This chapter focuses on the emerging Internet Service Provision (ISP) industry in Israel in the early 1990s. Developing ideas presented in the previous chapter regarding global/local tensions in processes of globalization, and the role of the state in such processes, it deals with the formation of an Israeli ISP industry, which we could also call the commercialization of the Internet, referring to the fact that the Internet ceased to be a service provided for free by academic institutions for its members, becoming instead a commodity purchased from private enterprises (L. Press, 1994). Although the entrepreneurs and owners of ISP companies are at the heart of the analysis, the chapter also refers to the Ministry of Communications (MoC), Bezeq, and experts with no financial interest in the Internet, such as representatives of MACHBA (the Inter-University Computing Center).

The chapter has the following structure: it starts by asking how to conceptualize the relationships between the various individuals involved, exploring the literature on epistemic and other types of communities (Haas, 1989, 1992; Ruggie, 1975; Zald, 1995). Concluding that the actors under study do not constitute any kind of community, I turn instead to Bourdieu, and conduct a field analysis of the industry (Bourdieu, 1977, 1989, 1990b, 1993a). I argue that this is theoretically appropriate because the positions of the actors in relation to one another appear more important than the relationships between one another (Bourdieu & Wacquant, 1992). Indeed, what is striking is how few interactions there were between a relatively small group of people doing very similar things in such a small country as Israel. Drawing on examples of a blatant and somewhat surprising inability for cooperation between ISPs, I suggest that this in itself is a finding that requires explanation. The explanation lies in the extreme competitiveness of the field, itself an outcome of changes that are more fully described later on in the chapter.

The field that emerges is comprised of three groups of Internet Service Provision companies–which I term small, medium-sized, and large–Bezeq, the monopolistic telecoms incumbent, and the Ministry of Communications, representing here the state, or the field of power. As explained in the Ministry’s web site:
The Ministry of Communications encompasses a wide and diversified range of activities. Its responsibilities include: formulating telecommunications regulation and policy, developing telecommunications infrastructures, supervising Bezeq and other telecommunications service providers, supervising the Postal Authority, setting and auditing postal and communications tariffs, managing the electromagnetic spectrum, regulating and supervising cable television services and tariffs, and approving usage of telecommunications equipment in Israel.[1]

Of particular interest in the current regard is the fact that the MoC is the government body responsible for the telephone systems–both local and international–upon which the Internet is based. As such, it was under the auspices of the MoC that the ISP field analyzed here was created and institutionalized.

This chapter, then, presents an analysis of the relations between the various members of the field, and in particular the relations between the ISPs and the MoC. More specifically, I found three distinct sets of attitudes to the MoC and Bezeq–indifference, indignation, and acceptance–which characterized the founders of small, medium-sized, and large ISPs respectively. I argue that these sets of attitudes are explicable in terms of actors’ location in the field and their habitus. In particular, I focus on the attitudes of the medium-sized ISPs and ask why they felt so indignant. Understanding indignation as the feeling of righteous anger when one has been wronged, there are two aspects of the explanation I present. The first is to do with the changing shape of the field and the entrance of big business, which I relate to the liberalization of the Israeli political economy, and especially the de-monopolization of Bezeq, both in the market for internal phone calls, and more notably regarding overseas telephony. These changes to the field left the medium-sized ISPs with companies that were becoming less economically viable and without the means to resist those changes. The second aspect of my explanation of their indignation refers to a set of normative beliefs by which the medium-sized ISP owners interpreted changes to the field.

As mentioned above, this chapter supplements the discussion of globalization initiated in the previous chapter. There I showed how a process of globalization was launched by people with relatively weak transnational ties, and how the state played a key role in the institutionalization of the Internet in the Israeli context. In this chapter I show how the companies that succeeded in the emerging Israeli ISP industry were those with the deepest global ties. These ties may have been expressed in the social capital of their owners, CEOs, and senior staff, or in the sources of the companies’ original investments and financial backing. However, the anger of the medium-sized ISPs was not that of the local rising up against the global, but rather of a competing vision of the global.

1.2 The Emerging ISP Industry: What kind of Community?

In the early 1990s an ISP industry was taking shape in Israel. As explained in the previous chapter, in 1991 the MoC asked MACHBA to effectively become a nation-wide commercial ISP, something which MACHBA had no interest in becoming. Indeed, Hank Nussbacher saw the involvement of business in the Internet as polluting what he saw as an academic network. Instead, commercial companies were licensed to connect firms conducting R&D, and educational and cultural institutions to the Internet, with government permission. In 1994 licenses were issued to ISPs to provide full commercial Internet services to all comers, including private individual customers, who until then had no access to the network. This, then, was a pioneering time. New companies were being set up providing services that had never before been offered in Israel. Many interviewees talked of a feeling of being involved in something new and exciting, in a way that suggested the excitement of the original ARPANET developers in the United States some twenty and thirty years previously. Those pioneers in America clearly comprised some kind of community. This is most certainly true for the group of computer scientists working on the initial problem of how to get computers to communicate with one another, as colorfully described by Hafner and Lyon in their book on the origins of the Internet (Hafner & Lyon, 1996). Over and above the fact that those men were working together in the same physical space, they are described, perhaps somewhat romantically (see the critique in Rosenzweig, 1998), as cooperating on the solution of a problem, bouncing ideas off one another as they strived to reach their collective goal.

But what about those people providing Internet services for the first time in Israel? Even though they were not developing the technologies of the Internet, but rather selling them on to the public, can they be characterized as a community? And if so, what kind of community? If they cannot, however, then how should we understand their relations with one another and the institutions with which they came into contact?

There are a number of quite good a priori reasons for expecting to find some kind of community among the founders and owners of Israel’s first ISPs.
1. They were “in it together” in several significant ways: firstly, they were the first people bringing the Internet to the public at large, and not only to academic staff and university students; secondly, they all had to deal with the Ministry of Communications in order to receive and renew their licenses, which at best was a complicated bureaucratic process, and at worst experienced as over-regulation by the state and as requiring them to pass on their business plans to a governmental body with extremely close ties with Bezeq, itself a potential competitor;[2] and thirdly, as I shall show later, one of the things that united ISP owners was a wary suspicion of Bezeq, and particularly of the possibility that it might become an ISP itself.
2. Israel is a small country about which it is said that everyone knows everyone. Also, because it is physically small, it is relatively easy to convene meetings of people based in different areas of the country. In such an environment it would be quite reasonable to expect a community of ISP owners to develop. Indeed, in interview, most of the ISP owners I spoke to said that they knew the others. However, as we shall see, they did not know each other very well and hardly ever used their acquaintances for professional benefit.
3. Commercial Internet provision involved a set of technologies and equipment new to Israel. Perhaps a degree of sharing of knowledge–either formally or informally–could be expected, even in a competitive environment.
4. The ISP owners I spoke to shared some significant similarities in their backgrounds, particularly a long-term and deep relationship with computers. One of them came to the industry from a completely unrelated field, but otherwise they were people who came to the ISP industry from a strong computing background, in many cases going back to when they were teenagers at school. In other words, for these people, computers were more than merely a way to make money. Rather, they were more akin to an extremely time-consuming hobby. In addition, and as I shall discuss in the following chapter, they shared similar views on the social potentials of the Internet.
5. At least in relation to the early stages of the commercialization of the Internet in Israel, one might reasonably postulate a win-win situation. In other words, one might expect a situation whereby the owners of the ISPs would work together to promote the Internet to the Israeli public, while leaving the question of which ISP the public will choose as almost secondary, assuming that if they work together to raise awareness of the Internet there will be more business for all of them. In other words, the founders of the ISPs certainly had a shared interest in the Internet’s overall penetration; accordingly, it might be suggested that they would conjoin in some kind of a collective effort to increase it.
6. Many countries have associations for ISPs. For instance, in Britain, the Internet Service Providers Association “was established in 1995 and promotes competition, self-regulation and the development of the Internet industry”;[3] France has its “Association des Fournisseurs d’Acce`ss et de Services Internet”;[4] and in the United States, the ISP-Planet website relates that “There are more than 50 professional Internet organizations in the United States alone”.[5] Given the proliferation of such associations around the world,[6] it would seem quite reasonable to expect to find a community of Internet providers in Israel.
7. Many industries and sectors have some kind of community with formal institutions linking members: for instance, in Israel there is a Forum of Cellular Companies that represents the mobile phone companies on issues such as antenna radiation and other matters of joint concern to companies that otherwise find themselves in harsh competition with one another. Indeed, the Israel Science and Technology Homepage lists nearly 40 forums, associations, and institutions in its technology sub-section.[7] Why, then, should there not be a forum for ISPs?

