireless, optical system or other electromagnetic systems;

Interested Party – a person who holds five percent or more of a particular type of Means of Control;

Licensee – a person that has received a General License or a Special License for the conduct of Telecommunication Activities and for the provision of Telecommunication Services;

Cable Broadcasting Licensee – a person that has received a General Cable Broadcasting License, an On -Demand Broadcasting License or a Special Cable Broadcasting License, under Chapter B1;

Broadcasting Licensee – a Cable Broadcasting Licensee, or a Satellite Broadcasting Licensee under Chapter B2;

Road – including any rail, road, street, alley, square, passage, bridge or open space, through which the public has a right to pass through;

The Company – Bezeq, the Israel Telecommunication Corporation Ltd.; Holding – for the purpose of Means of Control in a corporation - directly or indirectly, whether alone or in concert with others, including through another,

including a trustee or agent, or through a right granted under an agreement, including an option for a holding that does not derive from convertible securities, or in any other way;

General Permit – a permit granted under section 4A1 for the conduct of Telecommunication Activities and for the provision of domestic or international Telecommunication Services, that is limited to a certain type of Telecommunication Activities or Telecommunication Services;

The Ordinance - the Wireless Telegraph Ordinance [New Version], 5732-1972.

The Companies Law – the Companies Law, 5759-1999; Broadcasting HeadEnd – a Telecommunications Facility in which are

installed the means required in order to feed Broadcasts, including Broadcasts received through the air, into a Public Telecommunication Network, for distribution to subscribers;

Interface – the physical meeting point between different functional Telecommunications units, including by optical or wireless means; Telecommunications Facility - a facility or apparatus, which is primarily intended for Telecommunication purposes, and for the purposes of Chapters G and H – a facility or apparatus which is used or is intended for use for Telecommunication purposes, all of which including Terminal Equipment; Telecommunication Message – a message broadcast, transferred, received or delivered for broadcasting or for transfer at a Telecommunications Facility; External Laboratory – a laboratory that is not a Ministry of Communications laboratory, engaged in the conduct of inspections and measurements of Terminal Equipment;

Officer – as defined in the Companies Law;

License Assets – the assets necessary to assure the provision of Telecommunication Services by a Licensee under its License, or to assure the performance of Broadcasts by a Broadcasting Licensee under its license; N.T.P. (Network Termination Point) - an Interface to which a Public Telecommunication Network is connected on one side, and Terminal Equipment, a Private Network or a different Public Telecommunication Network on the other side, as the case may be;

Terminal Equipment Telecommunication equipment for use by subscribers, which connects or is meant to connect between the subscribers premises or any other location and a Public Communication Network, by means of the Interface designated for this purpose, including mobile radio telephone equipment, unscramblers or encoders, and including any other apparatus installed on the subscribers premises and intended to be used for the reception of Broadcasts on his premises, as well as Satellite Terminal Equipment as defined in section 6QQ;

Telecommunication(s) Activity - the operation, installation, construction or maintenance of a Telecommunications Facility, all for the purpose of Telecommunication;

General License – a license granted under this Law to establish, sustain or operate a Public Telecommunications Network, and for the conduct of

Telecommunication Activities and the provision of Domestic or International Telecommunication Services by means thereof;

Unique General License – a General License under section 4(A1), for the provision of Domestic Fixed-Lined Telecommunication Services, even if not to the general public, nationwide, or even if not in at least one Service Area; Special License - a license granted under this Law for the conduct of Telecommunication Activities and for the provision of Domestic or International Telecommunication Services, which is limited to a certain category of Telecommunication Activities or of Telecommunication Services; Mobile Radio Telephone via Network License – a license for the provision of mobile radio telephone services, which involve the use of another Licensee Telecommunications Facility for the purpose of providing mobile radio telephone services;

Public Telecommunication Network- a system of Telecommunications Facilities which serve or are meant to serve for the provision of Telecommunication Services to the general public, nationwide or at the very least in a Service Area, and which includes switching and routing equipment, transmission equipment and an Access Network, including an M.R.T. System and an International Telecommunication System, but excluding Terminal Equipment;

Access Network - Components of a Public Telecommunication

Network used for connecting [the last mile] between a Switch (PSTN) and an N.T.P. using terrestrial infrastructure, wireless infrastructure or a combination of the two;

Broadcasts – television broadcasts intended for the public, provided to subscribers, whether over a single channel or over a multi-channel system, and also services directly ancillary thereto, including video or audio services, two-directional and interactive Broadcasts;

Telecommunication Service – conducting Telecommunication Activities on behalf of a third party;

Control - the ability to direct the activity of a corporation, whether alone or in concert with others or through others, directly or indirectly, by virtue of a Holding in the Means of Control in it or in another corporation, including an ability deriving from the articles of incorporation of the corporation, by virtue of a written, oral or other agreement, or an ability derived from any other source, except for ability deriving solely from holding the position of an officer in the corporation;

without derogating from the generality of the aforesaid, a person shall be deemed to control a corporation if it holds fifty percent or more of a particular type of Means of Control in the corporation, or it is able to prevent the adoption of business decisions in the corporation, other than decisions on the issue of Means of Control in the corporation or decisions on the sale or liquidation of most of the business of the corporation or its substantive change; a person shall be presumed to control a corporation if it holds the highest rate of Means of Control of any type;

Amendment 25 – The Telecommunications Law (Amendment No. 25), 5761-2001;

The Minister – the Minister of Communications.

CHAPTER B: TELECOMMUNICATION ACTIVITIES AND

TELECOMMUNICATION SERVICES – LICENSING

2. The right of the State and licensing obligation

(a) The State has the right to conduct Telecommunication Activities and to provide Telecommunication Services.

(b) No person shall conduct Telecommunication Activities and no person shall provide Telecommunication Services unless it obtains a license therefor from the Minister under this Law or by virtue of a General Permit therefor.

3. Restrictions on application

The provisions of section 2(b) shall not apply to -

(1) a Telecommunication Activity conducted by a person for himself, whether on his own or through another, in a continuous area held by him and without creating a connection outside of that area;

(2) manufacturing a Telecommunication Facility or part thereof;

(3) an activity carried out by a person pursuant to a license under the Ordinance, and a Telecommunication Activity that the Ordinance exempts from the requirement of a license;

(4) operating a stop light regulating road traffic;

(5) A Telecommunication Activity conducted by a person by means of a Licensees facilities, provided that the Licensee may, under its license, allow another to conduct the said a Telecommunication Activity;

(6) electronic data processing;

(7) whosoever sustained or operated, for five consecutive years prior to the 13^th of Tevet, 5759 (the 1^st of January, 1999), a radio station for radio broadcasts primarily intended for the public in Israel, in such a manner that those Broadcasts were received in most of Israels territory, and continued to do so after the said date as well, and that person shall be considered as having received a license under this Law, under section 5(a) of the Ordinance, and as having received a franchise under section 32(a) of the Second Authority for Television and Radio Law, 5750-1990;

(8) telecommunication Activities or Telecommunication Services, whether domestic or international, of a certain type, in respect of which the Minister has prescribed, by an order, an exemption from the license requirement under section 4 and from the General Permit

requirement, having considered, inter alia, the considerations set out in section 4(b), mutatis mutandis, and having concluded that regulation of the conduct of the said activities or the provision of the said services under the provisions of this Law is not called for, provided that the Minister shall not prescribe an exemption under the provisions of this paragraph unless –

(a) any one of the conditions set out in section 4A1(a) holds true for the said Telecommunication Activities or the said Telecommunication Services;

(b) for the purpose of the Telecommunication Services – a significant level of competition exists in the provision of services of the said type.

4. Grant, change and revocation of licenses

(a) The Minister may grant a license for the conduct of Telecommunication Activities and for the provision of Telecommunication Services, and set out terms and conditions in the license, and he may direct that the license be granted by way of a tender; the license may be general or special; nothing in the grant of a General License shall prevent the grant of a Special License for an

Activity or Service included in the General License.

(a1)

(1) Without derogating from the powers of the Minister under this section, and subject to the considerations set out in subsection (b), starting from the 15^th of Elul, 5764 (the 1^st of September, 2004) (in this section – the Determining Date), the Minister may grant a Unique General License, including to whoever was, prior to the Determining Date, a holder of a General License for the provision of Telecommunication Services other than Domestic Fixed-Lined Telecommunication Services; if the Minister has granted a said license, the Unique General License shall be considered as a General License and the Telecommunication Network by means of which the Services of the said licensee are provided shall be considered as a Public Telecommunication Network for all matters and purposes.

(2) Nothing in this subsection shall derogate from the provisions of section 6L2 or from any other law, or from the obligations, under a General License granted prior to the Determining Date, to provide the Services under that license to the general public, nationwide or at the very least in a Service Area, as the case may be; for the purposes of

this paragraph, General License – even if the license or Control of the Licensee had been transferred to another.

(3) Notwithstanding the aforesaid in paragraph (1), if a Unique General License had been granted under that paragraph, and the Licensee became a Dominant Operator in a Domestic Fixed-Lined Telecommunication Services Sector of Activity, the Minister may mandate, in its license, that its Services shall be provided in a single Service Area at the very least; for this purpose, a Dominant Operator – as determined by the Minister.

(4) A license under this subsection shall be granted notwithstanding the aforesaid in the definition of General License and Public Telecommunication Network.

(a2)

(1) Without derogating from the powers of the Minister under this section, and subject to the considerations set out in subsection (b), the Minister may grant a Mobile Radio Telephone via another Network License;

(2) the Minister shall prescribe the conditions for the grant of a Mobile Radio Telephone via another Network License; the first regulations under this paragraph shall be made by the 13^th of Tishrei, 5770 (the first of October, 2009);

(3) if the Minister has granted a Mobile Radio Telephone via another Network License under paragraph (1), the said License shall be considered as a General License and the Telecommunication Network by means of which the Services of the said licensee are provided shall be considered as a Public Telecommunication Network for all matters and purposes.

(4) if the Minister has granted a Mobile Radio Telephone via another Network License under paragraph (1), he shall direct, by virtue of his power under section 5, that the holder of a license for the provision of mobile radio telephone services (in this paragraph and in paragraph (5) – the Other Licensee) must enable the holder of the Mobile Radio Telephone via another Network License to use its Telecommunication Facility, and the price and terms of the said use, if both of the following hold true:

(a) the Mobile Radio Telephone via another Network License holder had requested the Other Licensee to use its Telecommunication Facility, and they did not reach an agreement on the terms of use within six months from the date of the request;

(b) the Minister and the Minister of Finance conclude that the Other Licensee had set unreasonable terms for the said use;

(5) the Ministers directives on use said in paragraph (4) shall be given within nine months from the date of the request said in paragraph (4)(a), or within 90 days from the date on which a Mobile Radio Telephone via another Network License holder applied to the Minister and the Minister of Finance regarding the reasonableness of the terms of use required by the Other Licensee, whichever is later;

(6) In this subsection, Use – as defined in section 5(a).

(b) In the grant of a license and in the stipulation of its terms, the following considerations, inter alia, shall be taken into account:

(1) the government policy on Telecommunications;

(1A) considerations concerning the public welfare;

(2) the suitability of the license applicant to conduct the Telecommunication Activities and to provide the Telecommunication Services for which it is applying for a license;

(3) the contribution of the grant of the license to competition in the field of Telecommunications and to the standard of services therein;

46. A license application shall be submitted to the Minister in writing, and shall specify the details of the proposed Telecommunication Activities and Telecommunication Services the manner of their performance; the Minister may determine, in regulations, additional details to be included in the application.

47. The Minister may approve an application, impose conditions for his approval that must be met prior to the grant of the license or subsequent to the license being granted, including conditions concerning the payment of fees and the furnishing of guarantees and the manner of the forfeiture thereof, and he may reject the application, giving reasons for the rejection. In case of a Special License that includes Terminal Equipment, he may also stipulate the condition that the Equipment must first obtain a Type Approval.

(d1) No license, including any of the rights granted thereunder, may be transferred, charged or attached; any transfer, charge or attachment of any of the License Assets, not explicitly allowed under the license, shall require the approval of the Minister; however, the Minister may, in special cases, after having taken into account the considerations stated in subsection (b), permit the transfer of a license while carrying out structural changes, on conditions that shall

be stipulated by him, if he is convinced that all of the conditions that held true for the transferor hold true for the transferee Licensee.

(d2) Without derogating from the provisions of subsections (b) and (e) or section 59, and taking into consideration, inter alia, the considerations said in subsection (b), the Minister may prescribe, by regulations or in a license, provisions concerning the following:

(1) restrictions and conditions in respect of the holding, transferring or purchasing of Means of Control in a license applicant or in a Licensee, including by an Other Licensee under this Law or an Interested Party in any of them, all of which whether directly or indirectly, as well as restrictions and conditions concerning the appointment of Officers therein;

(2) the maintenance of separate accounting systems for different services provided by the Licensee, including by means of a system for separate recording of expenses and income, or separate financial statements, all of which as shall be prescribed; if the Minister has granted a license for a Broadcasting HeadEnd to a person who is a Licensee under this Law, the Licensee shall maintain a separate accounting system as said in this paragraph, in such manner as the Minister shall direct;

(3) a requirement to maintain separate corporations for the Licensee and for another for the purpose of the provision of different services, including separation between the provision of services to a Licensee and the provision of services to a subscriber, and provisions relating to the execution of the separation.

(d3) If the Minister directed that a license shall be granted by way of a tender as said in subsection (a), he may direct that the selection of a Licensee shall be based, inter alia, on the amount of the license fees offered by the participants in the tender.

(e) The Minister may change the terms of a license, add to or subtract therefrom; in this regard, the considerations said in subsection (b), inter alia, shall be taken into account, as well as the changes that had occurred in Telecommunications technology.

(f) The Minister may, by giving notice in Reshumot,

(1) grant a holder of a General License some or all of the powers and immunities listed in Chapters F and I; and he may direct that the exercise of the powers or the application of the immunities shall be conditional upon the fulfillment of conditions that he shall stipulate, including a limitation

of the period during which the said powers or immunities may be exercised;

(2) grant the powers said in paragraph (1) to the holder of a Special License, if he finds that there is special importance to the provision of the Service for which the license had been granted, and there are no other alternatives.

4A. Certification and authorization of External Laboratories and grant of

Type Approval

(a) The Minister may certify an External Laboratory, for which the conditions prescribed under section 53A(a)(1a) hold true, to conduct inspections and measurements of Terminal Equipment, for the purpose of giving Type Approval, generally or with respect to certain types of Terminal Equipment or certain matters, in accordance with the provisions stipulated under section 53A(a)(1) or

(a1) The Minister may grant a Certified External Laboratory, for which the conditions stipulated under section 53A(a)(1b) hold true, authorization to give Type Approvals in respect to such types of Terminal Equipment as he may direct, in accordance with stipulated under section 53A(a)(1) or (c) (in this section – Authorized External Laboratory).

(a2) An External Laboratory seeking to be certified under the provisions of subsection (a), or a Certified External Laboratory seeking to be authorized under the provisions of subsection (a1) shall submit a written application to the Minister for the said certification or authorization; the Minister may approve the application, impose conditions for his approval that must be met prior to the certification or authorization or subsequent thereto, or reject the application, giving reasons for the rejection.

(a3) Notice of the certification of an External Laboratory or the authorization of a Certified External Laboratory under this section shall be published in Reshumot and on the Ministry of Communications internet website.

(a4) The Minister may change one of the conditions for certification or authorization granted under subsections (a) or (a1), and he may also revoke a said certification or authorization or suspend it for such a period as may set, if he finds that the External Laboratory fails to fulfill the stipulated conditions for the said certification or authorization, or had breached one of the conditions for the certification or authorization, or one of the provisions stipulated under subsection (d4) or section 53A(a)(1) or (2), or (c), that apply thereto.

(b) If a person seeks to connect Terminal Equipment in respect of which no Type Approval has yet been given, to the Telecommunication

Network of a holder of a General License, then it shall submit a written application to obtain a Type Approval to an Authorized External Laboratory; the details of the Equipment shall be provided in the application, and the specifications of the Equipment and any other detail or document, as shall be prescribed by regulations or a procedure under section 53A(a) or (c), shall be attached thereto.

(c) No Type Approval shall be issued unless the Authorized External Laboratory considered and examined the application and the following, at least, hold true:

(1) the Terminal Equipment is compatible with the Telecommunication Network of the holder of the General License;

(2) the level of safety of the Terminal Equipment is sufficient to prevent injury or damage to the Equipments users and those handling it, and to the Telecommunication network and its workers.

(d) An Authorized External Laboratory may approve an application said in subsection (b), impose conditions for its approval that must be met prior to the issue of a Type Approval or subsequent to the Type Approval being given, including conditions concerning the payment

therefor, or reject the application, giving reasons for the rejection, all of which under the provisions stipulated under section 53A(a)(1) or

(C).

(d1) If the Minister did not certify an External Laboratory for the conduct of inspections and measurements of Terminal Equipment under subsection (a) or did not authorize an External Laboratory to give Type Approvals under subsection (a1), whether generally or with respect to certain types of Terminal Equipment, the Minister may give Type Approvals, generally or with respect to Terminal Equipment with respect to which no said certification or authorization, as the case may be, has been granted, in accordance with the provisions stipulated for this purpose under section 53A, and he may also do so with respect to types of Terminal Equipment with respect to which said certification or authorization has been granted if there are reasons that justify this, all of which for reasons which shall be recorded; the provisions of subsections (b) through

(d) shall apply, mutatis mutandis, to the issuing of Type Approval by the Minister under this subsection.

(d2) If a Type Approval has been given by an Authorized External Laboratory, the Minister may revoke it if he finds that there are special reasons, which shall be recorded, that justify this.

(d3) Terminal Equipment which is mobile radio telephone equipment, that meets the conditions prescribed by the Minister by an order, does not require Type Approval; the Minister may prescribe, by an

order, conditions for the grant of an exemption from Type Approval for additional certain types of Terminal Equipment, as he may prescribe.

(d4) The Minister shall appoint an employee from among the employees of his ministry, to supervise the activities of Certified External Laboratories and of Authorized External Laboratories, who may prescribe procedures for the activity of said Laboratories; said procedures shall be brought to the knowledge of the laboratories in such manner as the Director General of the Ministry of Communications shall deem to be appropriate, and shall be published on the Ministry of Communications internet website.

(e) (Repealed).