In short, there are good a priori reasons to expect to find a community of ISP owners in Israel in the early 1990s. However, for reasons that I shall outline, no such community came into being. The primary reason for this would seem to be the intense competition between the ISPs from the very beginnings of the industry in Israel–this is the reason stated by my interviewees. The profit an ISP could make on each individual subscriber was very small, and so the ISPs needed as many customers as possible just to break even. It would seem that such a high degree of competitiveness was an obstacle to the formation of a community. Secondly, the founders of Israel’s first ISPs acquired their knowledge from forums and trade journals based in the United States; they had no need to ask one another technical questions, as the information was available online from a range of sources.

Indeed, when I asked owners of ISPs if they had been part of a community of ISP owners around the world, they said that they had not. They did not travel overseas to conferences for ISPs, for instance. Their contact with other ISP owners abroad was via online forums and was conducted on an ad hoc basis. They were working very much independently. Hank Nussbacher strengthened this impression in interview by noting that Israeli ISP owners took very little interest in Internet security issues (a subject on which Nussbacher now consults); they did not join the relevant forums and committees. For instance, of all the Israeli ISPs, only NetVision delegated people to participate in the Network Service Provider Security forum, but even they were ejected from it after failing to respond to security requests in a timely manner. In other words, there was an insularity among ISP owners that went beyond a failure to form a community in Israel because of the competition between them. Nussbacher unequivocally puts this down to a concern with the bottom line: because participation in international committees and conventions does not generate revenue, the ISPs do not bother with it. Nussbacher said that the Israeli ISPs have a “very limited viewpoint and it has a lot to do with revenue. In other words, does what I’m doing bring in revenue? The Israeli companies look solely at the bottom line.”

One ISP owner, however, told me that he had convened the ISPs a few times, but with little success:
[I wanted] to try and set up an association of ISPs, so that we could initiate activities against the MoC and Bezeq […] but because of the competition between us we didn’t succeed in setting up an association and we are suffering and paying the price to this very day.

One particular episode highlights the high degrees of mistrust and antagonism among Israeli ISPs. As the Internet was commercialized in countries around the world, it was common for a Commercial Internet Exchange (CIX) to be set up. The idea behind setting up a CIX is simple, and I shall use the Israeli case to explain it: part of the commercialization of the Internet in Israel required that MACHBA not be used as a conduit for international Internet traffic in and out of Israel; it had to be entirely cut out of the commercial loop, as it were. However, without a central hub in Israel to which all Israeli ISPs could connect, an email sent from a customer of one Israeli ISP to a customer of another Israeli ISP would have to take a long route outside Israel, probably through the US, before reaching the other, Israeli, ISP. The same would be true of a surfer who was trying to surf to an Israeli site hosted by anyone other than his own ISP. In other words, because there was no central meeting point for Israeli ISPs, all traffic between them flowed out of the country, normally to the United States, before flowing back in again. Generally speaking, ISPs have an economic interest in keeping overseas data transfer to a minimum–after all, they are paying for it. Accordingly, when it became clear that MACHBA was going to disconnect all commercial entities from its network, the idea of founding an Israeli Commercial Internet Exchange was floated by ISOC, the Israel Internet Association. This CIX would connect Israel’s ISPs, ensuring that intra-Israeli Internet traffic would stay within Israel, and would not take up expensive international bandwidth (see Figure 1: the dashed lines show a route taken by data between two Israeli ISPs when there is no Internet Exchange; the solid lines show the route taken via an Internet Exchange; in the former instance, the data travels to the United States and back to Israel, while in the second instance the data stays in Israel, thus saving money on the cost of overseas bandwidth).

Figure 5 – a CIX saves on overseas bandwidth

In what would appear to be a very rare occurrence, the owners of Israel’s ISPs were convened in a meeting to discuss the practicalities of setting up an Internet exchange, the importance of which was not lost on any of them. This meeting was described to me by a number of interviewees, all of whom agreed that it was a failure, with some interviewees portraying more colorfully than others the way in which the meeting degenerated into a shouting match. While all parties agreed on the need for a CIX, none of them was prepared that the equipment should be physically set up on the premises of one of its competitors, as they were suspicious of the use that might be made of the information that the proposed CIX would generate. In the light of this disagreement, Doron Shikmoni,[8] representing ISOC, suggested that ISOC take charge of setting up the exchange, a compromise that was deemed acceptable to the ISPs. Rather than a Commercial Internet Exchange, then, maintained by the community of ISPs, Israel has what is known as the Israeli Internet Exchange (IIX), the upkeep of which is the responsibility of the Israel Internet Association.[9]This episode, embodying the complete failure of Israeli ISPs to come to an agreement of mutual interest to them all, would seem to be representative of the kind of relations that existed between the ISP owners in the early 1990s.

However, this does not mean that there was no contact whatsoever between the ISPs. As mentioned above, when it came to resisting Bezeq’s attempts to become an ISP itself, the ISP owners were able to act concertedly. This was the case with the 135 service offered by Bezeq. This service was one that enabled anyone with a computer and a modem to connect to the Internet without buying a connection package from one of the ISPs. Instead, one simply had to dial 135. According to the ISPs, the problem with this was twofold: firstly, Bezeq owned the Internet infrastructure, and charged other ISPs to use it–the 135 service would mean it was competing with those ISPs; secondly, the provision of Internet access was not within Bezeq’s license. So, four ISPs appealed to the Minister of Communications in May 1996 to stop Bezeq from implementing the service. However, their appeal was unsuccessful, and the service went live in November 1996. This struggle was supported by technology correspondents in the daily press, with one writing that Bezeq was behaving like a “violent monopoly” (Blizovsky, 1996). This struggle rumbled on for a number of years (see, for instance, Landau, 1998), but the service was still in place as late as September 2000, with Israel the only country with billing solely for usage, without a service package (Ashkenazy, 2000).[10] This, then, is an example of cooperation on the part of the ISPs, though even here we must limit its extent: after all, the ISPs merely hired a lawyer to represent them, without that requiring any real, active cooperation on their part. Also, the sole motivation behind this cooperation was financial, and by hiring a lawyer together they were spreading the cost of their challenge to Bezeq. Moreover, they perceived the cost of failing in this endeavor to be the end of their businesses, a view widely shared by other ISP owners, all of whom were extremely anxious that Bezeq, who owned the country’s telecommunications infrastructure, should not become an ISP itself.

At the level of collective work towards a shared goal, then, or of “holding of certain attitudes and interests in common”,[11] the founders of Israel’s first ISPs cannot be said to have constituted a community. When discussing how best to establish a Commercial Internet Exchange–something which would have been of financial value to all of them–they could not overcome their mutual suspicion. They barely knew each other in the context of their work, and certainly had no contact beyond that context.