4A1. General Permit

(a) If the Minister concludes that regulation of the conduct of Telecommunication Activities or the provision of Telecommunication Services, of a certain type, by a License under section 4, is not called for, he may, without derogating from the provisions of section 5, grant a General Permit for the conduct of the said Telecommunication Activities or for the provision of the said Telecommunication Services, and stipulate conditions therein, provided that one of the following holds true:

(1) the conduct of the activities or the provision of the services is primarily based on Telecommunication Activities conducted by a Licensee or on Telecommunication Services provided by it;

(2) the services are provided solely to a Licensee;

(3) the services are provided by means of a Telecommunication Facility operated by a Licensee;

(4) the conduct of the activities or the provision of the services solely involve the operation or maintenance of Terminal Equipment, with respect of which a Type Approval was given;

(5) a large number of Special Licenses were granted with respect to the services, in a uniform format;

(6) the activities or services are of minor importance, in light of their nature and the circumstances of the performance thereof.

(b) In granting a General Permit and in stipulating its terms, the Minister shall take into account, inter alia, the considerations set out in section 4(b), mutatis mutandis.

(c) The General Permit shall include provisions concerning recording obligations and the obligation to report to the Minister or to any

person empowered by him for that purpose, the fulfillment of which is a condition for the application of the permit to whoever wishes to conduct Telecommunication Activities or to provide Telecommunication Services, by virtue thereof.

(d) The General Permit shall be published in Reshumot.

(e) The following provisions, that apply in regard to a Special License and to whoever has received a Special License, including the powers of the Minister granted under the said provisions in regard to a said License and a Licensee, shall apply to a General Permit and to whoever acts by virtue of a General Permit, all as the case may be and mutatis mutandis:

(1) the provisions of Chapter B, excluding section 4(f)(2) thereof, and also section 6K1 of Chapter B1, and Chapters D, E and K;

(2) the provisions of any other law and any regulations made thereunder.

(f) The Minister may prescribe by regulations –

(1) a fee for registration said in subsection (c) or for the renewal thereof;

(2) ways and times for the payment of the fee, including its linkage to the consumer price index, and also the obligation and terms for the payment of interest arrears, linkage differentials and collection expenses in respect of fees that were not paid on the prescribed date.

4A2. Status of a licensee subsequent to the grant of a General Permit or an exemption

If the Minister has granted a General Permit, or has prescribed an exemption under the provisions of section 3(8), with respect to Telecommunication Activities or Telecommunication Services of a certain type, with respect to which a License was earlier granted under the provisions of section 4, he shall prescribe, in the permit or by the order in which the exemption was prescribed, as the case may be, provisions concerning the status of the License and of the Licensee subsequent to the grant of the permit or the prescription of the exemption.

4B. (Repealed).

4C. Fees for licenses and the conditions therefor

(a) The Minister may prescribe by regulations –

(1) a fee for the grant of a License;

(2) an annual fee that a Licensee must pay for any type of Telecommunication Service provided by it, excluding a Telecommunication Service in respect of which it pays royalties under section 54;

(3) ways and times for the payment of the fees, including the linkage thereof to the consumer price index, the collection of interest arrears and the expenses thereof.

(b) The Minister may stipulate, by regulations said in subsection (a), that any payment paid as a condition for the grant of a License or under it, prior to the commencement of the said regulations, shall be regarded as a fee prescribed therein.

4C1. Power to demand information

The Minister or an employee of the Ministry of Communications empowered therefor by the Minister, may demand the Licensee or any person acting on its behalf in the performance of Telecommunication Activities, the provision of Telecommunication Services or the performance of Broadcasts to provide to him, on such dates, in such format and in such manner as he shall instruct any information required for the exercise of the powers of the Minister under this law, or to facilitate the carrying out thereof; in this section, Licensee – including a Broadcasting Licensee or any person acting by virtue of a General Permit and any person who was granted Type Approval.

4D. Essential Service

(a)

(1) The Prime Minister and the Minister, at their own initiative and also at the request of the Minister of Defense, with the approval of the government, may determine in an order that a Telecommunication Service specified therein is an essential service (hereinafter – Essential Service), if they have observed one of the following:

(a) that a cessation, reduction or any other impairment to it, including to the dependable provisions thereof, may prejudice national security or the proper supply of services to the public;

(b) that the acquisition of Control or Means of Control in the Essential Service provider or the Holding thereof may have an adverse effect on the governments policy in the field of

Telecommunications, including an adverse effect on competition in this field;

(2) before the Prime Minister and the Minister determine that a Telecommunication Service is an Essential Service, due to the existence of grounds specified in sub-section (a)(1), they shall afford the Licensee providing the said service (hereinafter – Essential Service Provider), as well as whomever is a Controlling Party thereof or and Interested Party therein, an opportunity to voice their contentions.

(a1) No person shall transfer to another Control of an Essential Service Provider in respect of which an order under subsection (a) was issued, acquire a said Essential Service Provider or hold Control thereof, unless it obtains a prior written permit therefor from the Prime Minister and the Minister and on the conditions prescribed by them (hereinafter – Restrictions on Control); the Prime Minister and the Minister may grant a said permit if they are satisfied that nothing in the said Control may prejudice the provision of the Essential Service or detract from the grounds for its designation as an Essential Service said in subsection (a)(1); for the purposes of this subsection, selling shares on a stock exchange, otherwise than by prior agreement with a certain buyer, shall not be deemed a transfer in respect of the transferors obligation to receive a permit under this subsection, provided that one of the following holds true:

(1) the transferor is not the Controlling Party of the Essential Service Provider;

(2) the transferor is the Controlling Party of the Essential Service Provider and did not cease, as a result of the transfer, to be the said Controlling Party, unless he did not know or could not have known that he will cease to be the Controlling Party as a result of the transfer.

(b) By an order under subsection (a) –

(1) the Prime Minister and the Minister may, with the approval of the government, prescribe that some or all of the restrictions, conditions and provisions of subsections (c) and (d) shall apply for a fixed period or in general, all of which as shall be prescribed by the order;

(2) the grounds for designating the service as an Essential Service shall be stated.

(1) a stipulation that no person shall hold 5% or more of the Means of Control in the Essential Service Provider, or at additional rates prescribed by the Prime Minister and the Minister, or Significant Influence in the Essential Service Provider, without prior written consent of the Prime Minister and the Minister, and on conditions that shall be stipulated by them (hereinafter – Restrictions on Control and Holding); the Prime Minister and the Minister may grant consent to the applicant if they are convinced that nothing in the said Significant Influence or in the Holding of Means of Control at the rate requested by it, may prejudice the provision of the Essential Service or detract from the grounds for its designation as an Essential Service said in subsection (a)(1);

(2) a stipulation that Control of the Essential Service Provider shall be held by a citizen of Israel and a resident thereof, including by setting a maximum rate of Means of Control that shall be held by whoever is not a said citizen or resident (hereinafter – Restriction Concerning Israeli Identity);

(3) a stipulation that the day-to-day management of the Essential Service Provider and its center of business are in Israel;

(4) stipulation of a requirement that information be provided to the Prime Minister and to the Minister, as per their demand, on matters related to the provision of the Essential Service, as shall be set out in the demand; nothing in this paragraph shall derogate from any other requirement to provide information, existing under any law;

(5) a stipulation, for national security reasons, that all or some Officers in the Essential Service Provider, and other functionaries in the Essential Service Provider as determined in the order, shall be citizens of Israel and residents of Israel, and that all or some of them shall have an appropriate security classification, as shall be determined by the General Security Service;

(6) a stipulation concerning the validity of a transfer, charge or attachment of one of the License Assets required, in the opinion of the Prime Minister and the Minister, in order to ensure the Essential Service, made or placed in violation of the provisions of section 4(D1), vis-à-vis any person who knew or ought to have known thereof;

(7) a stipulation that proceedings for the Voluntary Winding Up of the Essential Service Provider corporation, any compromise or Arrangement in respect thereof, as well as

any change or reorganization of the corporations structure, Merger or Split thereof, require prior approval by the Prime Minister and the Minister;

(8) a stipulation that no person shall transfer Control, Means of Control or Significant Influence in an Essential Service provider if, as a result of the transfer, the Restrictions on Control or the Restrictions on Control and Holding will be breached, unless the transferee has presented it with consent under this section and the orders issued thereunder;

(9) a stipulation and the laying down of directives, in accordance with government decisions concerning this matter, in regard to the measures required for the protection of the Essential Service Providers computerized systems and data bases, that are used for the provision of services and for the operation and control of the computerized systems.

(d) Where an order said in subsection (a) was issued –

(1) and¹ a person holds, without the approval of the Prime Minister and the Minister, Control or Means of Control in the Essential Service Provider, exceeding the rate determined under subsection (c)(1) or (2), then it shall be required to sell them in accordance with the provisions under this Law; the holding person or any person acting on its behalf may not exercise the rights derived from the Control or Means of Control held by it, or the right to receive dividends; without derogating from the aforesaid, the Prime Minister and the Minister may prescribe in the order provisions in regard to the manner and time of the sale of the Control or the Means of Control, including provisions concerning the matter of the appointment of a receiver for the sale thereof;

(2) they may prescribe by the order, with the approval of the government, conditions, directives and restrictions for the Essential Service Provider, as well as ways of supervising and reporting obligation in respect of its activities and contracts, all of which if, in their opinion, are necessary in order to ensure the enforcement of the Restrictions on Control or the Restrictions on Control and Holding, or the Restriction Concerning Israeli Identity, including provisions concerning special reporting on, keeping of records with respect to and registration of those holding its securities, in general or at prescribed rates, or provisions on

¹ The prohibition on exercising a right to receive dividends shall apply to a transfer or acquisition of Control, Significant Influence or Means of Control in the Essential Service provider, made after the commencement of amendment No. 28.

restrictions applying to the allotment of the corporations securities, as well as restrictions on the use of Means of Control and the rights attached thereto, or on the validity, vis-à-vis the corporation, of acts carried out or decisions taken in violation of the imposed restrictions, by persons who had received approval for Controlling the corporation or for holding Significant Influence or Means of Control in the corporation;

(3) they may prescribe, by the order, provisions and conditions concerning the holding of Means of Control or Significant Influence in or Control of the Essential Service Provider, including provisions that make the validity all or some transactions in respect thereof conditional on the prior approval of the Minister and Prime Minister, who may refuse to grant it if they suspect that as a result thereof the

Restriction on Control or the Restrictions on Control and Holding or the Restriction on Israeli Identity may be violated;

(3a) the Prime Minister and the Minister may prescribe by the order under this section that a person holding two and a half percent or more of any type of Means of Control in an Essential Service Provider, more than three quarters of the issued share capital of whom is held by the public and the shares of whom are registered for trade on the stock exchange, shall notify the Essential Service Provider, the Minister and the Prime Minister as to its said holdings, as to the persons controlling it and as to any person holding in excess of 10% of any type of Means of Control therein, and also as to the members of the board of directors of any person holding said Means of Control; the Prime Minister and the Minister may prescribe, in order to ensure reporting under this paragraph, restrictions on the use of Means of Control and the rights attached thereto, including on the right to vote at the general assembly or the right to receive dividends.

(e) The provisions of this section, including the provisions of an order issued thereunder, shall constitute a part of the License.

(f) For the purposes of this section – Means of Control – (repealed);

Holding – including acquisition and both terms together, within the meaning of both terms in the Securities Law, 5728-1968 (hereinafter: the Securities Law) and including transfer or lien; all of which without derogating from the definition of Holding in section 1;

Significant Influence – the capability to significantly influence the activity of an Essential Service Provider, such as does not constitute Control and is not deriving from the fact of holding Means of Control, including a said capability derived from a right vested in a person by the Essential Service Providers articles of association or by a written or oral agreement with the Controlling Party, except when the said right was vested in an Israeli Banking Corporation; for this purpose, Israeli Banking Corporation – a banking corporation within its meaning in the Banking (Licensing) Law, 5741-1981, that received a license under paragraph (1) of section 4(a) of the said Law; however, without derogating from the generality of the foregoing –

(1) a person shall be deemed to hold Significant Influence over a corporation if it has the right to appoint an Officer of the Essential Service Provider;

(2) a person shall be deemed to hold Significant Influence over an Essential Service Provider if it holds twenty-five per cent or more of any type of Means of Control in that Essential Service Provider.

Voluntary Winding Up – within its meaning in the Companies Ordinance [New Version], 5743-1983 (hereinafter: the Companies Ordinance);

Arrangement – within its meaning in the third chapter of the ninth part of the Companies Law;

Merger and Split – within their meaning in the Income Tax Ordinance;

Control – (repealed).

4E. Operation of an Essential Service by the Appointee

(a) If a Licensee ceases to provide a service designated as an Essential Service under section 4D, or the Prime Minister and the Minister believe that there is reasonable suspicion that a Licensee will cease to provide a said Essential Service, and the Prime Minister and the Minister conclude that it is necessary toensure continuity in the provision of the Service or to prevent its disruption or cessation, they may, with the approval of the government, direct a Licensee, by an order, to provide the Service under the license, for a period and on conditions that shall be stipulated by them.

(b) If an order was issued under subsection (a), and the person to whom the order applies does not comply with its provisions, the Prime Minister and the Minister may, by order, appoint a person to be in charge of providing the Essential Service and managing the Telecommunication Facilities by means of which the Essential

Service is provided (hereinafter – the Appointee), and they may set out his duties in the order.

(c) In carrying out his duties under this section, the Appointee shall act in accordance with the instructions of the Prime Minister and the Minister, and he shall have all of the powers required in order to ensure the maintenance of the Essential Service, including the powers required for the management of the corporation.

(d) If the provision of an Essential Service ceased because the effect of a License lapsed or due to the revocation or limitation of a License, and the Prime Minister and the Prime Minister conclude that it is necessary to ensure the continuity of the provision of the Service, and that the cessation of the Service may substantially and immediately impair the Essential Service, the Prime Minister and the Minister may act as aforesaid in subsections (a) through (c), and if they have concluded that in the circumstances of the matter the Essential Service cannot be maintained by the Licensee, they may appoint the Appointee immediately.

(e) The appointment of the Appointee under this section shall be for a period that shall be prescribed by the Prime Minister and the Minister, and the said period shall not exceed one year; the Prime Minister and the Minister may extend the appointment for one additional period, which shall not exceed one year, and they may also replace them at any time.

(f) Nothing in the provisions of this section shall derogate from the right of the Licensee to receive fair user fees for the use of its facilities, and compensation from the State, subject to any law or to its obligations under its license, for damages caused thereto due to the appointment of the Appointee.

4E1. Appointment of an Observer

(a) In an order under section 4D, issued in regard to an Essential Service Provider that is a government company or a government subsidiary, within the definition thereof in the Government Companies Law, 5735-1975 (hereinafter – the Government Companies Law), The Prime Minister and the Minister may stipulate that an observer be appointed to a meetings of the board of directors of the Essential Service Provider and its committees (in this section – the Observer).

(b) The Observer shall be an employee of the State of Israel qualified to serve as a director pursuant to Chapter C of the Government Companies Law.

(c) Notices of meetings of the board of directors and its committees shall also be delivered to the Observer, and he may participate in every meeting of the board of directors and its committees.

(d) The Observer shall have the same right to receive information from the Essential Service Provider as that of a Director.

(e) If the Observer concludes that the Essential Service Provider is about to make a decision which conflicts with a provision of the order or with a provision under section 13, or with the provisions of section 11 of the General Security Service Law, 5762-2002 (hereinafter – the General Security Service Law), he shall promptly so notify the Essential Service Provider, the Minister and the Prime Minister.

(f) If the Observer gave notice as aforesaid in subsection (e), the Essential Service Provider may not adopt the decision during ten days after the Observers notice, and if it was adopted, it shall have no effect.

(g) If the Prime Minister and the Minister, within the ten days said in subsection (f), gave notice that the decision said in subsection (e) violates any provision of the order, any provision under section 13, or any provision of section 11 of the General Security Service Law, the Essential Service Provider may not adopt the decision and if it was adopted, it shall have no effect.

(h) The provisions of this section shall apply even if the Essential Service Provider ceases to be a government company or a government subsidiary, within the definition thereof in the Government Companies Law, and they shall also apply to companies controlled by the Essential Service Provider as said in this section.

4E2. Disclosure of confidential information

(a) If an order was issued under section 4D, the Prime Minister and the Minister may prescribe by the order that notwithstanding anything provided in any law and subject to the provisions of sections 19(a)(2) and 36C(b) of the Securities Law, to the extent that they apply to the Essential Service provider and to restrictions, conditions or provisions imposed thereon:

(1) a document or information as determined by the Prime Minister and the Minister in the order shall not be disclosed or revealed to certain Officers or shareholders of the Essential Service Provider, or to any person who has Significant Influence over the Essential Service Provider, all of which as prescribed by them;

(2) the disclosure or delivery of a document or information as determined by the Prime Minister and the Minister shall be restricted, in a manner prescribed by them, or the delivery thereof to any person who was not authorized, in writing, by the Prime Minister and the Minister or by a person appointed by him for this purpose shall be prevented.

(b) Where the Prime Minister and the Minister prescribed restrictions under subsection (a) on the disclosure of information to shareholders

or Officers, the said shareholders or Officers shall be, notwithstanding anything provided in any law, exempt, in case of a breach, of any liability imposed thereupon under any law, if that breach was caused solely due to their not having received the information withheld therefrom as aforesaid, and the said lack of disclosure of information shall not be deemed to be a breach of any duty under any law, all of which subject to the provisions of sections 19(a)(2) and 36C(b) of the Securities Law, to the extent that they apply to the Essential Service provider and to restrictions, conditions or provisions imposed thereon.

4E3. Provisions on enforcement and the effect of acts

(a) Without derogating from the provisions of any law, if a person violates an order or a provision issued under sections 4D through 4E2, then it shall be liable for compensation or indemnification for any damage or expense caused to the State, the Essential Service provider or any third party in consequence thereof.

(b) Any act carried out by the Essential Service Provider in violation of the provisions of sections 4D through 4E2, or in violation of an order or of a provision thereunder, shall have no effect; nothing in this provision shall derogate from rights acquired by any third party, if he did not know or could not have known that the act was carried out in violation of the said sections or in violation of the order or a provision thereunder.

(c) Nothing in the existence of a criminal proceeding under this Law shall derogate from any right or power to institute other proceedings under this Law or the orders thereunder.

(d) The District Court may, at the request of the State, order any person who violated provisions, conditions or restrictions stipulated under section 4D through 4E2, or orders issued thereunder, to cease the violation thereof, or to comply therewith, as the case may be.

4E4. Restrictions on the issuance of an order under another law

If an order was issued under sections 4D through 4E2, no order shall be issued under another law, including under Chapter H2 of the Government Companies Law, on the same or on similar grounds.

4F. Service for the general public

(a) The Minister may prescribe a list of basic Telecommunication Services which should be provided to the general public (hereinafter

– a Basket of Services for the General Public).

(b)

(1) If the Minister prescribed a Basket of Services for the General Public, he may direct a holder of a General License to provide a service under its license, which is included in the Basket, in areas or localities additional to those in which it provides its services.

(2) The Minister shall direct as said in paragraph (1) only after having considered alternatives in this regard, and after being satisfied that the public welfare requires it, and having regard to each of the following:

(a) competition in the field of Telecommunications;

(b) The needs of the public residing in sparsely populated areas, that are remote from the center of Israel;

(3) a directive under this subsection shall be issued after the Licensee has been afforded an opportunity to voice its contentions.

(c)

(1) If the Minister is convinced that all of the following hold true:

(a) significant competition has been established in the provision of a service included in the Basket of the Services for the General Public;

(b) areas exist in which a Service included in the Basket of Services for the General Public is provided by one or two holders of a General License;

(c) the cost of the provision of a said service by the said holder of a General License nationwide exceeds the benefit deriving to it from the provision of that service, and therefore the intervention of the Minister is required;

he may determine that another Licensee, who provides the same service not nationwide, shall participate in paying for the cost of providing the service in the said areas;

(2) if the Minister has so determined, he may prescribe provisions regarding the manner of realization of the participation in the funding and its amount;

(3) a determination under this sub-section requires the consent of the Minister of Finance and the approval of the Finance Committee of the Knesset.

(d) The provisions of this section shall also apply to a General License applicant, mutatis mutandis.

(e) Nothing in the provisions of this section shall derogate from the entirety of the duties of a holder of a General License, including provisions on its obligations to provide service to any person so requiring, under its license or under any law.

4G. Conditioning one service on another

No Licensee and no Broadcasting Licensee shall condition, directly or indirectly, the provision of Service on the purchase or receipt of another Service, provided by it or by another, or in not receiving Service from another Licensee or from another Broadcasting Licensee, unless the Minister, or the Council, as the case may be, permitted it to do so, subject to conditions or unconditionally; in this section, Service – Telecommunications Services or Broadcasts.

4H. The right to purchase Internal Wiring

(a) In this section –

Licensee – including a holder of a Satellite Broadcasting License as defined in section 6QQ;

Satellite Terminal Equipment, Reception Dish – as defined in Chapter B2;

Internal Wiring – such part of the Access Network as is installed on a persons premises and on joint premises, and as is intended for the sole use of that person.

(b) Without derogating from the provisions of this section, a person said in section (a) may purchase the Internal Wiring from a Licensee, in consideration for a payment, if it is owned by the Licensee, and provided that the Internal Wiring is installed on premises used solely for residence.

(c) If a person purchased the Internal Wiring, no other License or Broadcasting Licensee shall provide Telecommunications Services or Broadcasting Services to him, which involve use of the Internal wiring, unless he concludes that the purchaser paid the Licensee who owned the Internal Wiring for the purchase.

(d) Purchase of the Internal Wiring as aforesaid in subsection (b) may be made through another licensee, or another Broadcasting Licensee, if so agreed between it and the person on the premises of whom the Internal Wiring is installed; if there is said agreement, the other

Licensee or the other Broadcasting Licensee shall so notify the Licensee who owns the Internal Wiring, and shall be responsible for the payment for the purchase thereof, and the provision of subsection

(e) The payment for the Internal Wiring shall be as follows:

(1) in condominiums – 120 NIS, including V.A.T., and if the purchase was made in the manner said in subsection (d), this amount shall be paid in 12 equal payments;

(2) on premises that are not condominiums – an amount determined by the Minister with the approval of the Committee;

(3) the Minister, with the approval of the Finance Committee, may change the amount said in subparagraph (1), and he may also determine the manner in which they shall be updated and the ways for the payment thereof, and he may determine different amounts, according to such criteria as he may set out, including for types of premises.

(f) The provisions of this section shall also apply to the purchase of Satellite Terminal Equipment, excluding Reception Dishes, unscramblers and encoders, if it is owned by a holder of a Satellite Television Broadcasting License.

4I. Offensive Sites and content on the Internet

(a) In this section –

Offensive Site – an internet website, the main content of which is Offensive Content;

Offensive Content – each one of the following:

(1) the display of any obscene publication, within its meaning in the Penal Law, including –

(a) the display of sexual relations involving violence, abuse, debasement, degradation or exploitation;

(b) the display of sexual intercourse with a minor or with a person purporting to be a minor;

and all where the displayed content is clearly not of artistic, scientific, news, educational or advocacy value which justifies, in the circumstances of the matter, the display thereof;

(2) racial or nationalistic incitement;

(3) gambling;

(4) games that include violent acts;

Internet Access Provider – anyone who has received a License pursuant to this Law or anyone acting by virtue of a General Permit pursuant thereto that provides internet access service, including the holder of a General License for the provision of mobile radio telephone services and the holder of a Mobile Radio Telephone via another Network License, who provide the said service through Mobile Terminal Equipment.

(b) The Minister shall set out, in regulations or in the License of an Internet Access Provider, provisions concerning the obligation of an Internet Access Provider to inform its subscribers of –

(1) offensive sites and Offensive Content on the internet and ways of protection therefrom, including technological means intended for filtering sites or said content;

(2) additional hazards arising from use of the internet and possible protection from therefrom, as shall be determined by the Minister with the approval of the Economic Affairs Committee of the Knesset.

(c) An Internet Access Provider shall inform its subscribers, in accordance with subsection (b), in all of the following ways:

(1) it shall mail to the subscriber a printed information pamphlet, upon the execution of an agreement for the receipt of internet access service and upon the renewal thereof, as well as once every year, at the very least, during the term of the agreement;

(2) it shall publish the information on the internet website of the Internet Access Provider;

(3) it shall present the information in the agreement signed with the subscriber;

(4) it shall provide the information to the subscriber through the Internet Access Providers customer service representative.

(d) An Internet Access Provider shall present to its subscribers, in the manner determined by the Minister in regulations or in the License, and shall provide to any subscriber, at his request, an efficient service for filtering Offensive Sites and Offensive Content on the Internet, having due regard to accepted practices in the field; no Internet Access Provider shall charge a subscriber a fee for a filtering

service under this section, in addition to the payment it charges him for the internet access service.

5. Interconnection and Use of anothers Telecommunications Facility

(a) In this section –

Franchisee – (repealed);

Licensee – as defined in section 1; however, for the purposes of subsections (a) through (e) and (i), excluding a person who has received a Special License;

Another Licensee – for the purposes of subsections (f) and (g), a Licensee, including a holder of a Satellite Broadcasting License as defined in section 6QQ;

Interconnection - A connection between a Public Telecommunication Network of one Licensee and a Public Telecommunication Network of another Licensee, in either a physical or logical manner, which enables the transfer of Telecommunication Messages between the Licensees Subscribers or the provision of services by one Licensee to the subscribers of the other Licensee;

Use – for the purposes of subsections (f), (g) and (h) – including the following:

(1) the grant of access to a Telecommunication Facility of another Licensee, including a Public Telecommunication Network or a Access Network or any part of the above, and the possibility of using them;

(2) allowing the installation of a Licensees Telecommunication Facility in a Telecommunication Facility of another Licensee or on its premises;

Public Telecommunication Network – (repealed).

(b) The Minister may, for the purpose of ensuring competition in the field of Telecommunications and the standard of services therein, and having due regard to the public interest and to the interests of the Licensees concerned in the matter –

(1) stipulate that a Licensee must enable Interconnection to its Public Telecommunication Network, and issue directives with respect to the manner of carrying out Interconnection and scope thereof, as well as with respect to actions, services and arrangements which are incidental to effecting Interconnection and the payments therefor, including the provision of billing and collection services by one Licensee

to another Licensee, or the transfer of information between Licensees, to the extent the information is required for the provision of services by another Licensee to its subscribers or for the provision of services and for the collection of payments by one Licensee from the subscribers of another Licensee; a stipulation or the issue of directives under this paragraph may be prescribed in a license, by an administrative order or by regulations, as the case may be;

(2) prescribe by regulations, with the consent of the Minister of Finance, payments, maximum payments or minimum payments for Interconnection, as well as provision on the manner of calculation of the payments, their components and the proportions thereof, and provisions on the manner of linkage of the payments to the consumer price index or to a different index, including the possibility of determining an efficiency coefficient for a Licensee, at a rate and in the manner determined in regulations.

(b1) The prescribing of payments or the issuing of directives under subsection (b) (in this subsection – Payments for Interconnection) may be done, inter alia, based on one of the following:

(1) cost, according to a such calculation method as the Minister shall direct, with the addition of reasonable profit;

(2) a point of reference deriving from one of the following:

(a) the payment for services provided by the Licensee;

(b) the payment for other comparable services;

(c) payments said in subparagraphs (a) or (b) or payments for Interconnection or a service corresponding thereto, in other countries.

(c) If no provisions were prescribed under subsection (b)(1), neither generally nor concerning a particular matter, the Licensees concerned in the matter shall stipulate the terms of the Interconnection in an agreement, and in the absence of agreement, the Minister may issue directives thereto in accordance with his authority under subsection (b)(1).

(d) Where mandatory Interconnection was prescribed under subsection (b)(1) and no payments were fixed in regulations under subsection (b)(2), a Licensee may demand a reasonable price for Interconnection to its Public Telecommunication Network; in the absence of agreement between the Licensees concerned in the matter, the Minister shall fix the price for the Interconnection, according to a calculation method that shall be prescribed by him, and the said method may be determined, inter alia, as said in

subsection (b1); however, the Minister may direct that in under the circumstances of the matter each party shall bear its own expenses with regard to this matter; the Ministers directive shall be issued within a reasonable time, considering the circumstances of the matter; a Ministers directive under this subsection may be appealed to the District Court within 45 days from the date on which notice thereof was delivered to the Licensee; the Courts judgment may be appealed if the appeal is on a question of law. In this subsection, the Minister including any person authorized by the Minister.

(d1) The Minister may direct, with regard to an absence of agreement said in subsection (d), that the carrying out of Interconnection in accordance with the provisions prescribed under subsection (b)(1) shall not be delayed, an he may also issue any such other directive as he may deem appropriate under the circumstances of the matter, including directives concerning partial payments; the Minister shall decide whether to direct as aforesaid, and he shall issue this directives within a reasonable time not exceeding one year.

(e) The reasonable price which a Licensee may demand as aforesaid in subsection (d) shall be non-discriminatory; however, any preference allowed under any law or preference under special circumstances shall be enabled, in accordance with conditions stipulated in this regard in its license.

(f) Without derogating from the aforesaid in subsections (a) through (e), where the conduct of Telecommunication Activities or the provision of Telecommunication Services by one Licensee involved the Use of a Telecommunication Facility of Another Licensee, the provisions of this section shall apply to the arrangement of the said Use, with the necessary changes, and in the said subsections, the word Use shall replace the word interconnection.

(g) Where the conduct of broadcasting by a Broadcasting Licensee involved the Use of a Telecommunication Facility of Another Licensee, including Use of a Broadcasting HeadEnd, the provisions of subsections (a) through (e) shall apply to the arrangement of the said Use, mutatis mutandis, and in the said subsections:

(1) the words in the field of Telecommunications and in the field of Broadcasting, and the standard of services therein shall replace the words in the field of Telecommunications and the standard of services therein;

(2) the word Use shall replace the word interconnection;

in this subsection, Broadcasting Licensee – excluding holders of a Special Satellite Broadcasting License.

(h) Without derogating from the aforesaid in section 4H and in subsections (f) and (g), where the conduct of Telecommunication Activities, the provision of Telecommunication Services or the

conduct of broadcasting by a Licensee or by a Broadcasting Licensee involved the Use, including joint use by different Licensees, of a Telecommunication Facility installed on the premises of a subscriber, the provisions of subsections (a) through (e) shall apply to the arrangement of the said Use, mutatis mutandis, and in the said subsections, the words Use, including joint Use shall replace the word Interconnection.

(i) Without derogating from the provisions of this section, and having due regard, inter alia, to the provisions of section 6HH, the Minister may issue directives, in regulations or in a license or in administrative orders, concerning a Licensees obligation to designate capacity in its Public Telecommunication Network for the transfer of the Broadcasts or Telecommunication Services of another, and he may direct a said Licensee to connect more than one Broadcasting HeadEnd of persons who had received licenses therefor.

5A. Numbering

(a) In this section –

Allocation – the allocation of a range of telephone numbers for different uses and for different Telecommunication Services; Assignment – an approval for the use of telephone numbers, including any change in or revocation of the said approval, as well as the transfer of telephone numbers from one Licensee to another; Telephone Number - a group of numbers in a particular order, including a prefix which, when dialed, is intended to enable the transfer of a Telecommunication Message to particular Terminal Equipment or access to a particular Telecommunication Service; Number Portability – the possibility granted to a Licensees subscriber to retain the Telephone Number assigned to him upon becoming a subscriber of another Licensee in the same dialing area, in respect of the same type of Telecommunication Service; Numbering Plan – a plan for the Allocation and Assignment of Telephone Numbers, for mandating dialing rules and Number Portability or any part of the foregoing.

(b) The Minister may, for the purpose of ensuring competition in the field of Telecommunications and the standard of services therein –

(1) issue instructions to a Licensee in respect to the Allocation and Assignment of Telephone Numbers and in respect to dialing rules;

(2) formulate and administer a Numbering Plan and issue instructions to a Licensee in respect to the operation and implementation of the Numbering Plan.

(c) The Minister may prescribe, with the consent of the Minister of Finance and with the approval of the Finance Committee of the Knesset, fees for the Assignment of Telephone Number to Licensees, insofar as required for ensuring efficient use of the numbering resources.

(d) Without derogating from the provisions of any law, including provisions in a License granted under this Law, the Minister may direct that each Licensee shall bear some or all of the expenses incurred by it due to its compliance with instructions issued under subsection (b), and in respect to Number Portability, if any joint expenses are incurred by the Licensees concerned in the matter, he may mandate that the Licensees bear them in such manner as he may

direct.

(e)

(1) The Minister shall formulate a Numbering Plan concerning Number Portability in respect of a holder of a General License for the provision of Domestic Fixed-Lined Telecommunication Services and also in respect of a holder of a General License for the provision of mobile radio telephone Services (in this subsection – the Numbering Plan), and he shall issue instructions to holders of General Licenses in respect to the implementation and operation of the Numbering Plan by 8 Elul, 5766 (1 September 2006); the payment structure in this matter shall be prescribed by the said date by the Minister and the Minister of Finance, in such manner as shall ensure complete transparency and the prevention of any discrimination.

(2) The Minister and the Minister of Finance may delay, by order, with the approval of the Economic Affairs Committee of the Knesset, the implementation and operation of the Numbering Plan, for a period not exceeding three months, if they conclude that a real need therefor has arisen, and for special reasons.

(3) The Minister shall report to the Economic Affairs Committee of the Knesset on the Numbering Plan that he had prepared.

(f) The holder of a General License shall provide Number Portability to any subscriber requesting it, within one business day or within a shorter time set by the Minister, and shall carry out, without charge to the subscriber or to any other Licensee, all of the acts required of it for this purpose under this section.

5B. Blockage of SMS Services

(a) A Licensee shall enable, at the request of a subscriber, the blockage of SMS Services.

(b) If a subscriber requested a Licensee to block all or some SMS Services, the Licensee shall block the receiving or sending of SMSes, as requested.

(c) If an SMS was sent to a subscriber who had requested the blockage of SMS Services, the Licensee shall notify the sender of the SMS of the failure to transfer it, in which the addressees telephone number or name shall be indicated.

(d) No Licensee shall charge a subscriber for blocking or renewing SMS Services, for the notice sent to the sender of the SMS of the failure to transfer it, or for an SMS sent by a subscriber to a person at the request of whom the receipt of an SMS by him had been blocked under this section.

(e) The Minister may –

(1) prescribe provisions as to the Licensee on whom the obligation to give a notice said in subsection (c) shall be imposed and on the manner of the giving thereof;

(2) apply the provisions of this section to an SMS which includes video or audio as well.

(f) In this section –

Licensee - a holder of a General License for the provision of Domestic Fixed-Lined Telecommunication Services or for the provision of mobile radio telephone services, and a holder of a Mobile Radio Telephone via another Network License; SMS – a Telecommunication Message consisting of writing, including signals or signs, transferred by means of a Public Telecommunication Network to the Terminal Equipment of an addressee or a group of addressees;

SMS Services – SMS sending or SMS receiving services.

5C. Roaming Services

(a) In this section –

Holder of a New License – any one of the following:

(1) a person who first received a General License for the provision of mobile radio telephone services on 22 Elul 5770 (1 September 2010) or thereafter;

(2) a person whose existing license has been extended, following its selection via tender by the Tenders Committee appointed by the Minister for this purpose on 17 Iyar 5769

(1 May 2009), or by any other Tenders Committee that has replaced it;

Holder of an Existing License - a person who received a General License for the provision of mobile radio telephone services prior to 22 Elul 5770 (1 September 2010), and the aforesaid in paragraph (2) of the definition of Holder of a New License does not hold true for it;

Use – as defined in section 5(a);

Roaming Services – Allowing a Holder of a New License to Use of the Public Telecommunication Network of the Holder of an Existing License in order for the holder of a New License to provide mobile radio telephone services to its subscribers nationwide; Maximum Payment for Interconnection – the maximum payment a holder of an Existing License may charge a holder of a New License for Interconnection, in accordance with the regulations made under section 5(b)(2), and in regard to the transfer of data, for every 1 megabyte – a price not exceeding 65% of the said maximum payment set per minute of a voice call.

(b) Every Holder of an Existing License shall be required to provide Roaming Services to a Holder of a New License if both of the following hold true:

(1) the Holder of the New License had requested the receipt of Roaming Services from all of the Holders of Existing Licenses, and no agreement has been reached between it and at least one Holder of an Existing License, on the terms for the provision of Roaming Services as aforesaid;

(2) the Minister has certified that the Holder of the New License can provide, in accordance with the License first granted thereto or with the extension to its existing License, as the case may be, mobile radio telephone services to an area in which at least 10% of the population resides, by means other than receiving Roaming Services (in this section – the Ministers certification); the Ministers said Certification shall not be issued unless at least 30 days have passed from the date on which the Holder of the New License made its request to the Holder of the Existing Licenses as said in paragraph (1).