Perhaps, though, the early ISP industry in Israel could be characterized as an “epistemic community”, or a “community of practice”. The concept of an epistemic community originated in the literature on the sociology of knowledge (Ruggie, 1975), and was applied to academics (Zald, 1995) before taking on its most common usage nowadays as a community influencing policy (see especially Haas, 1989, 1992). In other words, it has two major applications: for some, an epistemic community is one with shared truth claims (Bergin, 2001; Holzner & Marx, 1979), while for others it is “a specific community of experts sharing a belief in a common set of cause-and-effect relationships as well as common values to which policies governing these relationships will be applied” (Haas, 1989, p. 384). On both of these dimensions it is hard to describe the ISP industry in Israel as forming an epistemic community. While the ISP owners are “a network of professionals with recognized expertise and competence in a particular domain” (Haas, 1992, p. 3), and tend to “share methods of work, tools and language; [and] to perform similar tasks in similar ways, with common standards,” (Van House, 2002, p. 111), the arguments and divisions between them show that they certainly do not share “a common policy enterprise–that is, a set of common practices associated with a set of problems to which their professional competence is directed” (Haas, 1992, p. 3). Indeed, at the center of the schism between ISP owners stand contradictory views of exactly what policy the government should be adopting in their regard. According to Haas, “members of epistemic communities not only hold in common a set of principled and causal beliefs but also have shared notions of validity and a shared policy enterprise. Their authoritative claim to policy-relevant knowledge in a particular domain is based on their recognized expertise within that domain” (Haas, 1992, p. 16). I shall show that ISP owners in Israel held very different principled and causal beliefs concerning the development of their industry. Moreover, to a large extent the early Israeli ISP industry was precisely characterized by struggles over what was to be recognized as expertise, and whose expertise would be recognized by whom.

A similar concept to that of an epistemic community is that of a community of practice (Wenger, 1998): “Membership in a community of practice […] impl[ies] similarities of practice and shared understandings and meaning that […] help us to identify people whom we can probably trust” (Van House, 2002, p. 106). From what was said above about the failed efforts to set up a Commercial Internet Exchange in Israel, it is clear that trust was a scarce commodity among the founders of Israel’s first ISPs. Also, given the different perceptions of what was going on at the time, as I shall present below, the fact that the ISPs were all involved in providing Internet services does not constitute grounds for saying that they made up a community of practice.

In sum, if “communities of practice and epistemic cultures shape the understandings and identities of participants” (Van House, 2002, p. 111), then the members of the ISP industry in Israel in the early- to mid-1990s cannot be said to have populated the same communities of practice and epistemic cultures. We need to turn to another theory in order to conceptualize the relations between members of the ISP industry and other relevant organizations.

1.3 A Bourdieuan Analysis of the ISP Field

As should by now be clear from the reasons for rejecting the concept of “epistemic community” that I just provided above, I would like to suggest that Bourdieu’s theory of fields offers a rich vein to be mined in this regard. Bourdieu’s theory of fields is an attempt to find a middle path through Durkheimian and Marxist objectivism on the one hand and ethnomethodological subjectivism on the other (see especially, Bourdieu, 1989). This method he calls constructivist structuralism orstructuralist constructivism. In the method’s objectivist moment, the social scientist constructs objective structures with no reference to agents’ subjective representations of them, what Bourdieu calls a “social topology”; and in the method’s subjectivist moment, the social scientist introduces representations in order to understand struggles over the preservation and transformation of the objective structures. In what follows, I also offer an objectivist moment by describing the structure of the field, and a subjectivist moment by analyzing actors’ perceptions of that field.

I find Bourdieu’s theory useful in understanding the emergence of the commercial ISP industry for a number of reasons. Firstly, as we have seen, the owners of the ISPs were not in close personal contact, even though they certainly had opportunities for that. This suggests that Bourdieu’s relational view of reality might be aptly applied here:
To think in terms of field is to think relationally […] what exist in the social world are relations–not interactions between agents or intersubjective ties between individuals, but objective relations (Bourdieu & Wacquant, 1992, pp. 96-97).

Secondly, a field can be defined as “a series of institutions, rules, rituals, conventions, categories, designations, appointments and titles which constitute an objective hierarchy, and which produce and authorize certain discourses and activities. But it is also constituted by, or out of, the conflict which is involved when groups or individuals attempt to determine what constitutes capital within that field, and how that capital is to be distributed” (Webb, Schirato, & Danaher, 2002, pp. 43-44). That is, the conflictual nature of the relations between the actors under discussion also suggests a Bourdiean analysis, and in particular, the struggles between them over the definition of the capital that is to prevail in the field. In what follows I pay particular attention to the constitution of the field, to the formation of a new set of hierarchies, institutions, and rules. Of course, this field must be located in relation to other fields, particularly the field of power; I shall show how this relation shaped the trajectory of the actors in the field.

Bourdieu often talks about action in a field as a game; indeed, this is one of his favored analogies. By entering a field, he says, one is recognizing the “tacit rules of the game and the prerequisites of the reproduction of the game and its stakes” (Bourdieu & Wacquant, 1992, p. 99). More explicitly,
the value of a species of capital (e.g., knowledge of Greek or of integral calculus) hinges on the existence of a game, of a field in which this competency can be employed: a species of capital is what is efficacious in a given field, both as a weapon and as a stake of struggle, that which allows its possessors to wield a power, an influence, and thus to exist, in the field under consideration, instead of being considered a negligible quantity. In empirical work, it is one and the same thing to determine what the field is, where its limits lie, etc., and to determine what species of capital are active in it, within what limits, and so on (Bourdieu & Wacquant, 1992, pp. 98-99).

Accordingly, in the case before us, while certain stakes of the game are clear (market share in the emerging ISP industry), it is the rules of the game that are most clearly up for grabs: how will the new industry look? Which “species of capital” will be dominant? By the time I conducted the interviews for this study, the rules of the game had more or less be settled and institutionalized in favor of the bearers of global social and economic capital. This requires us to ask: how did this state of affairs come about? What characteristics external to the field influenced its eventual shape?

By starting my analysis of it from its very origins, the case of the emerging Israeli ISP industry provides an opportunity to watch a struggle over the definition of the rules of a new game, including struggles over the type of habitus that is to characterize the emerging field.

In the most programmatic exposition of his theory of fields (Bourdieu & Wacquant, 1992), Bourdieu outlines the three stages that are necessary in analyzing a field:
(1) Analysis of the field vis-a`-vis the field of power. In this instance this requires accurately positioning the Ministry of Communications in the field and elucidating the decisions made by senior officials there. This also implies appreciating the broader context of the specific field under study.
(2) The researcher must also “map out the objective structure of the relations between the positions occupied by the agents or institutions who compete for the legitimate form of specific authority of which this field is the site” (Bourdieu & Wacquant, 1992, p. 105). In other words, who is closer to the center of power? Which alliances are forged? How is the internal hierarchy of the field populated?
(3) Thirdly, the researcher must “analyze the habitus of agents, the different systems of dispositions they have acquired by internalizing a determinate type of social and economic condition, and which find in a definite trajectory within the field under consideration a more or less favorable opportunity to become actualized” (Bourdieu & Wacquant, 1992, p. 105). In the field under study I find that the possession of what I call a global habitus is what enables agents to prosper, and can be seen to characterize the individuals associated with the large ISPs. Interestingly, it is not as if the owners of the medium-sized ISPs–those who express fierce indignation over their inferior location in the field–lack a global outlook altogether. However, as I shall explain below, theirs is the “wrong” kind of global outlook given the structure that eventually comes to define the field.

Having outlined Bourdieu’s theory of fields and introduced some of its most important concepts, I now turn to an implementation of this method in relation to the field of Internet service provision in mid-90s Israel.

1.3.1 Three Observations of the Field

I begin my analysis of the emerging field of Internet provision with three somewhat schematic observations of the field. These observations form the basis for my subsequent analysis. Firstly, in interview, ISP owners talked differently about the emerging ISP industry in ways that I argue reflect their position in the field circa 1995 (see Figure 6).