(c) A Holder of an Existing License shall provide Roaming Services to the Holder of the New License under the provisions of subsection (b) for a period of seven years from the date of the Ministers Certification; the said Roaming Services shall be provided in a manner enabling the Holder of the New License to provide mobile

radio telephone services to its subscribers, the quality and terms of which shall be the same as those provided by the Holder of the Existing License to its subscriber, and to comply with instructions given to it under section 13.

(d) Notwithstanding the provisions of subsection (c), if four years have passed from the date of the Ministers Certification, and the Minister or any person empowered by him for that purpose notified the Holder of the New License and the Holders of the Existing Licenses, immediately before the end of the said period, that the Holder of the New License cannot provide, in accordance with the License first granted to it or with the extension to its existing License, as the case may be, mobile radio telephone Services to an area in which at least 40% of the population resides, by means other than Roaming Services, the obligation under subsection (b) shall no longer apply to the Holders of the Existing Licenses, starting from 45 days from the date on which the Minister published notice thereof to the public.

(e) The Minister and the Minister of Finance may extend, in respect to a particular Holder of a New License, any of the periods said in subsections (c) and (d), for one additional period not exceeding three years, if they found that the said extension is required for reasons independent of the Holder of the New License.

(f) The Minister shall stipulate, in a General License for the provision of Mobile Radio Telephone services, the conditions for the provision of Roaming Services under this section and the scope thereof, including an obligation of the Licensees concerned in the matter to provide information to one another, insofar as the said information is required for the purpose of the provision of the said services; the Minister shall also prescribe, with the consent of the Minister of Finance, regulations concerning the amount of the payment for Roaming Services provided under this section, and the times of payment thereof; the first said regulations shall be made by 8 Shvat, 5772 (1 February, 2012).

(g) Until the date of the prescription of regulations under subsection (f) (in this section – the Determining Date), a Holder of an Existing License may demand a price for the Roaming Services not exceeding the maximum payment for Interconnection.

(h) The amount of the payment set under subsection (f) shall also apply to Roaming Services provided under this section, until the Determining Date; the difference between the payments paid under subsection (f) and the payments payable under subsection (f) shall be paid by the Holder of the New License or the Holder of the Existing License, as the case may be, within 60 days from the Determining Date; in the calculation of the said difference, to the payments paid under subsection (g) shall be added linkage differentials and interest within their meaning in the Adjudication of Interest and Linkage

Law, 5721-1961, from the date of the payment thereof until the date of the payment of the difference.

(i) Nothing in the provisions of this section shall derogate from the powers vested in the Minister under section 5, insofar as they do not conflict with the provision under this section.

6. Revocation, limitation or suspension of a license

The Minister may, at any time, revoke a License, limit it or suspend it, as the case may be, in each of the following instances, provided the Licensee has been given a reasonable opportunity for a hearing:

(1) the Licensee has requested cancellation of its License;

(2) the Licensee has breached a material condition of the License; (2a) the Licensee has breached or prevented the carrying out of an

instruction given under section 11(b), 13 or 13A;

(2b) the Licensee has breached one of the terms of the License (other than a material term), and has not remedied the breach as instructed by the Minister;

(3) the Licensee has not commenced the provision of a service or ceased to provide it;

(4) the Licensee has been declared bankrupt;

(5) the Licensee has decided on voluntary liquidation or a receiver was appointed to it by the court, or the court has ordered that it be liquidated;

(6) the conduct of Telecommunication Activities or the provision of Telecommunication Services by the Licensee did not meet appropriate standards for and levels of performance of similar Activities or Services, under rules prescribed under this law;

(7) reasons concerning the public welfare indicate the need to revoke, limit or suspend the License.

CHAPTER B1: CABLE TELEVISION BROADCASTING AND TELEVISION

BROADCASTING FOR SUBSCRIBERS

Article A: Interpretation

6A. Definitions

In this Chapter –

Area – a geographical area in which a holder of a Cable Broadcasting License is obligated, by the terms of its License, to provide Broadcasts; Means of Control – (repealed);

Franchisee - (repealed); Interested Party - (repealed);

The Committee – the Economic Affairs Committee of the Knesset;

The Council – the Council for Cable and Satellite Broadcasting appointed under section 6B;

Local Production – a television program produced for broadcasting in Israel, the majority of the production staff that took part in the production and carrying out of which being residents of Israel who permanently reside in Israel, excluding news, current affairs programs, sports events and fillers; Local In-house Production - a Local Production produced by a holder of a Cable Broadcasting License or a corporation in which a holder of a Cable Broadcasting License is an Interested Party, or a person who holds 10% or more of a particular type of Means of Control in a said Licensee, or a Sister Company, within its meaning in section 6L1, of a said Licensee, whether directly or indirectly, or a Channel Producer producing on its behalf; Purchased Local Production – a Local Production other than one of the following:

(1) a Local In-house Production;

(2) a production of a government institution;

(3) a production of any other body broadcasting, under any law, television Broadcasts to the public or to part thereof, or a production of a corporation in which another said body is a Controlling Party or Interested Party, or a production of a corporation that is, directly or indirectly, an Interested Party in a said other body;

Basic Broadcast Time – the time resulting from the multiplication of three broadcasting hours by five in-house broadcasting channels of a holder of a General Cable Broadcasting License, on each broadcasting day;

First Run Broadcast – the first run broadcast of a television program in Israel;

Channel Producer – a person that produces a broadcasting channel, which includes planning, producing, purchasing and lining up broadcasts, and edits them for the purpose of preparing them to broadcasting;

Operation Hub – (repealed);

Subscriber – any person who has entered into an agreement with a holder of a Cable Broadcasting License for the purpose of receiving its Broadcasts and services;

Dedicated Channel Broadcaster – a person who has received a Special Cable Broadcasting License under section 6HH1, for the purpose of broadcasting a Dedicated Channel;

Dedicated Channel – a broadcasting channel with unique characteristics such as language, culture or heritage, a channel primarily intended for a particular sector of the public, or a channel primarily dedicated to a single subject;

General Cable Broadcasting License – a license granted under this Chapter for the provision of Cable Broadcasts to Subscribers, which include a variety of television channels, including On-Demand Broadcasts and including the Broadcasts of a holder of a Special Cable Broadcasting License;

On-Demand Broadcasting License – a license granted under this Chapter to broadcast On-Demand Broadcasts;

Cable Broadcasting License – a General Cable Broadcasting License, an On-Demand Broadcasting License or a Special Cable Broadcasting License; Special Broadcasting License - a license granted under this Chapter to broadcast a single channel of Cable Broadcasts, through a holder of a General Cable Broadcasting License;

Interface Equipment – (repealed); Cable Network – (repealed);

Cable Broadcasts – Broadcasts distributed by means of a Broadcasting HeadEnd and Public Telecommunication Network;

On-Demand Broadcasts – Cable Broadcasts broadcast on one or more channels, which can be viewed at any time as per the Subscribers choice, distributed by means of broadband infrastructure and which are provided with assured quality and at the accepted standard of service for broadcasting in the digital method;

Broadcasts – (repealed); Broadcasting Station – (repealed).

Article B: The Council for Cable and Satellite Broadcasting

6B. Appointment of the Council, its composition and its work procedure

(a) The government shall appoint a Council for Cable and Satellite Broadcasting.

(b) The Council shall consist of thirteen members who shall be suggested by the Minister to the government, and who are:

(1) six representatives of the government who are employees of the State, one according to the recommendation of the Minister of Culture, one according to the recommendation of the Minister of Finance and three according to the recommendation of the Minister of Communications;

(2) seven representatives of the public, of whom two were recommended by Union of Local Authorities, two represent, in the Ministers opinion, the consumers, one, in the Minister opinion, represent the artists and creators in Israel, and two are representatives of bodies in the field of education and culture, recommended by the Minister of Culture.

(c) The Chairperson of the Council shall be the representative of the Minister of Communications, and he may sign rules prescribed, licenses granted and decision adopted by the Council, on its behalf.

(d) The Minister shall make regulations concerning the service of the members of the Council, and, inter alia, in regard to restrictions in

regard to the appointment, the term of office and its expiry and the appointment of a substitute, and in regard to the reimbursement of expenses to members of the Council for the payment of subscription fees to Broadcasting Licensees supervised by the Council.

(e) The Council may prescribe its own rules of procedure, as far as those were not prescribed by regulations made by the Minister in this regard.

6C. Obligation of full disclosure and prohibition on contracting

(a) A member of the Council who is aware that he has entered or is involved, or may enter or may be involved, directly or indirectly, on his own or through his Relative, agent or partner, into or in a transaction or a matter up for discussion in the Council or in one of its committees, shall inform the Chairperson of the Council thereof, in writing, immediately after he becomes aware that the said transaction or matter are up for discussion, and he shall not attend the discussions of the Council or of a said committee on that transaction or matter, and shall not participate in a decision relating to or concerning them.

(b) No member of the Council or Relative, agent or partner thereof, or corporation in which one of the aforesaid is an Interested Party or manager or a senior executive worker, shall enter into a contract or transaction with the holder of a Cable Broadcasting License; however, the Council, by a majority of two thirds, may permit the contractual relationship on conditions that it shall stipulate; a said permit shall require the Ministers approval.

6D. Application of laws on members of the Council

Members of the Council who are not employees of the State shall be deemed to be employees of the State for the purposes of the following statutes:

(1) the Knesset Elections Law [Consolidated Version], 5729-1969;

(2) The State Service Law (Restrictions on Political Party Activity and Fundraising), 5719-1959;

(3) the Public Service Law (Gifts), 5740-1979;

(4) the Penal Law, 5737-1977 – the provisions concerning public servants;

(5) the Evidence Ordinance [New Version], 5731-1971;

(6) the Torts Ordinance [New Version].

6E. Roles of the Council

The following are the roles of the Council:

(1) to set policies on –

(a) the classes of Broadcasts and the subjects, content, standard, scope and times thereof, including approving channels for broadcasting and the cancelling thereof;

(b) the performance of community Broadcasts;

(c) the encouragement of the production of original-local programs, including through broadcasting them in a maximum number of areas;

(d) the supervision of the performance of the Broadcasts provided by holders of Cable Broadcasting Licenses, having regard to the classes of broadcasts and the scope thereof, including supervising the fulfillment of the marking obligation and the obligation to provide information, and of the prevention of the broadcasting of commercials or promos the broadcasting of which by holders of Cable Broadcasting Licenses is prohibited under the provisions of the Classification, Marking, and Prohibition of Harmful Broadcasts Law, 5761-2001, as well as to supervise the performance of obligations under the Television Broadcasts Law (Subtitles and Sign Language), 5765-2005;

(e) conditions and restrictions concerning content exclusivity;

(f) ethics in Broadcasting and consumer protection in matters which are within the scope of the Councils authority under this Law;

(2) to publish tenders for the grant of Cable Broadcasting Licenses;

(3) to serve as the tenders committee in tenders said in paragraph (2);

(4) (repealed);

(5) to prescribe rules –

(a) on the matters set out in paragraph (1);

(b) on some or all of the broadcast schedule of holders of Cable Broadcasting Licenses;

(6) to grant licenses in accordance with its authority under section 6H;

(7) to approve cooperation between the Broadcasting Licensees in the field of broadcasting and Broadcasts; however, nothing in a said approval shall exempt from the requirement to obtain approval or a permit under any other law.

6E1. Local Productions

(a)

(1) at least 10% of the total Basic Broadcast Time broadcast annually by holders of General Cable Broadcasting Licenses shall be allocated to Local Productions, on topics that are not unique to a particular area, that shall be produced specially for the purpose of broadcasting them under this section, and that shall be broadcast as a First Run Broadcast;

(2) 50% of the broadcasts said in paragraph (1) shall be Purchased Local Productions.

(a1) Without derogating from the aforesaid in subsection (a), the Council shall require a holder of a General Cable Broadcasting License to invest a monetary sum at a rate of up to 12% of its annual income from subscription fees, which shall be no less than 8% of that income, for the production or purchase of Local Productions for First Run Broadcasts; in determining the amount under this subsection, the Council may take into account, among its other considerations, the financial state of the said Licensee in its activity in the field of Broadcasts.

(a2) The Council may condition the grant of more than one Special Cable Broadcasting License to the same holder on requiring it to invest a monetary sum at a rate that shall be determined by it, which shall not exceed 12% of its income from the Broadcasts, for the production or purchase of Local Productions for First Run Broadcasts.

(a3) The Council may condition the grant of an On-Demand Broadcasting License on a requirement to invest a monetary sum at a rate that shall be determined by it, which shall not exceed 4% of its annual income from the subscription fees for On-Demand Broadcasts, for the production or purchase of Local Productions for First Run Broadcasts, that shall be offered by it, for viewing, to its Subscribers.

(b)

(1) The Council may prescribe, by rules, the minimum quota for Local Productions of broadcasts broadcast by a holder of a General Cable Broadcasting License, on topics concerning solely a particular area, broadcast in a First Run Broadcast, in addition to the quota said in subsection (a), provided that, for this purpose, current affairs shall also be deemed to be Local Productions; the Council may determine the minimum quota under this paragraph as a quota of hours of part thereof;

(2) (repealed).

(c) Without derogating from the generality of the provisions of section 6E, the Council may prescribe rules on Local Productions, including

–

(1) on the classes of the broadcasts and the genres of the broadcasts that shall be included in the minimum quotas for Local Productions, In-house Local Productions and Purchased Local Productions, the scope of the classes of broadcasts and genres of broadcasts in each of the said Productions and the broadcast times thereof, and the manner of the distribution of the Broadcasts among the various channels, including in order for the Productions to be performed with the appropriate standards, budget quality;

(2) on the right of a holder of a Cable Broadcasting License to credit amounts paid for the Local Production produced by another against the Local Productions quota which it is required to meet;

(3) on the reporting obligation with respect to the fulfillment of the provisions of this section.

(d) If a holder of a Cable Broadcasting License breaches an obligation imposed on it under the provisions of this section, the Council may require it to produce or purchase Local Productions at the rate of double the Local Productions in respect to which the said obligation has been breached, and it may give instructions, inter alia, on the genres and the schedules for the production or broadcasting thereof; where the Council has imposed a requirement on the holder of a Cable Broadcasting License under this subsection, no financial sanction shall be imposed on the said Licensee under section 37B1, for that breach.

6F. Dissolution of the Council

(a) If the Minister concludes that the Council does not properly fulfill its functions under this Chapter, he shall advise the Council, in a written reasoned notice, that shall be sent to the chairperson of the Council, that if, within such period as he shall set, it shall not correct whatever requires correction, he shall order its dissolution; should the said correction not be made within the period prescribed by the Minister in his notice, the Minister may, with the approval of the government, order the dissolution of the Council.

(b) If the Council was dissolved as aforesaid, a new Council shall be appointed in the manner aforesaid in section 6B; the Minister may carry out the roles of the Council as set out in this Chapter, until a new Council is appointed.

6F1. Placing means and budgets at the disposal of the Council

The government shall place at the disposal of the Council the means and budgets required for it to function properly, and it shall act to promote, for this purpose and to the extent needed, the allocation of appropriate amounts in the budget laws.

6F2. Investment in Local Productions in the Amharic and Tigrigna languages

(a) In order to encourage Local Productions in the Amharic and Tigrigna languages for the community of immigrants from Ethiopia (in this section – the Community), and to assist in the integration of members of the Community into society and in their adapting thereto, an annual budget in the amount of 4.8 million NIS shall be set forth in the budget laws (in this section – Support Funds).

(b) The Council shall distribute the Support Funds for the funding of Local Productions to be broadcast on the channels that broadcast in the Amharic and Tigrigna Languages during at least half of their broadcast time, provided that the said broadcast time shall be no less that 12 hours a day, six days a week; for this purpose, Broadcasts in another language, accompanied by subtitles in the Amharic and Tigrigna Languages, shall not be taken into account.

(c) The provisions of section 2A of the Budgetary Principles Law, 5745-1985, shall apply a distribution under subsection (b), including the tests that shall be set out by the Council, mutatis mutandis, and they shall also apply to a distribution to bodies which are not included in the definition of Public Institution in the said section.

(d) In the distribution of the Support Funds, the Council shall examine the Council shall examine the suitability of the Local Productions to one or more of the following goals, and it shall also take into account the hours during which the Local Productions will be broadcast, on the channels said in subsection (b):

(1) enabling the members of the Community to express the collective feelings of the Community, their culture and traditions;

(2) highlighting the achievements of members of the Community, within the Community and vis-à-vis Israeli society as a whole;

(3) providing relevant information on all matters concerning dealing with bodies in Israel, including government ministries and the institutions dealing with issues related to the Community;

(4) depicting Israeli lifestyle, in order to aid in the absorption of members of the Community into Israel;

(5) familiarization with Israeli history and culture.

(e) In this section –

Local Production – a program in which a Majority of its creators, a Majority of the production staff, a Majority of the technical engineering crew that took part in its production, and a majority of the production staff are residents of Israel and Members of the Ethiopian Ethnic Group, who permanently reside in Israel, and that was produced for an Israeli initial target audience in the in the Amharic and Tigrigna Languages;

Member of the Ethiopian Ethnic Group – a person who was born in Ethiopia or at least one of his parents was born in Ethiopia; Majority – at least 75%.

Article C: Cable Broadcasting License

6G. Obligatory licensing

(a) No person shall perform Cable Broadcasting unless it has received a Cable Broadcasting License from the Council under this Chapter.

(b) No person shall establish, maintain or operate a Broadcasting HeadEnd for the purpose of the conduct of Broadcasts by a holder of a General Cable Broadcasting License unless it has obtained a license therefor under section 4 and in accordance with the terms and conditions thereof.

(d) (Repealed).

(e) (Repealed).

6H. Grant of a license

(a) The Council may grant a Cable Broadcasting License and set out terms and conditions in the license, and it may also direct that the license be granted by way of a tender; a Cable Broadcasting License may be a General Cable Broadcasting License, an On-Demand Broadcasting License or a Special Cable Broadcasting License.

(b) The Council may approve an application for a Cable Broadcasting License, impose conditions for his approval that must be met prior to the grant of the license or subsequent to the license being granted,

and it may reject a Cable Broadcasting License application, giving reasons for the rejection, in writing.

(b1) Where an application for an On-Demand Broadcasting License has been submitted to the Council, it may decide that a General Broadcasting License must be obtained for the purpose of the broadcasting thereof, having regard, inter alia, to the characteristics of the Broadcasts, their nature and scope; where it has decided as

aforesaid, it shall notify the applicant that it must submit a General Broadcasting License application, should it so desire.