In the first interviews I conducted, comments made about the relationships between the ISPs, the Ministry of Communications, and Bezeq arose spontaneously. In later interviews, when I initiated a discussion of those relationships, interviewees always had plenty to say on the matter. This trinity was also noted by Ein-Dor et al. in their report on the diffusion of the Internet in Israel (Ein-Dor et al., 1999).
Unsurprisingly, those highest up in the hierarchy were clearly pleased with how the industry had taken shape, while those lowest down, including people who were no longer players in the field, seemed to accept their lot with resignation, but not bitterness. Those located in between, however, expressed anger and indignation that the rules of the game had prevented them from becoming more significant agents in the field. I shall describe the respective sets of attitudes in more detail below, and explain why they should be particular to each group in terms of the groups’ location in the field and the habitus of the individuals populating them.

Secondly, I note that of the four companies to receive limited ISP licenses in 1992 (licenses which permitted them to connect R&D departments, and educational and cultural institutions after those had received governmental permission–see previous chapter), not one was among the three ISPs to be issued the first full commercial licenses in 1994. Actcom did receive a license very shortly afterwards, but, for reasons to be offered below, I find it significant that it was not in the very first wave of licensees.

Thirdly, the shape of the ISP industry has changed over the years. It started out with quite a large number of small companies, but after a while reached a situation where three very large firms now dominate the market. This is a process that can be discerned from the late 1990s. For instance, according to a Gallup poll, while in 1997 the three largest ISPs accounted for about 65% of private surfers, by 1999 that number had risen to 75% (Chametz & Gaoni, 1999).[12] Of particular note is the fact that the firms that came to be dominant in the ISP industry have several other business interests, particularly in overseas telephony.[13] Additionally, for reasons that I will expand upon below, it is noteworthy that they all have the backing of foreign investors.

The reasons for this change in the ISP market are to do with the processes of globalization and economic liberalization that Israel went through during the 1990s, and will be explored in more detail below. It is in this regard that we shall examine the relationship of the field under study to the field of power, the first of Bourdieu’s three necessary stages in analyzing a field (Bourdieu & Wacquant, 1992, p. 105).

These three observations raise the questions of how to explain the different sets of attitudes among ISP owners, and how to account for the shifting shape of the ISP industry. In Bourdieu’s terms, then, what follows is a “history of their positions and the history of their dispositions” (Bourdieu, 1993a, p. 61).

1.3.2 Three Sets of Attitudes towards the Ministry of Communications and Bezeq

As mentioned, a central feature of the ISP industry in Israel has been its relationship with the Ministry of Communications and Bezeq, the telecoms incumbent. This relationship has been changing, especially so since 1984 when Bezeq was corporatized (see Levi-Faur, 1998; Levi-Faur, 1999a, 1999b), but, as we shall see, not in ways that were to the satisfaction of all involved. I shall now outline the sets of attitudes that emerged during interviews with owners of ISPs.

I interviewed 13 owners and senior employees (at the level of Vice-President) of ten different ISPs which were operational during the mid-1990s. This does not comprise all of the ISPs to have been given licenses, as a number of companies received a license without ever making use of it,[14]while others have since disappeared.[15] However, it does include all of the main actors between 1992 and 1996. The ISPs whose owners and employees I met can be roughly divided into three groups according to the size of the ISPs, as in Table 1 below. Table 1 also shows the dominant attitude among each category towards the activities of the MoC and Bezeq. I shall now present these attitudes, before deploying Bourdieu in an attempt to understand their origins and role in struggles over the definition of the emerging field of Internet service provision.
Table 2 – Categorizing ISPs

Category ISP Attitude to MoC/Bezeq
Small ISPs Canaan Indifference
Kinneret
Gezernet
Lahavnet
Medium ISPs Actcom Anger
Aquanet
Israsrv
Shani
Large ISPs Elronet Approval
NetManage/NetVision[16]

1.3.2.1 Attitudes among the small ISPs

When the Internet industry got underway in Israel, there were a number of small ISPs, the gradual disappearance of which will be discussed later on. These ISPs were very local businesses: Gezernet and Lahavnet, for instance, were kibbutz-based companies, run by kibbutz members as an offshoot of internal kibbutz organizations to provide their own communities with Internet connectivity cheaply. Rather than each kibbutz member buying a connectivity package from an ISP on his own, it made more sense for the kibbutz to buy a large-scale connectivity package and install the required hardware at the kibbutz switchboard. In the days when the Internet was accessed through regular phone lines and customers paid to use it by the minute this was an economically efficient way of providing connectivity to tens or hundreds of households at once. And because phone calls within the kibbutz tend to be free (after all, they are all connected to the same switchboard), this system meant that kibbutz members could surf for as long as they wanted for a flat fee, if the kibbutz charged a fee from its members at all. Kibbutz Gezer and Kibbutz Lahav are two examples of kibbutzim that set up such a system for the benefit of their members. Once their systems were up, though, representatives of neighboring kibbutzim or moshavim expressed an interest in hooking up, assuming that it would be easier and cheaper to buy Internet connectivity from a nearby community rather than set up their own systems. This turned what was at first a service for kibbutz members into a small business. In neither Kibbutz Gezer or Kibbutz Lahav had the kibbutzim been planning on setting up an ISP, only doing so as a result of requests from neighboring kibbutzim or moshavim, and at no point did they have more than a few hundred customers.

Meanwhile, two small companies operated in the north of Israel, Canaan and Kinneret, both operating from in and around the city of Tiberias. The relative advantage that these small companies enjoyed derived from their geographical peripherality: it must be remembered that the period of time being discussed here predates the introduction and widespread diffusion of broadband Internet, meaning that private customers all used dial-up technologies to get online. Dial-up connections are made by a phone call to one’s ISP’s nearest Point of Presence (or PoP), meaning that the cost of surfing was comprised of a payment to an ISP, and a further payment to Bezeq for the cost of the phone call. Therefore, for someone living in Tiberias or thereabouts, it would make financial sense to buy a connectivity package from a local ISP, as phone calls to the Internet would thus be considerably cheaper than making an inter-city call to Haifa or Tel Aviv.[17]As explained to me by the founder and owner of Canaan, the small towns of Kiryat Shmoneh, Afula and Tsefat all lay in different dialing zones, despite sharing the 04 prefix. For a company like NetVision, the potential returns meant that it was scarcely worth establishing a PoP in Tsefat for a couple of hundred surfers, and this is what made it possible for a company like Canaan to exist.

These companies were very small, with a handful of employees and a customer base measurable in terms of hundreds or a few thousands of customers. Their attitudes to the MoC and Bezeq were by and large benign, though it would be more accurate to distinguish the attitudes to those two key institutions–the MoC because it provided the license for being an ISP, and Bezeq because all Internet communications ultimately went through its infrastructure.

The small companies were quite uninterested in the Ministry of Communications: for them it was a remote institution for whom they had to fill in forms once in a while, and they did not all need to do even this. Lahavnet, for instance, subcontracted bandwidth from a larger ISP, thus bypassing the need for an ISP license, because it was not establishing an overseas Internet connection of its own. When they did come into contact with the MoC, it was for bureaucratic purposes, which one interviewee described as something of a “headache”, but nothing more. In fact, he said, “the guys there [at the MoC] were very nice”. Indeed, when I asked what kind of a “headache” the MoC gave him, he replied with rhetorical exaggeration: “I had to fill in thousands of forms”, before revising his statement and adjusting the tone of his comments: “No, not thousands, but I had to send them reports”. And recognizing that all ISPs were in the same boat, he added, “I wasn’t any different from the others”. Insofar as no one enjoys filling in forms, such contact as there was between these small ISPs and the Ministry of Communications was bothersome for the former, but certainly no more than that.