(c) The Council may change the terms of a license, add to or subtract therefrom, provided that it has first given the Licensee an opportunity to make submissions.

(d) Where the Council directed that a license shall be granted by way of a tender, it may direct that the selection of the Licensee shall be based, inter alia, on the amount of the license fees offered by the tender participants.

(e) With regard to (a) through (d), the Minister may give instructions in respect to changing the decisions of the Council under the said subsections, if, in his opinion, special reasons exist requiring it.

(f) The Minister may give instructions concerning conditions in respect of engineering matters, which shall be included in a Cable Broadcasting License, whether prior to the grant of the license or subsequent to the license being granted, including in respect of the following matters:

(1) the technology which shall be used in the Broadcasting and the manners of reception and access thereto;

(2) the means and manners of transmitting and distributing the Broadcasts, and of their reception by the Subscribers; including the specifications of the Broadcasting HeadEnd which shall be used for its Broadcasts and the compliance thereof with the standards, and a minimum number of broadcasting channels that may be maintained by means thereof.

(g) The Director General of the Ministry of Communications shall prescribe directives concerning the promised quality and the standard service quality of On-Demand Broadcasting; the said directives shall be published on the Ministry of Communications internet website.

6H1. Considerations in granting a license

In the grant of a Cable Broadcasting License and in the stipulation of its terms, the following considerations, inter alia, shall be taken into account:

(a) government policy in the field of Telecommunications and in the field of Broadcasting;

(b) considerations concerning the public welfare;

(d) the contribution of the grant of the license to competition in the field of Broadcasting, to the plurality and diversification thereof and to the standard of services therein;

6H2. Qualifications to obtain a license

A Cable Broadcasting License shall only be granted if the following, at the very least, hold true for the applicant:

(1) he is an Israel Citizen and an Israel resident, or it is a corporation registered in Israel, and in the case of a General Cable Broadcasting License, at least 26% of every type of Means of Control in the said corporation is held by a citizen of Israel and a resident of Israel; in this paragraph –

Israel Citizen – within its meaning in the Citizenship Law, 5712-1952;

Resident – within its meaning in the Population Registry Law, 5725-1965;

(2) the applicant has not been convicted of an offense that because of its nature, severity or circumstances renders him unfit to be granted a said license, and if it is a corporation – no Officer or Interested Party therein has been convicted as aforesaid.

6H3. Restriction on the grant of a license

No Cable Broadcasting License shall be granted in the following cases:

(1) the grant of the license may be contrary to public welfare;

(2) the grant of the license may constitute a threat to national security;

(3) the applicant is a political party or an agent of a political party, directly or indirectly, who may use the Broadcasts in order to promote the purposes of the party;

(4) the applicant or any person that holds any type of Means of Control in an applicant that is a corporation is a foreign government; however, the Minister may permit an indirect Holding of up to 10% of any type of Means of Control by a corporation in which a foreign government holds any type of Means of Control.

6H4. Cross Ownership

(a) No Cable Broadcasting License or On-Demand Broadcasting License shall be granted to a corporation for which one of the following holds true, directly or indirectly:

(1) it is a holder of a television broadcasting franchise under the Second Television and Radio Authority Law, 5750-1990, or a holder of a Satellite Broadcasting License under Chapter B2 or a holder of a General Cable Broadcasting License or a holder of an On-Demand Broadcasting License (in this section – a Holder of Another Broadcasting License) or it is a newspaper;

(2) it is a corporation in which a Holder of Another Broadcasting License holds any type of Means of Control, or that holds any type of Means of Control in a Holder of Another Broadcasting License or in a newspaper;

(3) it is a corporation a Controlling Party of which or a person who holds more than 24% of any type of Means of Control of which is a newspaper, or it is a corporation a person who holds 24% of any type of Means of Control of which or who is a Controlling Party of which also holds 24% of any

type of Means of Control in or Controls a newspaper;

(4)

(a) where two or more persons hold, in the aggregate, more than 24% of any type of Means of Control in a single newspaper, then they shall not be Controlling Parties of the applicant corporation and their total aggregate holdings in the applicant corporation shall not exceed 24% of any type of Means of Control therein;

(b) where two or more persons hold, in the aggregate, more than 24% of any type of Means of Control in different newspapers, then they shall not be Controlling Parties of the applicant corporation and their total aggregate holdings in the corporation shall not exceed one third of any type of Means of Control therein; where the provisions of subparagraph (a) also hold true for any of the persons who hold Means of Control in different newspapers, only the restriction provided in this paragraph shall apply to their aggregate holdings;

(5) it is a corporation an Interested Party in which is also an Interested Party in another corporation that has obtained a General Cable Broadcasting License or an On-Demand Broadcasting License, or a person who holds more than 24% of any type of Means of Control in which also holds more than 24% of any type of Means of Control in a corporation that has obtained a Satellite Television Broadcasting License, unless the Minister has determined,

with the consent of the Council, that it will benefit competition in the field of broadcasts and the variety of the broadcasts offered to Subscribers, all in accordance with the provisions, conditions and restrictions established by the Minister after consulting with the Council and with the Committees approval.

(b) Notwithstanding anything provided in this section, any person who held Means of Control in a Franchisee on the date of commencement of Amendment 25, and the Franchisee or a linked company thereof have chosen to act as said in section 6L2(1), may hold Means of Control in a corporation that has obtained a General Cable Broadcasting License, at the same rate of Means of Control held by it in the Franchisee, all of which for the period ending at 8 years from the date of commencement of Amendment 25.

Newspaper – a daily newspaper distributed throughout most of the country, as well as any person who is that newspapers publisher; Franchisee – within its meaning in Chapter B1, in its version immediately before the commencement of Amendment 25, and in this regard, a corporation that had been directly held by Franchisees or linked companies thereof, which were, immediately before Amendment 25, Franchisees, and who had acted, in their various franchise areas, during the period of the franchise, as a single brand, shall also be deemed to be a Franchisee;

6I. Conditions for granting a Cable Broadcasting License

(b) The Minister may, after having consulted with the Council, prescribe conditions for granting a license for Cable Broadcasting and the conduct of Broadcasts, including conditions concerning the following:

1 the procedures for the grant of a Cable Broadcasting License, whether it is granted through a tender or otherwise, including the manner of submission of application and of the handling thereof, information that the applicant for a license must disclose and documents that it must furnish;

2 a fee for the grant of a Cable Broadcasting License and the ways and times of the payment thereof, including the linkage thereof to the consumer price index and the determination of interest arrears and collection expenses;

3 guarantees that a Cable Broadcasting Licensee must furnish in order to receive the license and to ensure the fulfillment

of the terms of its license, and the manner of the forfeiture thereof;

(4) terms that will be set out in the license, concerning the prices for the services, including a determination of the maximum or minimum prices that the licensee may charge a Subscriber, insofar as that determination is required for the purpose of promoting competition and the standard of services therein;

(5) terms and restriction concerning the Holding, transferring or acquisition of Means of Control in the applicant for a license, the appointment of Officers and the maintaining of a separate accounting system or the maintaining of separate corporations, as said in section 4(d2), mutatis mutandis;

(6) the professional know-how and experience that must be at the disposal of the applicant for a license and its financial capability;

(7) a determination of the area in which the licensee is required to provide Cable Broadcasts;

(8) The period of the license, including the possibility to extend it by one or more additional periods;

(9) the obligations of a holder of a General Cable Broadcasting License towards its Subscribers and towards other licensees.

(b) Where no regulations had been prescribed concerning the matters listed in subsection (a)(3) through (9), the Council may prescribe, in a license or in a tender, terms and conditions concerning the said matters; the provision of section 6H(e) shall apply to the Councils prescription under this subsection.

6I1. Conduct of Broadcasts in a proper and regular manner

(a) A Cable Broadcasting Licensee shall conduct the Broadcasts in a proper and regular manner, in accordance with the license granted thereto and in accordance with the regulations and rules prescribed under this Law.

(b) If the Ministry or the Council conclude that a Cable Broadcasting Licensee is acting in a manner that may cause an impairment to the proper and regular conduct of the Broadcasts, or that its activity may cause significant impairment to competition in the field of Broadcasting, each of them may give instructions to the licensee in respect to steps that it must take in order to prevent that impairment; the Ministers instructions under this subsection shall be given after the Minister has consulted with the Council.

6J. Prohibition on transfer, charge and attachment

(a)

(1) No Cable Broadcasting License, including any of the rights granted thereunder, may be transferred, charged or attached; notwithstanding the aforesaid, the Minister may, after consultation with the Council and after having taken into account the considerations stated in section 6H1, permit the transfer of a Cable Broadcasting License while carrying out structural changes, on such conditions as he may stipulate, if he is convinced that all of the conditions that held true for the transferor hold true for the transferee Licensee;

(2) any transfer, charge or attachment of any of the Cable Broadcasting License Assets, not explicitly allowed under the license, shall require the approval of the Minister; notwithstanding the aforesaid, the charge of a said Asset to a banking corporation as defined in the Banking (Licensing) Law, 5741-1981, shall not require a said approval;

(3) no charge on any of the License Assets shall be realized unless in a manner approved by the Minister, and provided that nothing in the realization can impair the proper and regular conduct of the Broadcasts.

(b) Terminal Equipment installed on the premises of a Subscriber shall not be capable of being –

(1) charged or attached;

(2) transferred to another, except in accordance with provisions prescribed by the Minister by regulations or in accordance with the Cable Broadcasting License;

(c) guarantees furnished by a Cable Broadcasting Licensee under section 6I(a)(3) or 6I(b), to ensure the fulfillment of the terms of the license and the moneys received from the forfeiture thereof shall not be capable of being attached.

6K. Revocation, limitation or suspension of a license

(a) The Council may revoke a Cable Broadcasting License, limit it or suspend it, in each of the following instances, provided the Licensee has been given a reasonable opportunity for a hearing:

(1) the Licensee did not disclose to the Minister, the Council or the Tenders Committee, as the case may be, information

that must be disclosed or it furnished inaccurate information;

(2) the Licensee did not comply with the provisions of this Chapter or of regulations or rules made thereunder;

(3) the Licensee committed a material breach of the License conditions;

(3A) the Licensee had breached a condition of the License (other than a material term), and has not remedied the breach as instructed by the Minister or the Council;

(4) the Licensee has not commenced Broadcasts within the time fixed therefor in the license, or ceased its Broadcasts for an unreasonable period of time;

(5) one or more of the qualities that rendered the licensee suitable to be a Cable Broadcasting Licensee has ceased to exist;

(6) the Licensee has died, has been declared legally incompetent or bankrupt, and if it is a corporation - a receiver or a temporary liquidator was appointed thereto by the court, the court has ordered that it be liquidated or the licensee has decided on voluntary liquidation;

(7) the Licensee has requested cancellation of its license;

(8) in the opinion of the Minister or the Council, reasons concerning the public welfare require it.

(b) For the purpose of this section, the provision of section 6H(e) shall apply.

6K1. Additional powers

The Minister may give, in regulations or in a license, instructions to a holder of a General Broadcasting License, concerning the provision of Broadcasts to Israeli citizens and residents in the Israeli localities in Judea, Samaria and Gaza, as well as instruction to a licensee concerning Telecommunication Activities and Telecommunication Services required for the provision of said Broadcasts.

6K2. Basic Package

(a) The Minister may direct a holder of a General Cable Broadcasting License to offer to any person that requires it, a package of Broadcasts comprising a limited number of channels at a fixed price (in this section – Basic Package); the Minister shall issue directives as to the number of channels in the Basic Package and as to its price, and he may also issue directives as to the policy on the characteristics of the Basic Package and the types of channels therein.

(b) The directives of the Minister under subsection (a) shall be effective for a period not exceeding three years; however, if the Minister finds that no competition has yet been established in multi-channel Television Broadcasting, then he may direct, in consultation with the Council, that the effective period of such directives be extended for additional periods not to exceed three years each.

(c) The Council shall issue directives for the implementation of the directives of the Minister under subsection (a), including directives as to the specification of the channels to be included in the Basic Package, the content of the Broadcasts on the channels included in the package and the standard and extent thereof; the Council shall also issue directives as to the General Cable Broadcasting Licensees informing the public of the Basic Package.

(d) No General Cable Broadcasting Licensee shall demand any payment from a Basic Package subscriber, for services ancillary to the Basic Package, including installment fees or the cost of the installment, and for Terminal Equipment (in this subsection – Ancillary Payments), exceeding the price for the package mandated by the Minister under subsection (a), if it does not demand Ancillary Payments from subscribers of other packages; if the Licensee demands Ancillary Payments from subscribers of other packages, then the said payment that the Licensee collects from the subscribers of the Basic Package shall not exceed the payment collected from the subscriber of other Broadcast packages, for the same Ancillary Services, except with the approval of the Council.

(e) If the Minister directs as said in subsection (a), the Council may not issue directives requiring a Licensee to offer another basic package.

6L. Maintaining continuity of Broadcasting

The Minister may prescribe regulations or give instructions concerning the maintaining continuity of Broadcasting where Broadcasting has ceased due to one of the grounds set out in section 6K, or due to the expiration of the validity of the Cable Broadcasting License or of any other license by virtue of which the Broadcasting HeadEnd is operated, including concerning the appointment of a trustee for the management of the Headhend and the operation thereof, and he may also prescribe terms for the payment of user fees to the licensee for the use of the Broadcasting HeadEnd, and the rate thereof.

Article C1: Transition from a Franchise to a license

6L1. Definitions

In this Article –

Franchisee, Franchise, Broadcasting Station and Cable Network – within their meaning in Chapter B1, in its version prior to the commencement of Amendment 25;

Company – including any other corporation;

Linked Company – a parent company, a subsidiary or a sister company; Significant Influence - the capability to significantly influence the activity of a corporation, whether alone or together with or through others, whether in a direct or indirect manner, arising from holding Means of Control in that corporation or in another corporation, including capability that derives from the corporations articles of association, from a written, oral or other kind of agreement, or capability deriving from any other source, excluding capability that derives solely from the performance of an office holders duties in the corporation; without derogating from the generality of the foregoing, a person shall be deemed to hold Significant Influence over a corporation if it holds twenty -five per cent or more of any Means of Control in that corporation; Sister Companies - companies where the entity holding Significant Influence over one company also has Significant Influence over the other company;

Parent Company - a company with Significant Influence over another company;

Subsidiary - a company over which another company exerts Significant Influence.

6L2. Conditions for the grant of a General License

The Minister may grant a Franchisee or a Linked Company of a Franchisee (hereinafter – the Applicant) a General License for the conduct of Telecommunication Activities and for the provision of Telecommunication Services by means of the Broadcasting Station used by the Franchisee for Broadcasting (hereinafter – the License) under the provisions of section 4 and subject to the following conditions:

(1) within 60 days from the date of commencement of Amendment 25, the Franchisee and a Linked Company thereof submitted applications for a General License – for one of them, and for a General Cable Broadcasting License – for the other, all of which in respect of all of the areas included in all of the Franchises of the said Franchisee and of Linked Companies thereof, that had operated, during the period of the Franchise, as a single brand, and one of them has also submitted an application for a Special License for a Broadcasting HeadEnd; in its application, the applicant for a General License shall undertake to perform any act required in order to adjust the Cable Network to be used as a Public Telecommunication Network;

(2) the Franchisee shall pay the State consideration as per the stipulations of the agreement signed between the State and the

Franchisees, for being allowed to continue to operate the Broadcasting Station subject to the provisions of this Law and to the licenses that will be granted, after the end of the period of the Franchise as well, all of which notwithstanding any thing provided in section 6K(b) and the rest of the provision of the Law, in their version prior to the commencement of Amendment 25;

(3)

(a) where the Applicant was the Franchisee, the grant of the license shall be conditional upon the Applicants transferring the activity involved in the provision of Broadcasts to the Linked Company, as stipulated in the license;

(b) where the Applicant was the Linked Company, the grant of the license shall be conditional upon the Franchisees transferring the rights in the Cable Network used for its Broadcasts to the Applicant.

6L3. Transfer from a Franchise to a Cable Broadcasting License

(a) Where the Linked Company has received a General License under the provisions of section 6L2, the Franchisee shall not continue to broadcast Cable Broadcasts, unless it has received a General Cable Broadcasting License in accordance with its application under section 6L2(1); until a General Cable Broadcasting License is received, the provisions of the Franchise shall continue to apply to the Franchisee, insofar as they concern the maintenance of Broadcasts and subject to the instructions of the Minister, and if a General Cable Broadcasting License was not granted thereto, the said provisions of the Franchise shall continue to apply until the end of the period of the Franchise or until the date that the Minister shall prescribe or direct in accordance with his power under section 6L.

(b) Where the Franchisee has received a General License under the provisions of section 6L2, it shall not continue to broadcast Cable Broadcasts; until a General Cable Broadcasting License is received by the Linked Company in accordance with its application under section 6L2(1), the Minister may direct that the provisions of the Franchise apply thereto, instead of to the Franchisee, insofar as they concern the maintenance of Broadcasts and subject to his instructions, and if a General Cable Broadcasting License was not granted thereto, the said provisions shall apply thereto until the end of the period of the Franchise or until the date that the Minister shall prescribe or direct in accordance with his power under section 6L.

(c) Where a General Broadcasting License has not been granted, or as long as it has not been granted, the provisions of this Law shall

apply, mutatis mutandis, to the Franchisee or the Linked Company, as the case may be, as if they were a holder of a General Cable Broadcasting License, throughout the periods said in subsections (a) and (b), provided that the Minister not give a decision on the continuation of Broadcasts except for six month periods at a time.

(d) The Council shall not refuse to grant a General Cable Broadcasting License to a Franchisee or a Linked Company, solely due to the fact that it had been found that the Franchisee did not comply, in whole or in part, with obligations compliance with which was required thereof during the period of its Franchise, provided that the Franchisee or the Linked Company undertook to comply with the obligations that shall be stipulated by the Council in the license, in the manner and at the terms that shall be stipulated as aforesaid.

6L4. Time for handing down decisions on applications for licenses

The Minister or the Council, as the case may be, shall hand down their decision on the application for licenses submitted thereto in accordance with the provisions of section 6L2(1) within 90 days from the date of receipt of the application, or from the date on which the Applicant has furnished any information or made any change demanded therefrom; a demand that the Applicant provide information or make changes shall be met by the Applicant within 15 days from the date of its delivery thereto.