Bezeq, however, raised more complaints, which were based on the tardiness and inefficiency of their service. Indeed, one of the small ISP owners told me that “Bezeq was the number one cause in unintentionally causing my company to fail”. The main accusations made towards Bezeq–and these will be repeated among the larger ISPs–were that its services were very expensive–especially the cost of overseas connectivity–and that the service it provided was poor, with Bezeq taking a very long time to install connection lines, make repairs, and so on. This is unequivocally attributed to Bezeq’s being a monopoly in both overseas communications and in the local loop.[18]“In 1997,” said one interviewee, “they just didn’t care about anything”. Another interviewee was less forceful in his words: “Basically they [Bezeq] were OK, but also, with them, it was problematic, because they gave service until a certain time of day, and so if the frame-relay falls at another time of day, there’s no one to talk to about it”. And yet another simply said they were “OK” without feeling the need to add anything more about them. In general, then, the small ISPs found Bezeq to be inefficient in the way that monopolistic state-owned companies can be; in this sense, they express the broader feeling about Bezeq that became prevalent in Israel during the 1980s, and which is described by Levi-Faur as “a decline in public support for the state monopoly in the sector” (Levi-Faur, 1999a, p. 177). Even the interviewee with the most serious grievances regarding Bezeq was not tempted to blame them of conspiratorially trying to undermine his business, and the tone in which he related his comments to me was certainly not an indignant one, but rather characterized by resignation and a recognition that that is simply how things were. This resignation will be the focus of my analysis of the attitudes among the small ISPs below, as I shall argue that their marginal position in the ISP field made stronger resistance futile.

1.3.2.2 Attitudes among the medium-sized ISPs

The medium-sized ISPs were characterized by antagonistic attitudes towards the MoC and Bezeq, as they felt that certain decisions and modes of action had a very real and negative impact on their businesses. However, unlike representatives from ISPs smaller and larger than them, the interviewees in this category were much less willing to be understanding of behavior that they felt damaged them. While it would seem that the previous category of ISPs never wholeheartedly attempted to “play the game”, the ISPs in this category did try to compete, only to find, in their perception, that the rules were weighted against them. Of particular interest are the rhetoric and tone adopted: there was an indignation to many of the comments made, and the deployment of concepts such as fairness and rights. In particular, their comments reveal them to be proponents of liberalization, deregulation and privatization. I shall later argue that this is to do with the location of these ISPs in the field of Internet provision, such that a morally indignant discourse was their main resource. Indeed, one cannot ignore the fact that throughout the 1990s the MoC was making efforts at liberalization across the telecommunications sector; in other words, it was implementing the very policies that the medium-sized ISP owners were calling for, though perhaps not as fast as they would have liked.

Interviews provided several examples of dissatisfaction on the part of the medium ISP founders. For instance, the decision in 1991 to connect organizations to the Internet for R&D purposes alone was criticized. One ISP owner found this hard to fathom, and even termed it “censorship”, using this term to refer to the fact that not every citizen was afforded equal access to information, or that certain routes for accessing information were blocked off to large numbers of people. “There was censorship in Israel”, he said, “and I don’t know why. It was an instruction from the Ministry of Communications”.

Although other sources told me that virtually all requests for connectivity were answered positively, this same ISP owner told me:
I remember there was this poet who said he wanted to do research on poetry. If you are a poet that’s not good enough for your request so they don’t let you.
For him, this was wrong. He thought the state had no right to prevent people from accessing online information, and so saw the very existence of the committee for ratifying Internet connections as a blatant example of heavy-handed state centralism.

This criticism was shared by other interviewees, as well as a number of journalists at the time, who complained of the delay in providing Internet to the wider public. One journalist, for instance, wrote that “in recent years the information superhighways have also been reaching Israel, though for the time being they are slowly crawling here” (Beller, 1994). Complaints that Israel was at least two years behind America were commonly reported in the press (for example, Kaplan-Sommer, 1994), and conveyed to me in interview. Indeed, a report by a former president of the Israel Internet Association claimed that “the damage resulting from slow Internet access and high prices is estimated at $61m” (Etzioni, 1999, p. 1). In short, the perception was that the government was imposing high regulation on entrance to the Internet even as Americans could freely access it. This was a situation that the some founders of ISPs found absurd.

One ISP owner bore particularly strong grievances. At the end of an interview during which he gave extremely terse answers to my questions, and after the tape recorder had been switched off, he suddenly came to life and started telling me what he really thought, including quite harsh accusations of foul play on the part of the MoC and Bezeq.

While not explicitly accusing any institution of underhand behavior, another ISP owner expressed his criticism in quite colorful language. Referring to government policies, he said:
It’s very simple. Bezeq is allowed to sell Internet services [the 135 service discussed above], I’m forbidden from selling telephony services. In every other country it’s permitted, permitted. This is an undemocratic country here. Israel is an undemocratic country. Why? Because, what can you do, Bezeq belongs to the government, and the government defends itself in all sorts of ways.
This interviewee acknowledged the need for some regulation (in ensuring that the equipment connected to Bezeq’s infrastructure meets safety standards, for instance), but, when referring to the degree of central control that he perceived in the mid-1990s, said that Israel is “the last communist country standing”. He saw the MoC as providing Bezeq with unfair protection and preferential treatment, and argued that the rules were not applied equally to everyone; in particular, he felt it was unfair that he could not sell telephony services in competition with Bezeq, though he backed this up with the clearly false assertion that “in every other country it’s permitted”. It may be that nowadays more and more countries are breaking the monopoly of a state-owned telecommunications company, but looking back to 1995, say, his argument is vastly overstated.

A further interviewee also criticized what he saw as “very high and bad” regulation on the part of the Ministry of Communications, or, as he corrected himself, “very strong regulation in the wrong things, would be more accurate”. He too agreed that there is room for government involvement, but claimed that the MoC’s involvement was of entirely the wrong kind:
Question: So there is room for government involvement?
Answer: There has to be, has to be regulation to prevent interference between providers. Government has to make sure that they don’t damage one another. That’s its role. It’s a policeman, really. […] It’s not [the government’s] job to decide who will earn more money and who will earn less. But it is only concerned with that. […] The Ministry of Communications only deals with who will earn more money and who will be given more advantages and who will be given less, whom will it damage and whom will it help.

In other words, the MoC is not seen as a detached and impartial regulator, but rather as a body that gives certain organizations unfair assistance while holding others back. The fourth ISP owner in this category also complained of “very harsh regulation”. None of the interviewees in this category softened such comments in the way we saw in the previous section, for instance by accepting that bureaucratic procedures take time, that a degree of bureaucracy is inevitable, especially when dealing with an entirely new technology, and that the rules applied to all of the ISPs equally. Notably, none of them fully accepted the need for regulation.

As with the owners of smaller ISPs, here too complaints were made about the functioning of Bezeq, but in a slightly different way. In particular, an interpretation of the field shared by ISP owners in this category is that the MoC was merely a puppet in the hands of Bezeq, rather than it being the regulatory body that was meant to be supervising the telecoms incumbent. This is an interesting interpretation of the power relations in the field of power, and quite possibly one that does not accurately reflect the objective relations between those two bodies. Indeed, the owners of the larger ISPs, and figures from within the MoC itself, spoke at length about the MoC’s struggles againstBezeq, and in particular their efforts to resist Bezeq’s strong desires to become a fully-fledged ISP in itself, a point to which I shall return.

One example of harsh criticism of Bezeq was provided by an ISP owner who had started setting up hot-spots from which he was planning to sell wireless Internet. He reported that Bezeq was very concerned about this because it saw it as threatening its income at a time when Internet connections were made through the regular phone line: surfers using the Internet wirelessly would therefore not be using their phone lines to surf. A clause was found in the Telecommunications Law which stipulated that only Bezeq was permitted to provide wireless Internet connectivity, and so this particular project was brought to an end, thereby collapsing the ISP that had set it up. The ISP owner’s interpretation is very clear:
This whole outlook that I started, it looks like I started it several years too early, and it really annoyed Bezeq and it really annoyed the MoC. Back then, everything that Bezeq asked for [the Ministry] would do, and they finished us off.
Indeed, Bezeq and the MoC are often seen as a unit, with the latter implementing policies that the former has requested or that somehow benefit it.

As summed up by one owner:
To this very day Bezeq abuses us. […] Bezeq is a very problematic thing and we have all been fighting it. But we can’t fight it, I’m like a fly fighting an elephant. Can I fight? I can’t. But that’s just how it is. That’s the situation.

1.3.2.3 Attitudes among the large ISPs

I interviewed people from the large ISPs towards the end of my research in the field. By this stage of the research I knew that I would wish to discuss their attitudes towards and relationships with the Ministry of Communications and Bezeq, and I expected to hear from them similar stories to those related by the owners of smaller ISPs: namely, that the MoC was overly bureaucratic and slow, and subjugated to the will of Bezeq, which I expected to be described as an arrogant and domineering monopoly. However, this was in no way the case. Instead, while they expressed some frustration about the MoC’s bureaucracy, they shrugged their shoulders and pointed out that every government has a bureaucracy, that there is nothing you can do about it, that it was not all that bad, and that the staff at the MoC were actually very well meaning. For instance, while owners of the medium-sized ISPs spoke angrily about the lack of knowledge about the emerging Internet in the MoC, interviewees from this category, while talking in quite a patronizing way, nonetheless seemed to take this lack of awareness more understandingly, adding that the MoC was keen to learn.

Representatives from the large ISPs clearly differentiated between the MoC and Bezeq, resisting perceptions of the former as nothing more than an administrative wing of the latter. For instance, I asked a former VP of Business Development from NetVision, and one of its founders, how he would characterize relations with the Ministry of Communications: “Very good,” he replied, adding, “honestly, about the government, I’ve got no complaints about the government”.
Question: Would you say there was over-regulation?
Answer: You live in a country with heavy regulation. You could see them trying to do it gradually, to take down all those things. All in all, it took its own time. Don’t forget that they were protecting… today, looking back with perspective, they had to protect Bezeq […] but all in all it worked fine. […] If someone tells you today that it was unfair […] then they should know their history a bit better. […] Now, Israeli customers, and Israeli providers who tell you that the MoC screwed them over […]. You always have to look at it in perspective, you don’t live on your own in the world. You’ve got Europe, you’ve got Africa, the Far East, and regulation isn’t something that collapses in ten minutes, so you have to compare what happens in the world, and then [compare it to here], I’ve got no complaints.

The first CEOs of Elronet and NetVision spoke similarly, pointing out that the Internet raised new legal issues that needed to be examined and properly processed. For instance, while some interviewees complained about the length of time it took for full ISP licenses to be issued, Abe Peled, CEO of Elronet, was much more understanding: it was not as if such a thing as an ISP license already existed; rather, it had to be written, a process in which Peled himself was involved, an important point to which I shall return later.

Bezeq was more problematic in the eyes of these interviewees. One problem was the price it charged for international connectivity, obviously a crucial component in connecting Israel to Internet servers overseas: until 1997 Bezeq had a monopoly on international telephony, and international communications were very expensive. Indeed, Bezeq used the profits from this side of its business to cross-subsidize the price of local phone calls. This was a source of ire for all ISPs, and was cited as a cause for the relatively high cost of Internet connections in the early years. In fact, when the Internet in Israel used to be very expensive, much of the cost lay in the prices paid by the ISPs for the use of Bezeq’s infrastructure (Eilan, 1998). This, however, was a situation that changed in 1997 with the introduction of competition in the overseas telephony sector.

The most problematic aspect of Bezeq’s behavior for this category of ISPs, and indeed all of Israel’s ISPs, was its desire to become an ISP itself. Ruth Alon, founder of NetVision, described this as a “very scary” potential, and one that would have put the Internet in Israel back “by a hundred years”. Providing Internet access while enjoying monopolistic ownership of the infrastructure for the Internet was seen by all as a potentially disastrous eventuality. This view was shared by the Ministry of Communications, which repeatedly rebuffed attempts by Bezeq to become an ISP–a fact that the medium-sized ISPs were seemingly unaware of, or chose not to acknowledge. This was related to me by all of the interviewees from this category, as well as by two former Directors-General of the Ministry of Communications, Shlomo Waxe and Daniel Rosenne. For instance, Shlomo Waxe, Director-General of the MoC between 1993 and 1997, told me that he waged “World War Three” with Bezeq so as not to let them become an ISP. He said: “During my time at least, I can only talk about my time, Bezeq had no preferential position and no say in the issue of the Internet”. Indeed, the owner of a medium-sized ISP also mentioned this–“Bezeq was always trying to get in, but they didn’t let it,” he said–but because this would seem to contradict his main view, namely that the MoC was working in Bezeq’s favor all the time, this interviewee does not mention that the “they” in his comment is the MoC, and nor does he make any more of the issue than that small sentence.

In sum, we can characterize the attitudes towards the MoC and Bezeq according to three categories of ISP: the smallest ISPs expressed some frustration with those institutions, but in a way that lacked anger; they simply accepted that as the way things were. The medium-sized ISPs tended to lump the MoC and Bezeq together and saw them as putting sticks in the spokes of their businesses’ wheels. The MoC was seen as an overweight bureaucracy protecting the interests of the monopolistic and inefficient telecoms incumbent. They saw the system as unfairly weighted against them. Finally, the two largest ISPs in the early to mid-1990s approached what they described as the failings of both institutions with understanding, showing particular awareness of the MoC’s resistance to Bezeq’s desires to become an ISP in itself. We now turn to an analysis of these sets of attitudes from a Bourdiean perspective.

1.3.3 Analysis: how to interpret the attitudes?

In the following I shall interpret these sets of attitudes by attributing them to objective positions in the field, and the relation of the ISP field to the field of power. In this sense, I shall be engaging in genetic structuralism, defined by one critic as,
the attempt to understand how “objective”, supra-individual social reality (cultural and institutional social structure) and the internalized “subjective” mental worlds of individuals as cultural beings and social actors are inextricably bound up together, each being a contributor to–and indeed an aspect of–the other (Jenkins, 1992, pp. 19-20).
In addition, I shall argue that these attitudes are reflective of different habitus among ISP owners.

1.3.3.1 The small ISPs: accepting their lot

The attitudes of the small ISPs–which I have summed up as indifference to the Ministry of Communications and the regulatory regime–are the easiest to understand, and as such the least interesting. Moreover, their objective importance in the field is minimal. Therefore, I devote only a small section to them.

Bourdieu wrote that “at the very basis of my representation of action [is] the way in which dispositions are adjusted in accordance with one’s position and expectations in accordance with opportunities” (Bourdieu, 1990a, p. 10). And writing about Bourdieu, Webb et al. claimed that “those with the least amount of capital tend to be less ambitious, and more ‘satisfied’ with their lot; in Bourdieu’s terms, ‘the subjective hope of profit tends to be adjusted to the objective probability of profit'” (Bourdieu, 2000, p. 216; cited in Webb et al., 2002, p. 23). These citations would seem to succinctly contain the attitudes of the small ISPs described above. Positioning themselves as very local businesses, they never imagined that they would become nationwide ISPs, providing Internet connectivity throughout the country; this is certainly the case with the kibbutz-based businesses, while the two companies in the north explained how their business plans relied on the singularities of the Israeli dialing system, and the fact that a phone call to the neighboring town could be charged as a long-distance call.

When they realized that their businesses were being threatened by the larger companies and by changes to the dialing system–which can be conceived as changes imposed by the field of power as part of the modernization and digitalization of the Israeli telecommunications network–they accepted this quite calmly. The owners of the two companies in the north of Israel shifted their companies’ emphases somewhat: one now focuses on web design, having given up on Internet provision altogether; the other concentrates on providing Internet solutions to businesses, recognizing that he has no chance of gathering a customer base that would support his company as he originally established it. The people running the kibbutz-based companies were quite content to let their companies dwindle away and return to work they enjoyed somewhat more. For instance, one of the founders of Lahavnet spoke with considerably more enthusiasm at the end of our meeting about an innovation he was developing in the kibbutz-owned factory he worked in than he did about the Internet.