6L5. Regulations and rules

Regulations and rules concerning Franchises made under the Law shall remain in effect and shall apply, mutatis mutandis as the case may be, to a Cable Broadcasting License, unless they were earlier repealed or amended under this Law.

6L6. A Franchise remaining in place

(a) Where no General License has been granted as stipulated in this Article, or for as long as no said license has been granted, the Franchisee shall continue to operate under its Franchise, until the end of the period of the Franchise; the provisions of the Law, in its version prior to the commencement of Amendment 25, including the offenses under Chapter G and regulations and rules made under the Law shall continue to apply as aforesaid, with the following changes:

(1) the following shall replace section 6K(b) in its version prior to the commencement of Amendment 25:

(b) Where a Franchise had been revoked or where its validity had expired, and one or more new licenses

for the provision of Telecommunication Services or for the conduct of Broadcasts by means of all or part of the Broadcasting Station were granted, a Licensee who will win, by tender, the right to do so, shall acquire from the Franchisee, for payment, its rights in the Broadcasting Station that had been used for its Broadcasts, provided that the Station is suitable for use for the purposes of its license; in the absence of agreement between the Franchisee and the Licensee regarding the Broadcasting Stations condition or the amount of payment therefor – the Minister shall resolve the controversy and he may grant exemption from purchasing the Broadcasting Station, in whole or in part; the Ministers decision may be appealed to the District Court within 45 days from the day on which the parties have been notified of the decision.;

(2) the provisions of sections 4H and 5 of the Law, the provisions of section 6Y and Chapter G1 shall apply to the Franchisee, as the case may be and mutatis mutandis; for the purposes of the said provisions, the Franchisee shall be considered as a holder of a General Cable Broadcasting License or as a holder of a General License, as the case may be;

(3) the following shall replace section 6E(1)(d) in its version prior to the commencement of Amendment 25: The supervision of the performance of the Broadcasts, having regard to the classes of broadcasts and the scope thereof, and of the provision of the services by the Franchisees, including supervising the fulfillment of the marking obligation and the obligation to provide information, and of the prevention of the broadcasting of commercials or promos the broadcasting of which by Franchisees is prohibited under the provisions of the Classification, Marking, and Prohibition of Harmful Broadcasts Law, 5761-2001.

(b) Where a General License was granted under section 6L2, and it was decided not to grant a General Cable Broadcasting License under section 6L3, the person to whom the General License was granted may notify the Minister in writing, within 30 days from the date on which the decision was delivered thereto, of its withdrawal of the application for a General License; where a said notification was given, the General License shall be revoked and the provisions of subsection (a) shall apply.

6L7. Cooperation – temporary order

(a) All or any of the Franchisees or of Linked Companies thereof, that applied for General Cable Broadcasting Licenses, may request the Minister and the Council to grant approval for them to act in cooperation, in spheres and matters related to the activity of a holder of a General Cable Broadcasting License, and for a single period that shall be determined by the Minister and the Council, that shall not exceed eight years (hereinafter – the Period of Cooperation), all of which if they were convinced that this is required in order to promote competition in the field of communications or for reasons concerning public welfare.

(b) Approval under this section shall not be in lieu of any approval or exemption required under any law.

(c) The Minister and the Council may grant their approval for cooperation said in subsection (a), that will be carried out through another cooperation (hereinafter – the Other Corporation), provided that General Cable Broadcasting License applications have been submitted as said in subsection (a), and that the Other Corporation has submitted an application for a General Cable Broadcasting License only for the Period of Cooperation, all of which under this Law.

(d) Some or all of the persons who had been Franchisees, or Linked Companies thereof, or persons who had held Means of Control in Franchisees on the date of commencement of Amendment 25, may also be among those Holding Means of Control in the Other Corporation, and the provisions of section 6H4(a)(4)(b) concerning restrictions on Control or Holding Means of Control in a corporation shall only apply to the Other Corporation; for the purpose of this section, the General Cable Broadcasting Licenses granted to any of the Holders of the Means of Control in the Other Corporation shall not be considered as General Cable Broadcasting Licenses that violate the restrictions stipulated in section 6H4; in this subsection, Control – as defined in the Banking (Licensing) Law, 5741-1981.

(e) Where a General Cable Broadcasting License has been granted to an Other Corporation, and General Cable Broadcasting Licenses have also been granted to a persons who have submitted applications under subsection (a), all of the obligations concerning Broadcasting and Services under this Law shall apply, during the Period of Cooperation, all as approved as said in subsections (a) and (c), only to the Other Corporation, and any amendment to the Other Corporations General Broadcasting License shall be considered as an amendment to each of the other licenses that have been granted as said in subsection (a).

(f) The Minister and the Council may give instructions, from time to time, in the licenses granted under this section, which are required for the performance thereof.

(g) For the purposes of this section, Franchisee – as defined in section 6H4.

6L8. Market share – temporary provision

At the end of the period prescribed in section 6H4(b), the Minister may, in consultation with the Council and with the approval of the Committee, permit holders of Means of Control in or Controlling Parties of one or more newspaper to also be holders of Means of Control in or Controlling Parties of only one of the holders of the General Cable Broadcasting Licenses (hereinafter – the Controlled Licensee), all notwithstanding the provisions of sections 6H4(a)(3) and 6H4(a)(4), provided that one of the following holds true:

(1) the number of the Controlled Licensees Subscribers does not exceed, at any time, a third of the Subscribers of all of the holders of General Cable Broadcasting Licenses, and at least two Broadcasting Licensees exist, other than the Controlling Licensee, who operate separately from it and compete with it, and who are capable of operating nationwide, and each of whose market share exceeds 20% of the Subscribers of all of the holders of General Cable Broadcasting Licenses;

(2) a Broadcasting Licensee exists, who is not a holder of a General Cable Broadcasting License, and the number of whose Subscribers is at least a third lower than that of all of the Broadcasting Licensees; and provided that the number of Subscribers of the Controlled Licensee does not, at any time, exceed half of the total number of cable television Subscribers, and at least two Broadcasting Licensees exist, other than the Controlling Licensee, who operate separately from it and compete with it, and who are capable of operating nationwide, and each of whose market share exceeds 20% of the Subscribers of all of the holders of General Cable Broadcasting Licenses;

an approval under this section shall be granted subject to terms and provisions for the enforcement of the said conditions, as the case may be, being stipulated therein, with the consent of the Antitrust Commissioner, also about arrangements concerning excess holdings; in this section, Broadcasting Licensee – a Broadcasting Licensee that offers television Broadcasts for Subscribers in a multi-channel format, which are not solely a provision of video On-Demand Broadcasts, with the exclusion of a holder of a Special Cable Broadcasting License.

Article D: (Repealed)

6M. The right to participate in a tender

Any person for whom the following, at the very least, hold true, may participate in a tender:

(1) he is a Israel Citizen and an Israel resident, or it is a corporation registered in Israel at least 51% of the Means of Control of which are held by a said Israel Citizen and resident, or by a corporation for which the said condition holds true; in this paragraph, Israel Citizen – within its meaning in the Citizenship Law, 5712-1952;

(2) he has not been convicted of an offense that involves ignominy, and if it is a corporation – neither its manager, nor any person who is an Interested Party therein, has been convicted as aforesaid.

6N. Disqualification of a tender participant

(a) The Tenders Committee shall disqualify a tender participant if, in its opinion –

(1) the grant of the Franchise to that participant may be contrary to public welfare;

(2) the grant of the Franchise to that participant may constitute a threat to national security;

(3) the tender participant is a political party or an agent of a political party, directly or indirectly, who, in the opinion of the Tenders Committee, may use the Broadcasts in order to promote the purposes of the party.

(b) The Tenders Committee shall give reasons, in writing, for its decision to disqualify a tender participant due to the reason said in subsection (a)(1).

6O. Disclosure of information in a tender

(a) The Tenders Committee may require a tender participant to disclose full and accurate details of its identity, business relationships, obligations, capital structure and sources of funding, the management of its business, the ownership thereof, the holders of voting rights or Interested Parties therein, the know-how agreements to which it is a party and agreements related to the construction of the facilities for the purpose of the Broadcasts and the operation thereof, as well as any other information that, in the opinion of the Tenders Committee, there is interest in the disclosure of which.

(b) The Tenders Committee may require from a tender participant who is a corporation to disclose all of the information as said in subsection (a), and any other information that, in the opinion of the Tenders Committee, there is interest in the disclosure of which, also in respect of an Interested Party in the corporation and in respect of any party who has a share in the Means of Control of the corporation or takes part in the management thereof.

6P. Discussions with bidders

The Tenders Committee may discuss the details of a bid with the bidder, request clarifications thereto and request all bidders to amend their bids, provided that all of the bidders have been informed of the Committees contacting a particular bidder requesting it to amend its bid, and of the content of the request, and that an equal opportunity has been afforded to each of them.

6Q. Considerations in selecting the winner of the tender

The Tenders Committee, in selecting the winner of the tender, shall consider, inter alia –

(1) the bidders financial and organizational capability;

(2) the know-how and professional experience that are at its disposal;

(3) the diversity of the bidders Broadcasting programs and services;

(4) the proposed pace for laying the Cable Network in the area;

(5) the price that the bidder intends to charge the Subscribers for the provision of the services.

6R. Regulations on tenders

The Minister shall prescribe the following by regulations –

(1) the rules of procedure and modes of operation of the Council when sitting as a Tenders Committee;

(2) the procedures for granting a Franchise, including the holding of tenders, the manner of submission of the bids and the handling thereof, as well as the ways and times for the provision of information on the results of tenders.

Article E: Content of Cable Broadcasts

6S. (Repealed)

6S1. Services ancillary to Broadcasts

If the question arises of whether a particular service is a service directly ancillary to Broadcasts, the Minister shall decide it.

6T. Content of Cable Broadcasts

(f) A holder of a General Cable Broadcasting License shall broadcast local news and local programs on current affairs concerning the area only; where the Broadcasting Authority has produced the said broadcasts in accordance with section 44C1 of the Broadcasting Authority Law, 5725-1965, the Broadcasting Authority may also broadcast them among its Broadcasts as stipulated in the said section, on conditions to be agreed upon between it and the Licensee.

(g) A holder of a General Cable Broadcasting License shall broadcast a variety of films and programs, inter alia, in the fields of entertainment, music, arts, society, science, education, culture and sports.

(h) Among the Broadcasts said in subsection (b), a holder of a General Cable Broadcasting License shall also include Broadcasts in which there is an expression of issues and needs unique to the area (hereinafter - Broadcasts on Issues Concerning the Area).

(i) The Council may permit two or more holders of a General Cable Broadcasting License, between the areas of which there is geographical proximity and a connection, to jointly produce and broadcast broadcasts dealing with news related to those areas or on other issues unique to those areas, if it was convinces that there is importance to the existence of said broadcasts, and that the joint broadcast may contribute to the quality and diversification of the Broadcasts on Issues Concerning the Area and to increasing the amount thereof, all of which on conditions that shall be prescribed by it.

(j) The Council may also grant permission as aforesaid in subsection (d) to a holder of a General Cable Broadcasting License to whom two or more licenses have been granted.

(k) In maintaining Broadcasts under this section, a holder of a General Cable Broadcasting License shall operate in accordance with rules

that shall be prescribed by the Council concerning this section.

(f1) A holder of a General Cable Broadcasting License may deduct from the royalties paid by it under the provisions of section 6JJ(a) amounts disbursed for the funding of the production and broadcasting of Broadcasts said in subsection (a), provided that the amounts that all of the said holders of a license may deduct do not exceed the total amount of NIS 25.5 million per year; the Minister, with the consent of the Minister of Finance, after consultation with the Council and with the approval of the Committee, may prescribe provisions on the deduction from the said royalties, including on the examination of the amounts disbursed and the approval thereof.

(f2) If the amounts disbursed as said in subsection (f1) exceeded the amounts deducted from the royalties under the same subsection, the difference between the said amounts shall be funded from the royalties that a Satellite Broadcasting Licensee must pay under section 6TT(f1), provided that the total amounts deducted from royalties under this section does not exceed the amount referred to in subsection (f1); the Council shall prescribe provisions on the transfer of the amounts of the difference under this subsection to the persons who actually produced the broadcasts said in subsection (a).

(f3) Where a deduction said in subsection (f1) was made from the royalties paid or required to be paid for 2012, for the purpose of funding the production and broadcasting of broadcasts said in subsection (a) in 2012, and a balance of royalties remains after the said deduction, the balance shall be used for the purpose of funding the production and broadcasting of broadcasts said in subsection (a), during the first seven months of 2013.

(f4) An additional amount shall be added to the balance amount said in subsection (f3), for the purpose of the production and broadcasting of broadcasts said in subsection (a) during the first seven months of 2013, out of the royalties that a holder of a Satellite Broadcasting License pays under section 6DDD(a) for 2012, in a manner in which the total amount used for the funding and broadcasting of said broadcasts during the first seven months of 2013 shall not exceed NIS 10.8 million; the extent and format of broadcasts said in subsection (a) shall be in accordance with the directives of the Council, which shall be made taking into consideration the amount said in this subsection.

(f5) The Accountant of the Ministry of Communications shall prescribe provisions as to the manner of transferring the balance said in subsection (f3) and the amount said in subsection (f4) to the person actually producing the broadcasts said in subsection (a).

(l) In this section, Area – a geographical area, the boundaries of which have been determined by the Council in rules; the Council may grant a holder of a General Cable Broadcasting License approval for the broadcasting of Broadcasts said in subsections (a) and (c) in an area exceeding the boundaries of a single Area.

6T1. Approval of Joint Channels

(a) If some or all of the holders of General Cable Broadcasting Licenses seek to broadcast broadcasts on some or all of the issues or in some or all of the fields listed in section 6T(b), in the format of a Joint Channel, they shall apply to the Council requesting to do so, in one or both of the following manners:

(1) a channel produced by a Channel Producer, who may broadcast it to the Broadcasting HeadEnds available to the said Licensees, or to otherwise deliver it thereto;

(2) a channel produced by all or some of the said Licensees, directly or indirectly, by themselves or jointly with another person, provided that the number of the said channel does not exceed two fifths of the number of In-house Channels of each said Licensee; the said decision of the Council to approve a rate lower than two fifths shall be granted for special reasons related to the Councils policy in the fields that are within its authority.

(b) The Council may approve an application under subsection (a), reject it or impose additional conditions for its approval, including conditions concerning the types of channel and the number of channels that will be produced under subsection (a); nothing in the grant of approval under this subsection shall derogate from a Cable Broadcasting Licensees obligations or rights under this Law or under the terms of the license; the Council may change its decisions under this section, for the purpose of carrying out the objectives specified in subsection (c), after having given the Licensee an opportunity to make submissions.

(c) The Council may prescribe rules concerning this section, and in doing so it may also, with an aim to bring about a multiplicity of the parties involved in Broadcasting to the public or to part thereof, the diversification of the Broadcasts and the encouragement of local production, impose restrictions on the Holding of Means of Control by any person, including any person who broadcasts Broadcasts under any law.

(d) The Council may prescribe, by the rules, restrictions on the number of Joint Channels produced by a Channel Producer, whether alone or together with others, including said restrictions on a person who holds Means of Control in a Channel Producer.

(e) In this section –

Broadcasting Licensee – excluding a holder of a Special Cable Broadcasting License and an On-Demand Broadcasting Licensee; Production – including the production, purchase and editing of Broadcasts for a channel, the production of connecting segments, and the carrying out of the activities involved in preparing a channel for broadcasting;

In-house Channel – a channel broadcast by a Broadcasting Licensee, that is produced primarily for the public in Israel or for part thereof, excluding the channel of a holder of a Special Cable

Broadcasting License, a channel broadcast under the provisions of section 6U(a), a community channel, a local channel, a channel the production of which for the public in Israel is only manifested by dubbing or adding translation or promos, an information channel, or any other channel determined by the Council for this purpose; Joint Channel – an In-house Channel broadcast by more than one Broadcasting Licensee or an In-house Channel broadcast to half of more of the total number of the Subscribers of all of the Broadcasting Licensees.

6T2. Non-Area Specific News Broadcasts

(a)

(1) In this section –

Interested party and Holding – (repealed); Independent News Producer – a person who has received a license under subsections (c) and (d);

News Channel Broadcaster – a Dedicated Channel Broadcaster, who has received a Broadcasting License under section 6HH1, for broadcasting news and current affairs programs;

Control – (repealed);

(2) (repealed).

(b) Notwithstanding the provisions of section 6T(a), and in addition thereto, the Council may approve the transmission, by a holder of a General Cable Broadcasting License to its Subscribers, of news and current affairs programs that do not only concern the Area of the license, whether in the format of a separate channel or in the format of editions incorporated into the Licensees In-house Channels (in this section – General News Broadcasts), provided that the following conditions hold true:

(1) the General News Broadcasts are produced and edited for broadcast by an Independent News Producer;

(2)

(a) any contracting of an Independent News producer with a holder of a General Cable Broadcasting License (in this section – the Contractual Relationship) is brought to the prior approval of the Council; the Council shall not approve the Contractual Relationship unless it is convinced that

the terms of the Contractual Relationship ensure the independence of the Independent News Producer, the credibility of its Broadcasts and the proper standard of production thereof, as a well as that nothing in the said Contractual Relationship may impair competition in the field of Broadcasting to the public;

(b) without derogating from the generality of the above, the Council may impose conditions for the grant of the approval, including that the monetary consideration under the contract ensures, to the satisfaction of the Council, the independence of the Independent News Producer, the credibility of its Broadcasts and the proper standard of production thereof; if the Council determined as aforesaid, the monetary consideration of the Contractual Relationship shall not be reduced without the Councils prior approval;

(c) the Council shall not approve the Contractual Relationship unless by a majority of its members, which shall include at least half of the representatives of the public under section 6B(b)(2), and after having afforded the public a proper opportunity to voice its opinion regarding the Contractual Relationship and the terms thereof, in accordance with rules that shall be prescribed by it;

(3) no Independent News Producer shall discriminate, in the terms of the Contractual Relationship, between a holder of a General Cable Broadcasting License or a Satellite Broadcasting Licensee and another Franchisee or another Satellite Broadcasting Licensee; without derogating from the above, an Independent News Producer shall fix a uniform price for all persons contracting with it, which shall serve as the basis for the calculation of the monetary consideration of the Contractual Relationship, according to the number of their Subscribers;

(4) no Independent News Producer shall receive, directly or indirectly, any benefit or payment, of any kind whatsoever, in connection with the news Broadcasts, except from the licensee and in accordance with the terms of the Contractual Relationship; nothing in the aforesaid shall reduce the right of an Independent News Producer to sell the news Broadcasts to a party broadcasting news on television, in Israel or abroad;

(5) where a holder of the General Cable Broadcasting License has contracted with an Independent News Producer for the transmission of General News Broadcasts in the approved format, the licensee shall transmit the news Broadcasts in that format, fully and without interruption, editing or delay.