More than lacking ambition, though, these people also lacked the required capital to truly succeed in the ISP industry. Firstly, they lacked financial capital, which severely restricted their ability to expand their enterprises. For instance, their marketing, when they did any, was minimal, primarily because they lacked the cash to make that kind of outlay. Secondly, and more importantly, they did not have the technological capital characteristic of the founders of the medium and large ISPs in the mid-1990s. The owners of the two ISP companies in the north of Israel were both in their early twenties when they set up their businesses, and had no experience of working in a hi-tech environment. They had both been very involved with computers in their youth, which is what attracted them to set up ISPs, but they had not pursued their interest through university studies, for instance. They were also extremely local in their orientation. As mentioned above, one of the companies was called Kinneret, reflecting the fact that it was based in Tiberias; and the second was called Canaan Glishot [surfing]. When I asked the founder about the name, he said:
Answer: From the outset we didn’t want to do another NetVision, Vision-net, Vision-Internet, all kinds of words from the United States. We stuck with Hebrew words.
Question: Why?
Answer: We thought it wasn’t proper.
Question: What wasn’t proper?
Answer: All that trend of American names, it didn’t seem right, it seemed more logical that names should be Israeli, and that we should be proud of that.

This is an extremely local orientation. Indeed, this interviewee sees himself as having a personal responsibility to protect the Hebrew language, and thus local Israeli culture, from the ravages of Americanization. His protest against the “Englishization” of Hebrew (Dor, 2004) is similar to former President Ezer Weizman’s famous outburst against “the three Ms”–Madonna, Michael Jackson and McDonald’s–following the death of a number of youths at a rock concert in Arad in 1995. It most certainly contrasts starkly with the global habitus exhibited by the owners of the larger ISPs, and particularly by the ISPs that today dominate the market in Israel. I shall reinforce this point when I come to discuss the large ISPs below.

More than their local orientations, though, it would seem that the people behind the small ISPs were fully aware of the limited potential of their companies, both in terms of their own capabilities as managers and the structural surroundings of their businesses, such as a kibbutz unprepared to funnel funds into such a project, or the structural changes to the dialing system, which pulled the rug from under the feet of companies which relied on the previously tiny dialing zones. Accordingly, they did not complain that the industry was over-regulated, or that Bezeq was being given unfair advantages.

In his work, The Subtlety of Emotions, Aaron Ben-Ze’ev offers another way to understand the mindset of the small ISP owners. Discussing envy, he says, “[s]ince social comparison is chiefly limited to those similar to us, envy should be more typical of small subject-object gaps” (Ben-Ze’ev, 2000, p. 287). The small ISPs clearly recognize that there is a large “subject-object” gap between them and the large ISPs (a recognition lacking among the medium-sized ISPs, as discussed below). Thus, the small ISPs are not envious of the big ones. They simply do not compare themselves with them. As I show below, this is the main difference between the small and medium ISP owners.

1.3.3.2 The large ISPs: The success of the “newcomers”

Talking of the “general laws of fields“, Bourdieu says,
we know that in every field we shall find a struggle, the specific forms of which have to be looked for each time, between the newcomer who tries to break through the entry barrier and the dominant agent who will try to […] keep out competition (Bourdieu, 1993b, p. 72).

This assertion would seem to be applicable to the case at hand. As mentioned in section y’4.3.1 above, none of the four companies to be given provisional ISP licenses in 1992 was among the very first wave of three companies to be licensed in 1994. In other words, the companies that were given licenses in 1992 were unable to solidify their status in the field, and were “overtaken” by new actors. What was it, then, about the newcomers to this emerging field that enabled them to receive the first licenses? And how did they go on to establish themselves as the major ISPs in Israel, at least at the early stages of the industry’s existence.

Abe Peled and Ruth Alon, who ran Elronet and NetVision respectively, were certainly newcomers. Abe Peled moved to Israel from the United States in 1993, as did Alon. Indeed, in interview she said that there was a lot she did not know about the early history of the Internet in Israel because she only arrived on the scene once the bureaucratic processes for licensing ISPs were already in motion. Nonetheless, NetManage was among the first companies to receive an ISP license, even though Alon herself had only been in the country for such a short time. How should we understand this?

Firstly, this is a function of the newness of the field. Positions within it had not yet solidified and, apart from the state, in the form of the MoC, and, to an extent, Bezeq, there were no especially powerful institutions playing the game. Under such conditions it was possible for newcomers to stake a powerful claim to dominant positions. The ability of Peled and Alon to push to the front of the queue, as it were, is also related to their habitus and social capital. This is most clear with Peled. In interview he told me that when he arrived in Israel he telephoned Shlomo Waxe, then Director General of the MoC, to set up a meeting to discuss the commercialization of the Internet in Israel. None of the other ISP founders did such a thing; indeed, it would hardly have crossed their minds to do so, mostly because they saw the MoC as a distant body, a foreign bureaucratic machine. Peled also told me that it was he who wrote to an acquaintance of his on the relevant Internet committee in the United States in order to get a letter giving Israel permission to allow the general public onto the network, and that he had even been involved in formulating the terms of the license that would shortly be issued to his company.[19] It is hardly surprising, then, that he should have been among the first to receive a license from the government ministry that he had assisted and with which he had been in such close contact.

Moreover, it can be argued that Waxe and Peled have much in common: it could be said that in some respects they have a shared habitus, thus positioning Peled in closer proximity to Waxe in the field than other ISP owners. First of all, they would seem to share similar positions in the class system: while I did not ask as to their incomes, a good indication of Waxe’s standard of living can be gauged from the size of his property in a desirable suburban town, and the artwork that ornamented his house.[20] Moreover, Waxe was a career soldier, reaching high rank before retiring from the army, which is well known for its extremely generous pensions. Meanwhile, before running Elronet, Peled had been Vice-President of Systems and Software at the Research Division of IBM, and is currently CEO of a Murdoch-owned News Corp. subsidiary, NDS, positions that undoubtedly command high salaries.[21] In addition, both men, who are about the same age, came to their new jobs (Waxe joined the MoC in 1993) from managing very large enterprises: Waxe had been Commander of the IDF Signals Corps, while Peled had headed research for IBM worldwide. Also, they were both from European families–Waxe’s parents were holocaust survivors; while Peled lived in Romania from his birth until his family left for Israel when he was 13 years old–a not insignificant factor in Israel, a country with marked ethnic divisions and cultural barriers (Ben-Porat, 1992b; Semyonov, 1988).

With regard Ruth Alon, of most significance is her social capital, which derives from two main sources. Firstly, she arrived in Israel as the co-owner of a very successful Silicon Valley firm, NetManage, whose main achievement was in developing a version of the Internet protocols, TCP/IP, for Windows. This background in the American hi-tech industry was to prove crucial to the way she would run NetVision, as attested to by both Alon herself, and one of the first VPs of the company. In particular, she placed great importance on the value of good customer service, believing that potential clients would be prepared to pay a little bit more for excellent service. To this end she set up a 24/7 customer service call center at great expense. In interview she was quite clear that this emphasis on service was directly drawn from her time in the US, and that it was something she wanted to introduce into Israel.

Secondly, and as mentioned, she was the daughter of Uzia Galil, one of Israel’s most prominent hi-tech industrialists, an Israel Prize laureate, and, among a long list of achievements and positions, a former member of the NetManage Board of Directors. The investment behind the establishment of NetManage as an ISP in Israel was, unsurprisingly, made by Elron, the company set up by Galil in 1962. Alon thus entered the field with experience in the computer industry from the United States and extremely useful business and family connections in Israel. These enabled her quickly to take up a dominant position in the emerging ISP field ahead of people who had been dealing with the Internet in Israel for much longer than her.

In short, the newcomers had the requisite social capital to propel them to dominant positions in the emerging field. Peled and Galil had the social capital and habitus that brought them into close contact with figures from the field of power. Because their involvement (helping to write the text of the ISP licenses, for instance) brought them advantages (being issued with licenses before anyone else), it is natural that these people voiced the least criticism of the MoC. Also, they were able to see more closely the kind of structural and institutional limitations the MoC had to deal with, and their own experiences of managing large enterprises meant that they showed more understanding of them than other actors in the field, namely, the founders of the medium-sized ISPs, to whom we now turn.