(c) The Council may grant a license to produce news as an Independent News Producer to an applicant for whom all of the following hold true (in this section – the Applicant):

(1) it is a company registered in Israel, and its center of business operations in located in Israel;

(2) the companys manager is a citizen of Israel and a resident thereof;

(3) the majority of the companys directors are citizens of Israel and residents thereof;

(4) the companys manager shall serve as editor in chief of all of its General News Broadcasts;

(5) neither any of the following nor any person of which any of the following is a Controlling Party is an Interested Party in or a Controlling Party of the Applicant:

(a) a holder of a General Cable Broadcasting License, including any person who is a Controlling Party of or an Interested Party in a said holder of a General Cable Broadcasting License;

(b) a Satellite Broadcasting Licensee, including any person who is a Controlling Party of or an Interested Party in a said Satellite Broadcasting

Licensee;

(c)

(1) a franchisee under the Second Authority for Television and Radio Law, 5750-1990 (hereinafter – the Second Authority Law), including any person who is a Controlling Party of or an Interested Party in a said television broadcasting franchisee;

(2) the provisions of paragraph (1) shall not apply to an Applicant in which an Interested Party is an Interested Party in a television broadcasting franchisee under the Second Authority Law, and it may hold up to 24% of any type of means of control in the Applicant, provided that it is not a Controlling Party of the Applicant, is not a

Controlling Party of a television broadcasting franchisee under the Second Authority Law, is not an Interested Party in a Broadcasting Licensee, and is not an Interested Party in a holder of a General License under this Law;

(d)

(1) a daily newspaper distributed nationwide or a corporation that is the publisher of a said newspaper, including any person who is an Interested Party or a Controlling Party therein;

(2) notwithstanding the provisions of paragraph (1), the Council may grant a license to the Applicant if it has been proven, to its satisfaction, that the newspaper said in paragraph (1) is not among the two most widely-circulated daily newspapers in Israel, and is not a Controlling Party of the Applicant;

(e)

רדסל

(3) any person who lawfully broadcasts news Broadcasts, on television or on the radio, and does not broadcast a news channel;

(4) notwithstanding the provisions of paragraph (1), the Council may grant a license to the Applicant if it has been proven, to its satisfaction, that the person who broadcasts news as said in paragraph (1) is not among the two news broadcasters the Broadcasts viewed or listened to by the highest percentage of the public, and is not a Controlling Party of the Applicant;

(6) the Applicant is not listed among those who may not participate in a tender under section 41(a)(2) through (4) of the Second Authority Law;

(7) control or Means of Control of the Applicant shall not be held by any person who is not a citizen of Israel or a resident thereof; however, the Minister may determine the rate of any type of Means of Control that may be held by a person who is not a citizen of Israel or a resident thereof,

provided that the said rate does not exceed a third of the Means of Control of that type.

(d)

(1) No license shall be granted under subsection (c) if, in the opinion of the Council:

(a) the grant of the license may be contrary to public welfare;

(b) the grant of the license may constitute a threat to national security or to public peace;

(1) a political party, within its meaning in the Parties Law, 5752-1992;

(2) a representative or agent of a political party;

(3) a body connected with a party group, within its meaning in the Political Parties Financing Law, 5733-1973;

(4) any other body connected with a political party;

(5) any other body, not listed in paragraphs (1) through (4), or a representative or agent of thereof;

all of which if, in the opinion of the Council, the Applicant may use the General News Broadcasts in order to promote the unique purposes of the party or of the said bodies.

(2) The Council shall give reasons, in writing, for its decision not to grant a license due to the reason said in paragraph (1)(a).

(e) An Independent News Producer shall holds accurate, reliable and balanced news Broadcasts, and the private viewpoints and opinions of its executives, employees and shareholders, or of the managers of the licensee, its employees and shareholders shall not be expressed therein.

(f) The Council may apply rules prescribed by it under this Law to an Independent News Broadcaster, and it may also prescribe special rules concerning General News Broadcasts; without derogating from the aforesaid, the Council may prescribe provisions on:

(1) procedures for the grant of a Broadcasting as an Independent News Producer License and for the revocation thereof;

(a) the obligation of an Independent News Producer to report to the Council and the manner thereof;

(b) the obligation of an Independent News Producer to keep records of and retain its Broadcasts.

(g) The provisions of sections 6H(b)(5), 6J(a) and (c), 6K(a), 6X, 6Y and 6PP shall apply mutatis mutandis, to an Independent News producer.

(h) Nothing by virtue of the incorporation documents of a corporation that is an Independent News Producer shall derogate from the provisions of this Law.

(i)

(1) The provisions of this section shall apply to a News Channel Broadcaster; however, the provisions of section 6X shall not apply; the Council may prescribe conditions and rules, as needed, concerning a News Channel Broadcaster, including on the separation of news Broadcasts from the commercial advertisement Broadcasts;

(2) the Council may grant a News Channel Broadcaster a license to produce news as an Independent News producer, and if it has done so, and notwithstanding the aforesaid in paragraph (1), the provisions of subsections (a) through (h) shall apply thereto, in all matters concerning its said Broadcasts.

6U. Transmission of Broadcasts

(a) A holder of a General Cable Broadcasting License shall fully transmit, in real time and without any interruption or editing, the FM radio Broadcasts and the television broadcasts that are broadcast under any law to the public in Israel, and that can be received through the air; the Council may prescribe, by rules, special reasons for which a holder of a General Cable Broadcasting License shall be exempt from the said obligation, with respect to terrestrial broadcasting or with respect to satellite broadcasting, excluding with respect to encrypted broadcasts the reception of which is conditional upon payment.

(b) A holder of a General Cable Broadcasting License shall not be liable to pay any payment for transmission said in subsection (a) to the person broadcasting the original broadcast or to the holders of the copyrights or the performers rights in the Broadcasts.

(c) A holder of a General Cable Broadcasting License shall transmit Broadcasts originating outside of Israel, including Broadcasts from satellites, in accordance with rules that shall be prescribed, in this regard, by the Council.

6U1. Broadcasting channels and special provisions in channels 10 and 22

(a) In this section –

Existing Channel – as defined in section 37D of the Second Authority Law;

Television Broadcasting Franchisee, Television Broadcasting Licensee, Channel 2, the Third Channel and Amendment No. 33 – as defined in the Second Authority Law;

The Determining Date – the date of commencement of Amendment No. 33;

The Councils – the Council and the Second Authority for Television and Radio Council;

The Second Authority for Television and Radio Council – within its meaning in the Second Authority Law.

(b) Without derogating from the powers of the Council under this Law, the Council may direct a holder of a General Cable Broadcasting License as to the number of channels on which each of the following Broadcasts shall be broadcast, and it may direct it, for reasons that justify this, to transfer each of the said Broadcasts to a different channel:

(1) the television Broadcasts broadcast by the Broadcasting Authority under the Broadcasting Authority Law, 5725-1965; however, the transfer of the said Broadcasts to a different channel shall be require the approval of the Minister charged with implementing the said law;

(2) the Broadcasts of the Knesset Channel, as defined in section 2 of the Television Broadcasts from the Knesset Law, 5764-2003; however, the transfer of the said Broadcasts to a different channel shall require the approval of the Chairperson of the Knesset;

(3) the television Broadcasts broadcast by Television Broadcasting Franchisees as defined in the Second Authority Law;

(4) the Broadcasts of a Dedicated Channel Broadcaster;

(5) the Broadcasts of a holder of a Special Cable Broadcasting License.

(c) In exercising its powers under this Law, concerning the channels on which a holder of a General Cable Broadcasting License shall Broadcast, or the transfer of Broadcasts to a different channel, the Council shall not permit to transfer to or broadcast on channel 10 or 22 Broadcasts of a channel broadcasting commercial advertisements intended for the public in Israel, the Broadcasts of a channel the

Broadcasts of which are news Broadcasts or and current affairs programs intended for the public in Israel, or the Broadcasts of a channel with other characteristics, insofar as any were determined by the Minister after having consulted with the Councils, all of which during the following periods:

(1) as regards channel 10 – during the period commencing on the date on which there were no remaining Franchisees for Television Broadcasting on the Third Channel, and ending three years from the said date; however, if the Minister has permitted a Television Broadcasting Licensee to continue to use channel 10 under the provisions of section 71E(h) of the Second Authority Law - during the period commencing on the date on which the Television Broadcasting Licensee has ceased to use channel 10 as aforesaid, and ending after three years from the said date;

(2) as regards channel 22 – during the period commencing on the date on which there were no remaining Franchisees for Television Broadcasting on Channel 2, and ending three years from the said date.

(d) Without derogating from the provisions of subsection (c), the Minister may direct the Council that during the period said in paragraph (1) or (2) of that subsection, as the case maybe, or during part thereof, it shall not permit a holder of a General Cable Broadcasting Licensee to transfer to or broadcast on channel 10 or 22 Broadcasts of any channel.

(e) After the period said in subsection (c)(1) or (2), as the case may be, has elapsed, the Minister may direct the Council not to permit to transfer to or broadcast on channel 10 or 22 the Broadcasts of a channel broadcasting Broadcasts of all or some the types specified in the opening passage of subsection (c), for an additional period, all as he shall direct.

(f)

(1) The Minister, after having consulted with the Councils, may determine, no later than 25 Adar A, 5771 (1 March 2011), a list of five consecutive channels designated for the transmission of the Broadcasts of Television Broadcasting Licensees by a holder of a General Cable Broadcasting license (in this section – the first list of channels);

(2) where a holder of a General Cable Broadcasting License has transmitted the Broadcasts of Television Broadcasting Licensees on all of the channels listed in the First List of Channels, the Councils shall determine an additional channel or an additional list of consecutive channels, to the

extent possible with numbers consecutive to those of the First List of Channels, for the purpose of the transmission of the Broadcasts of additional Television Broadcasting Licensees; the Councils shall determine additional channel as aforesaid, as needed;

(3) the Councils may change the list of channels said in paragraphs (1) and (2), for reasons that justifying this; the list of channels determined by the Minister and Councils, as the case may be, shall be published in the internet website of the Ministry of Communications and in the internet website of the Second Authority for Television and Radio;

(4) where the Council were in disagreement as to the channels said in paragraph (2) or (3), the Minister shall decide on the matter;

(5) during the period commencing on the Determining Date and ending as set out below, the following channels shall not be included among the channels or the lists of channels said in paragraphs (1) through (3):

(a) channel 22 – at the end of three years from the date on which there are no remaining Franchisees for Television Broadcasting on Channel 2;

(b) channel 10 - at the end of three years from the date on which there are no remaining Franchisees for Television Broadcasting on the Third Channel or from the date on which a Television Broadcasting Licensee has ceased to use channel 10, if the Minister has permitted a Television Broadcasting Licensee to continue to use channel 10 under the provisions of section 71E(h) of the Second Authority Law.

(g)

(1) The channel, not being an Existing Channel, on which the Broadcasts of a Television Broadcasting licensee shall be transmitted by a holder of a General Cable Broadcasting License, shall be determined in the manner set out in section 37D(b) of the Second Authority Law, from among the channels listed on the lists of channels said in subsection (f); the Councils may transfer the said Broadcasts, for reasons that justify this, to a different channel, provided that the other channel determined is also from among the channels listed on the said lists of channels;

(2) where a Television Broadcasting Licensee was permitted to use a channel, in accordance with the provisions of section

37D of the Second Authority Law, the Council shall direct a holder of a General Cable Broadcasting License to cease using that channel until a date, of which it shall be informed, in order to enable the commencement of the Broadcasts of the said Television Broadcasting Licensee on that channel.

6V. Broadcasts in cases of emergency

In cases of emergency or for reasons of state security, the Minister may direct a Cable Broadcasting Licensee to broadcast announcements on behalf of the government, Israel Police, the General Staff of the Israel Defense Forces and the Head of Civil Defense.

Article F: (Repealed)

6W. (Repealed).

Article G: Restrictions on Broadcasts 6X. Prohibition on commercial advertisements

(a) No Cable Broadcasting Licensee shall include commercial advertisements in its Broadcasts.

(b) At the end of five years from the date of commencement of this Chapter, the Minister may, after having consulted with the Council and with the approval of the government and the Committee, permit the broadcasting of commercial advertisements by a Cable Broadcasting Licensee; no Cable Broadcasting Licensee shall broadcast said advertisements except at the time, on the conditions and in the manner that shall be prescribed by the Council by rules.

6X1. Sound intensity of commercial advertisements, promos and other

Broadcasts

No Cable Broadcasting Licensee, including a Dedicated Channel Broadcaster funded by commercial advertisement Broadcasts, shall broadcast, on a channel produced primarily for the public in Israel, any commercial advertisement, promo or other type of Broadcasts determined by the Council by rules, at a sound intensity level exceeding the standard range of sound intensity in Broadcasts which are not commercial advertisements, promos or other said types of Broadcasts, as prescribed by the Council by rules; in this section, Promo – as defined in section 6HH1(g)(3), including a cross-promo, as defined in that section.

6Y. Prohibited Broadcasts

No Cable Broadcasting Licensee shall broadcast Broadcasts –

(1) which are films or plays that have not been approved for presentation, under any law, by the Films and Plays Review Council, within its meaning in the Cinematograph Films Ordinance;

(2) that include obscene publications within their meaning in the Penal Law, 5737-1977, including broadcasts that involve one of the following:

(1) the display of sexual relations involving violence, abuse, debasement, degradation or exploitation;

(2) the display of sexual intercourse with a minor or with a person purporting to be a minor;

(3) the display of a person or any of his organs as an object that is available for sex;

and all where the broadcasts listed in subparagraphs (1) through (3) are clearly not of artistic, scientific, news, educational or advocacy value which justifies, in the circumstances of the matter, the broadcasting thereof;

(2a) (repealed);

(3) that are political party propaganda;

(4) that involve racist or nationalistic incitement;

(5) that constitute a violation of copyright or performers rights under any law.

Article H: (Repealed)

6Z. (Changed to section 17A)

6AA. (Repealed).

6BB. (Changed to section 21A).

6CC. (Changed to section 21B).

6DD. (Changed to section 21C).

6EE. (Repealed).

6FF. (Repealed).

6GG. (Repealed).

Article I: The Transmission of Broadcasts and Dedicated Channels

6HH. Transmission of Broadcasts

(a) Where the Council has granted a Special Cable Broadcasting License, a holder of a General Cable Broadcasting License shall transmit the Broadcasts of the holder of the Special Cable Broadcasting License through the Broadcasting HeadEnd available thereto, and for this purpose, the Minister may give instructions to any licensee as he deems appropriate, provided that the capacity designated for Broadcasts available to the holder of the General

	Cable Broadcasting License shall be no less than five sixths.
(a1)	The Minister, after having consulted with the Council and with the
	approval of the Committee, may set priorities with respect to
	Dedicated Channels.
(a2)	(Repealed).
(a3)	The Minister, after having consulted with the Council and with the
	approval of the government and the Committee, may prescribe that a
	Dedicated Channel Broadcaster may fund its Broadcasts by
	commercial advertisement Broadcasts in accordance with the

provisions applying, in this regard, in section 6HH1.

(b)

(1) The provisions of section 5 shall apply, mutatis mutandis, to use said in subsection (a); the Ministers decision may be appealed to a competent court of law; the Ministers decision shall be given within a reasonable period not exceeding one year;

(2) the provisions of paragraph (1) shall not apply to a Dedicated Channel Broadcasts under section 6HH1.

(c) A holder of a General Cable Broadcasting License shall allocate, without consideration, one of the channels of the HeadEnd available thereto, for the Broadcasts of the Educational Television, all of which for the period ending at 1 Tevet 5766 (1 January 2006); however, the Minister of Education and the Minister of Finance may, if they deem it appropriate, set a later date; the manners of use of the channel shall be prescribed by the Council.

The provisions of subsection (a) shall be in addition to the provisions of section 5.

6HH1. License for a Dedicated Channel Broadcaster

(a) The Council may grant a Special Cable Broadcasting License to a Dedicated Channel Broadcaster, to a person chosen by it though a

tender published by it, and in this regard the provisions of section 6H shall apply.

(b) With an aim to bring about a multiplicity of the parties involved in Broadcasting to the public, the Council shall prescribe, in a tender under subsection (a), conditions for and restriction on the Holding, transferring or purchasing of rights in the Dedicated Channel Broadcaster, including by a person broadcasting Broadcasts to the public under any law or a Channel Producer, or an Interested Party in any of them, all of which directly or indirectly.

(c) The Council may prescribe, in the terms of the tender, conditions for and restrictions on the funding of the Broadcasts of a Dedicated Channel Broadcaster in ways other than through commercial advertisement Broadcasts; where the Dedicated Channel Broadcaster may fund its Broadcasts by commercial advertisement Broadcasts and through additional ways of funding, the additional ways of funding shall also be brought to the approval of the government and the Committee as said in section 6HH(a3), mutatis mutandis.

(d) In regard to a Dedicated Channel funded by commercial advertisement Broadcasts, the Council shall prescribe in the tender and by rules conditions and restrictions concerning the Broadcasts of a channel under this section, ensuring that a fitting expression shall be provided having regard to the prescribed special dedication or to the characteristics unique to that channel, including that some of the Broadcasts, the percentage of which shall be no less than 20%, shall be Local Productions; the Council, with the approval of the Committee, may prescribe a lower percentage of Local Productions, if it concludes that special circumstances for doing so exist, or that the nature of the channel or the character thereof require it.

(e)

(1) In regard to a Dedicated Channel funded by commercial advertisement Broadcasts the target audience of which is differentiated by language, the Council shall prescribe in the tender terms ensuring that all of the Broadcasts, including commercial advertisements, indicated in the successful bidders bid, are in the language of the channel, by means of speech, dubbing or subtitles;

(2) at least half of the Broadcast said in paragraph (1), excluding commercials, shall be in the language of the channel, by means of speech, dubbing or subtitles, and at least half of the said portion shall be on prime time.

(f) The Council may apply to a Dedicated Channel Broadcaster some or all of the rules prescribed by it concerning Cable Broadcasting Licensees, and it may prescribe special rules concerning the Broadcasts of a Dedicated Channel Broadcaster, generally or with

respect to a certain Dedicated Channel Broadcaster, including that some of the Broadcasts be Local Productions.

(g) The Council may direct, in respect of a Dedicated Channel funded through commercial advertisement Broadcasts – additional or other rules, including rules in respect of the following matters:

(1) the separation of commercial advertisement Broadcasts from Broadcasts that are not commercial advertisements, and the position of commercial advertisement Broadcasts within broadcasts that are not commercial advertisements;

(2) a prohibition on the preference of an advertiser solely due to its commercial advertisement being produced by the Dedicated Channel Broadcaster or by any person on its behalf;

(3) the maximum broadcast time that a Dedicated Channel Broadcaster may allocate to commercial advertisement Broadcasts and to Promo Broadcasts or to Cross-Promo Broadcasts within each broadcast hour; for the purpose of this paragraph –

Promo – a broadcast conveying information on the channel on which it is broadcast or on other broadcasts on that channel;

Cross-Promo – a broadcast conveying information on another channel or on broadcasts thereon;

(4) limitations on the sale of commercial advertisement broadcast time to another person;

(5) prohibited commercial advertisement Broadcasts, and subjects the broadcasting of which as commercial advertisement Broadcasts is prohibited, generally or in certain circumstances or due to their being distasteful or offensive to the public feelings, including to the feelings of the target public;

(6) the format of commercial advertisement Broadcasts and the manner of the presentation thereof;

(7) the timing of commercial advertisement Broadcasts within the broadcasts, the maximum length of time for each said commercial advertisement Broadcast, and the time intervals between different commercial advertisement Broadcasts, with the intention of broadcasting all of the commercial advertisement Broadcasts in a batch;

(8) the types of broadcasts the broadcasting of which may be interrupted for the purpose of Broadcasting commercial advertisement broadcasts;

(9) restrictions on the broadcasting of incidental commercial advertisements, hidden commercial advertisements and subliminal commercial advertisements;

(10) restrictions applying to Officers in a Dedicated Channel Broadcaster or in a licensee, concerning their participation in commercial advertisement Broadcasts;

(11) restrictions on the advertising of products and services, whether in respect of categories of subjects or generally, on their prices and the manner of comparison between them, with an aim to ensure the broadcasting of credible information and fair competition;

(12) restrictions concerning commercial advertisements targeting children, including the manner of presentation thereof and the hours on which they are broadcast;

(13) restrictions concerning the participation of children in commercial advertisement Broadcasts;

(14) restrictions concerning the broadcasting of commercial advertisements which are not Local Productions; in this paragraph, a commercial advertisement Broadcast shall be deemed to be a television program, for the purpose of the definition of Local Production;

(15) restrictions concerning the use of the body of a person in a manner violating human dignity;

(16) a requirement to obtain prior approval of transcript copies and films of commercial advertisement Broadcasts, and the imposition of conditions concerning Broadcasts or the imposition of conditions, that it shall stipulate, for the grant of approval for the broadcasting thereof.

(h) The Minister may prescribe provision concerning the procedure for holding a tender for the selection of a Dedicated Channel Broadcaster under subsection (a), the manner of submission of bids for the tender and of the handling thereof, the ways and times for providing information on the results of the tender and the procedure for granting a license.

(i) The provisions of sections 6K and 6L shall apply to a Dedicated Channel Broadcaster, mutatis mutandis.

(j) The Minister shall prescribe, with the consent of the Minister of Finance, the royalty rates and license fees that shall be paid to the State by persons who have received a license under this section, taking into consideration the type of the channel, the ways of the funding it and the nature of its Broadcasts.

6HH2. Revocation of advertising time

(a) The Council may revoke, on times that it shall prescribe, some or all of the advertising time of a Dedicated Channel Broadcaster funded by commercial advertisement Broadcasts, who has violated, in its Broadcasts, one of the rules of the Council or directives given thereunder, or who has broadcast prohibited Broadcasts, within their meaning in section 6Y (hereinafter – a Broadcast in Violation), as follows:

(1) for every minute of Broadcast in Violation – one minute of commercial advertisement Broadcasts, provided that the total revocation due to the broadcasting of one program as aforesaid, shall not exceed the maximum broadcast time prescribed therefor for broadcasting commercial advertisement Broadcasts;

(2) for a Broadcast in Violation not exceeding, in length, one minute – up to a minute of commercial advertisement Broadcasts.

(b) Where the Council has ordered the revocation of advertising time, a Dedicated Channel Broadcaster shall not broadcast commercial advertisement Broadcasts during the time ordered by the Council.

(c) The Council shall notify a Dedicated Channel Broadcaster funded by commercial advertisement Broadcasts of its intention to revoke time slots as said in subsection (a) at least twenty four hours prior to the carrying out of the revocation.

(d) The Council may prescribe rules for the carrying out of this section.

6HH3. Dedicated Channel in the Arabic language

(a) Where a license for broadcasting a Dedicated Channel in the Arabic language has been granted, and in order to ensure maximum access to Broadcasts in the Arabic language, the said broadcaster of the said channel may broadcast it in the format of satellite television Broadcasts, intended for direct, unscrambled reception by any person, whether or not he is a Subscriber, and provided that it has notified the Minister and the Council of the date on which it shall commence broadcasting in the said format.

(b) After two years from the date of commencement of Broadcasting in the format said in subsection (a), the Broadcaster of the Dedicated Channel in the Arabic Language shall be considered as having received a Television Broadcasting License under the Second Authority Law, the terms of which are the terms included in its license, and all of the Councils powers under this Law in respect thereof shall be vested in the Second Authority for Television and Radio under the said law.

(c) The Minister may prescribe rules and arrangements for the carrying out of the provisions of subsection (b), including the adjustments necessary due to the transition from a license under this Law to a license under the Second Authority Law, and he may, with the consent of the Economic Affairs Committee of the Knesset, defer the commencement date of the provisions of subsection (b), prescribe, provided that the total period of deferment shall not exceed two years.

6II. (Repealed).

Article J: Miscellaneous

6JJ. Use of income

(a) A Cable Broadcasting Licensee shall pay license fees, royalties and as he shall other payments, at such rates as the Minister shall set in regulations, after consultation with the Council.

(b) The said license fees, royalties and other payments shall be used for covering the expenses required for the carrying out of the provisions of this Law, including for the maintaining of community Broadcasts and the encouragement of Local Productions under section 6E and 6E1. Any excess of income over disbursements shall be deposited in the state treasury. The Minister, with the consent of the Minister of Finance and with the approval of the Economic Affairs Committee of the Knesset, may give instructions for the purpose of the carrying out of this subsection.

6KK. Penalties

(a) If a person violates the provisions of sections 6G, 6Y(1), (2), (3) and

(4) or 6RR, then he shall be liable to three years imprisonment or to

a fine of NIS 8,913,000. (a1) (Repealed).

(b) If a member of the Council violates the provisions of section 6C, then he shall be liable to one years imprisonment.

(c) If a person prevents or hinders the carrying out of Broadcasts or obstructs the carrying out thereof, in any way whatsoever, then he shall be liable to three years imprisonment.

(d) If a person obstructs a Cable Broadcasting Licensee or the agents thereof, on his own or through others, from lawfully establishing, operating, maintaining, testing or repairing a Broadcasting HeadEnd, then he shall be liable to the fine stated in section 61(a)(2) of the Penal Law, 5737-1977, and in the case of continuing obstruction – an additional fine at the maximum rate stipulated in section 61(c) of the said law, for each day on which it continues.

(e) If the court concludes that there are reasonable grounds to assume that a person has conducted one of the activities listed in section 6G(a) or (b) without having been granted the appropriate license therefor, it shall order the seizure of the instruments and equipment in respect of which the offense was committed; the provisions of sections 33 through 42 of the Criminal Procedure Ordinance (Arrest and Search) [New Version], 5729-1969, shall apply, mutates mutandis, to the said seizure.

(f) The aforesaid in subsection (e) shall add to powers of seizure under any other law and not derogate therefrom.

(g) Without derogating from the provisions of Chapter D of the Penal Law, 5737-1977, if a person aids in the installment, operation or maintenance of Broadcasts or aids in the installment or operation of a Broadcasting HeadEnd while knowing or while he should have known, in the circumstances of matter, that they are being unlawfully broadcast and that no license has been granted in respect thereto under this Law or that no permit has been granted in respect thereto under any law, then he shall be liable to six months imprisonment or to a fine of NIS 1,068,000 (hereinafter – Prohibited Broadcasting HeadEnd or Prohibited Broadcasts, as the case may be).

(h) For the purpose of subsection (g), Aiding –

(1) participating in Prohibited Broadcasts, including reading, speaking orally not from a written text, playing musical instruments and acting, or participating in a taping for the purpose of said Broadcasts;

(2) supplying broadcasts for programs for Prohibited Broadcasts, including the supply of records, motion picture and television films, magnetic and audio recording tapes, and the writing of work for the purpose of said Broadcasts;

(3) supplying news, news items or Commercial Advertisement Broadcasts for Prohibited Broadcasts or for a Prohibited Broadcasting HeadEnd, the ordering thereof or paying therefor;

(4) managing a business intended for the enabling of Prohibited Broadcasts, including aiding in the management of a said business;

(5) funding activities in and Broadcasts of a Prohibited Broadcasting HeadEnd;

(6) technically assisting a Prohibited Broadcasting HeadEnd, the operation thereof and the maintenance of Prohibited Broadcasts;

(7) brokering between an operator of Prohibited Broadcasts, the owner or possessor of a Prohibited Broadcasting HeadEnd and suppliers of news or news items or persons

who are engaged in advertising or who are interested in advertising;

(8) employing a person on the staff of a Prohibited Broadcasting HeadEnd;

(9) representing or brokering of or on behalf of the operator, owner or possessor of a Prohibited Broadcasting HeadEnd in respect of the activities listed in paragraphs (1) through (8);

(10) authorizing the use of premises for the Broadcasts of a Prohibited Broadcasting HeadEnd.

(i) Where a Commercial Advertisement Broadcast has been included in Prohibited Broadcasts, and without derogating from the liability of any person for the broadcasting of a said Commercial Advertisement Broadcast, it shall constitute prima Facie evidence that the broadcast had been supplied, ordered or paid for by a person whose business or goals may be promoted by the content thereof, unless it has proved the following:

(1) it has taken all reasonable measures in order to prevent the broadcasting of the broadcast;

(2) the broadcast was broadcast without its knowledge;

(j) For the purpose of subsection (h)(3) and for the purpose of subsection (i), Commercial Advertisement Broadcast, including Broadcasts funded by a political party or other bodies, and election propaganda.

(k) For the purpose of this section, Broadcasting HeadEnd - including a Satellite Broadcasting Facility as defined in section 6QQ.

6LL. Regulations and rules

(a) Regulations under this Chapter shall require the approval of the Committee.

(b) The Minister may request the Council to prescribe rules concerning a matter that he shall define in his demand; if the Council does not prescribe said rules within sixty says following the said request, the Minister may make rules in its stead.

6LL1. Obligation by virtue of a decision of the Council

A decision taken by the Council in accordance with its powers, in a matter concerning a Cable Broadcasting Licensee, which has not been published in Reshumot, shall be binding on the licensee after it has been brought to its knowledge in writing.

6MM. (Repealed).

6NN. Joint Productions

Subject to the provisions of any law, and for the purpose of the carrying out of the provisions of section 6E1(a)(1), some or all of the holders of a General Cable Broadcasting License may contract with each other (hereinafter – Joint Contract), for the purpose of the purchase or Local Production, whether In-house or purchased, of broadcasts on subjects that are not unique to a particular Area; in this section, Joint Contract – including a contract between holders of a General Cable Broadcasting License and a Channel Producer or any other person.

6OO. (Repealed).

CHAPTER B2: SATELLITE TELEVISION BROADCASTING

Article A: Licensing

6QQ. Definitions

In this Chapter –

Means of Control, Interested Party and Channel Producer – within their meaning in section 6A;

Satellite Broadcasting Licensee – a person who has received a license under this Chapter for broadcasting Satellite Television Broadcasts;

The Council – the Council appointed under section 6B;

Satellite Broadcasting Facility – a facility or apparatus broadcasting or intended for the broadcasting of a satellite broadcast;

Independent Channel Producer – a person who seeks to use one of the channels of a Satellite Broadcasting Licensee in accordance with the provisions of section 6ZZ, for the purpose of broadcasting its channel through a Satellite Broadcasting Licensee;

Satellite Terminal Equipment – means for receiving Satellite Television Broadcasts, including means used for the operation of bi-directional and interactive services, installed on the premises of the receiver of the Broadcasts;

National Broadcasts – Broadcasts intended, under law, for reception nationwide, with national deployment;

Satellite Broadcast – the feeding of a Satellite Broadcasting Facility with television Broadcasts intended for the public, including through another person;

Satellite Television Broadcasts – television Broadcasts, video or audio services and ancillary services intended for the public, including two-directional and interactive services broadcast in code by means of satellite and

that are intended for direct, decoded reception, to subscribers, whether over a single channel or over a multi-channel system;

6RR. Obligatory licensing

(a) For the purpose of this section, Satellite Televisions Broadcasts – as defined in section 6QQ, and including Satellite Televisions Broadcasts that are not in code or that intended for decoded reception by any person, whether or not he is a subscriber.

(b) No person shall broadcast Satellite Television Broadcasts, received in Israel and primarily intended for the public in Israel or to part thereof, unless it has received a license from the Minister under this Chapter, or it may do so under any law.

(c) No Israel Citizen and no Israel resident shall broadcast, abroad, Satellite Television Broadcasts that are received in Israel and primarily intended for the public in Israel or to part thereof, unless it has received a license from the Minister under this Chapter, or it may do so under any law; for this purpose, Israel Citizen – including a corporation registered in Israel.

(d) No person shall install, operate or maintain a Satellite Broadcasting Facility unless it has obtained a license therefor from the Minister under section 4 and in accordance with the terms and conditions thereof.

(e) The provisions of the Ordinance shall apply to a licensee under this Chapter.

6SS. Broadcasts intended primarily for Israel

For the purpose of subsections 6RR(b) and (c) –

(1) Broadcasts, at least half of which are in the Hebrew language, be it by speech, dubbing or subtitles, Broadcasts that, during prime time, generally include Broadcasts in the Hebrew language as aforesaid, and Broadcasts that generally include commercial advertisement Broadcasts for products or services primarily marketed in Israel, are presumed to be intended primarily for the public in Israel;

(2) a Satellite Broadcast originating in Israel is presumed to be primarily intended for the public in Israel, unless it has been proven, to the satisfaction of the Minister, that the Broadcasts, according to their nature and content, are not primarily intended for the public in Israel.

6TT. License and tender

(a) The Minister may, after having consulted with the Council, grant a Satellite Broadcasting License to a person who has submitted an application for a license and has met the conditions imposed under

section 6VV(a), and he may direct that a Satellite Broadcasting License also be granted by way of a tender; where the Minister has directed as aforesaid, the Council, the Tenders Committee and the Minister may grant a Satellite Broadcasting License to the person selected by the Council in the tender published by it.

(b) No Satellite Broadcasting Licensee shall be granted exclusivity in Satellite Television Broadcasting; however, if the Minister has decided to grant a license by way of a tender, he may prescribe, in the terms thereof, a period not exceeding 5 years, for which any person winning the tender shall be granted exclusivity.

6UU. Qualifications to obtain a license

The Minister shall only grant a Satellite Broadcasting License to a person for whom the following, at the very least, hold true for the applicant:

(1) he is an Israel Citizen or an Israel resident, or if it is a corporation registered in Israel – Means of Control thereof, directly or indirectly, at the rate prescribed by the Minister by regulations as said in section 6VV(c), are held by an Israel Citizen or an Israel resident;

(2) he has not been convicted of an offense that because of its severity or circumstances he is prevented, in the opinion of the Governments Legal Counsel, from obtaining a said license, and if it is a corporation – neither its executive nor any Interested Party therein has been convicted as aforesaid.

6VV. Procedures and conditions for granting a license

(a) The Minister may, after having consulted with the Council, prescribe conditions for granting a Satellite Broadcasting License, whether in a tender and its terms or by regulations, including conditions concerning the following matters, and he may impose additional conditions:

(1) with an aim to bring about a multiplicity of the parties involved in broadcasting Broadcasts to the public – conditions and restrictions on the Holding, transferring or purchasing of Means of Control in the applicant for a Satellite Broadcasting License, including by any person who broadcasts Broadcasts to the public under any law or a Channel Producer, a holder of a license for the provision of Telecommunication Services, or an Interested party in any of them, all of which directly or indirectly;

(2) the financial and organizational capability of the applicant for a Satellite Broadcasting License;

(3) the know-how and professional experience that are at the disposal of the applicant for a Satellite Broadcasting License;

(4) the diversity of the Broadcasts and services offered by the applicant for a Satellite Broadcasting License and the choices offered by it to the public;

(5) the technology which the applicant for a Satellite Broadcasting License will use for the purpose of Broadcasts and serviced that it will offer to the public, and the manner of reception and access to said Broadcasts and services;

(6) the scope of the Broadcasts offered by the applicant for a Satellite Broadcasting License, that shall be Broadcast in Hebrew, be it by speech, dubbing or subtitles, and the hour of the broadcasting thereof, as well as the scope of the Broadcasts of Local Production within its meaning in Chapter B1;

(7) the ways of funding the Broadcasts of the applicant for a Satellite Broadcasting License.

(b) The Minister may prescribe the procedures for the grant of a Satellite Broadcasting License, whether it is granted through a tender or otherwise, including the manner of submission of application and of the handling thereof, information that the applicant for a license must disclose and documents that it must furnish;

6WW. Terms and conditions of the license

The Minister may, after having consulted with the Council, prescribe terms and conditions in a Satellite Broadcasting License, including terms and conditions concerning the matters listed in section 6VV and the following matters:

(1) the period of the Satellite Broadcasting License, including the extension thereof;

(2) specifications of Satellite Terminal Equipment, including with respect to technology, its compliance with the standards and its compatibility with the specifications of the Satellite Broadcasting Facility;

(3) maximum times and time tables for the contracting of a Satellite Broadcasting Licensee required for maintaining its Broadcasts, including contracting with other licensees and with Channel producers;

(4) the imposition of an obligation upon a Satellite Broadcasting Licensee to transmit, among its Broadcasts, some or all of the television and radio Broadcasts broadcast in Israel in the form of National Broadcasts,