1.3.3.3 The medium-sized ISPs: left behind in a changing field

Having discussed the indifference of the small ISPs and the approval of the large ones regarding the functioning of the MoC and, to a lesser extent, Bezeq, I turn now to the medium-sized ISPs, whose owners were the most critical of the field of power, drawing on a rhetoric of rights, equality, and democracy when making their arguments. Indeed, they were the most strident in expressing any kind of opinion. As such, they comprise the most interesting of the three groups, and hence my analysis of it is longer than that of the other two.

In this section, then, I wish to understand the positions taken up by this group of ISP owners. This involves several steps. The first is to accurately identify the emotions expressed by the interviewees. The next is to suggest a way of discussing them sociologically. While not proposing to offer here a lengthy exposition on the sociology of emotions (Barbalet, 2002a; Stets & Turner, 2006), a basic premise should be noted, namely, that “particular structural configurations give rise to specific emotions” (Ben-Ze’ev, 2000, p. 287). That is, emotions and social structure are related. This leads me to inquire into the objective circumstances that gave rise to the set of emotions enunciated by my interviewees. In doing so, I draw upon their location in the ISP field, the relation of that field to the field of power, and to aspects of their habitus which I see as relevant, in particular the extent to which they display a global habitus.

As mentioned above, the emotion most strongly expressed by the owners of the medium-sized ISPs was indignation. The emotion of indignation is a feeling of righteous anger; it is the anger one feels when one considers oneself to have been wronged. It is associated with other emotions such as envy and resentment, all of which were expressed by the owners of medium-sized ISPs whom I interviewed. Sociologists have approached the broader emotion of anger from a number of perspectives, all of which have in common a linkage between emotion and social structure. One approach sees anger as an emotion that, like others, is controlled and deployed in social circumstances (Hochschild, 1983; Sutton, 1991). However, this would appear to be of limited use here, as I did not observe my interviewees interacting with other members of the field. While the interview situation is of course also a “social circumstance”, it is quite dissimilar to the examples of tax collectors and flight attendants described in the studies cited above.

Another perspective linking anger to social structure has shown how it is correlated with perceptions of higher social status (Keating, 1985; Tiedens, 2001; Tiedens, Ellsworth, & Mesquita, 2000). Again, I am not interested in the expression of emotion by my interviewees when in the company of other people from the field and how their anger might improve others’ perceptions of their status. Indeed, their indignation stems precisely because their status in the field is not what they wish it was.

This leads us to a third approach to anger and indignation, one that focuses on its moral aspects. This is the approach most suitable for discussing the emotions expressed by the owners of the medium-sized ISPs whom I interviewed. Discussing the seminal work of Svend Ranulf, who formulated a theory linking disinterested criminal punishment with a certain class structure (Ranulf, 1964), Jack Barbalet highlights the affinity between the emotions expressed by certain of the interviewees for this study and morality:
[E]nvy, jealousy and resentment all contain a clear moral or normative element, because these emotions all function in terms of a notion of a postulated desirable state of affairs or outcomes: my envy implies a feeling that I should have what is currently denied to me (Barbalet, 2002b, p. 287).

Similarly, Ben-Ze’ev describes envy as being “concerned with someone’s undeserved good fortune” (Ben-Ze’ev, 2000, p. 283, emphasis in original). This of course begs the question as to how one judges what is deserved or undeserved. This is what Peter Lyman is referring to when he states that moral indignation is created by “[d]etaching the self-righteousness of anger from the self and re-attaching it to a political ideology”. That is, indignation is not merely anger, but rather anger that is backed up by certain moral principles. It stems from a reading of reality that is informed by a set of beliefs.

What, then, was the reality in which the medium-sized ISP owners found themselves? And what was the political ideology that provided the lens through which they interpreted it? By answering these questions we shall explain their indignation and account for some important dynamics in the field.

1.3.3.3.1 Shifting types of capital in the ISP field

As we know, a large part of the struggles in a given field are over which type of capital will be considered valid (Bourdieu & Wacquant, 1992). Actors with large amounts of a certain type of capital will try to ensure that possession of that capital is the deciding factor in the location of actors in the field. Actors with other types of capital will try and resist this, asserting the validity of the capital in which they are wealthy instead. This kind of struggle is clearly visible in the ISP field during its first few years; today, however, it would seem that this particular struggle has been settled, to the benefit of today’s strongest actors.

More specifically, I contend that in the ISP field there has been a shift from the dominance of “technological capital” to purely economic capital, and that this shift is the source of much of the bitterness now felt among medium-sized ISP owners towards the institutions that they perceive as being responsible for it. By “technological capital” I mean technological knowledge itself and the symbolic capital associated with it as a resource. The importance of technological capital in the early days of the Internet can be seen in the fact that the dominant actors were computing experts, and that all but one of the ISPs that I encountered were set up by people with a rich background in computer networking, bulletin boards, and so on. For instance, one medium-sized ISP founder brought knowledge and experience from the military, where he had served as an officer in the Communications Corps; another had worked in a university computing department prior to founding his company; another had jointly set up a large and successful network of computer stores. In other words, the dominant players were those with deep knowledge and experience of computers, which earned them recognition and enabled them to stake a claim in the field. Just as this had been the case with the invention of the Internet in the US, so it was also the case in the early days of the Internet in Israel.

With time, however, this knowledge has become less and less valuable, especially because of the introduction of standardized broadband Internet connectivity technologies. One ISP owner put it like this:
Not long ago, before the age of broadband, my knowledge had real value. What do I mean? Every ISP would buy its equipment and set up network technologies between his dialing areas. Today that doesn’t exist any more. Today Bezeq controls the market with all sorts of monopolistic practices. One of these is that actually there is no difference between the ISPs. What do I mean? You dial using ADSL to Bezeq […] All that I’ve got with Bezeq is an optic cable that I am obligated, I mean legally obligated, to buy from them, and NetVision is just the same as me. There’s no technical difference. I can’t give you a different technical service even if I want to, even if you pay me more I won’t give you better or worse service than NetVision. […]
Regarding [my ISP company] I don’t update myself technologically. There’s nothing to be updated about. If Bezeq comes across ADSL they tell me about it officially, they take us to a conference and give us lectures about it, they tell us that this Cisco [router] is the right one […] Up until two or three years ago[22] […] at least it was interesting. Technically, it was interesting. […]
Today, for instance, if I want to connect to ADSL, Bezeq in advance imposes on me that I can only buy Cisco, and they even tell me which model I have to buy. I mean, I don’t have any choice today and that’s not democratic. Let’s say there are better companies that compete with Cisco, let’s say they are cheaper. But there’s no point in even checking, it doesn’t make any difference, they won’t let me [use them]. You see?

Hank Nussbacher described a similar process, ratifying the sentiments expressed by ISP owners:
Back in the early days things were very new and you, when you put in new boxes and new equipment and new services you were testing the water, you were always leading edge and […] learning from others, communicating with others because you’re doing things where no man has gone before, and you need to consult with others who have possibly, you know might be one guy in South Africa and one guy in London who are doing something similar and you want to be in contact with them. Nowadays it’s, the Internet’s become more of a commodity, so therefore there’s no, there’s not much, you just, you know get another box, connect more lines, connect […] another ten thousand users, and off you go. There’s not much thought put into it. A dumbing down of the entire process.

The technological capital of the medium-sized ISP owners, then, seriously declined in value. Moreover, the contrast between actors rich in technological capital and the figures dominant in today’s ISP industry in Israel is striking. For instance, Internet Gold represented the first major financial involvement in the Israeli Internet. If most ISPs had been set up with virtually no investor backing whatsoever, and if NetVision was remarkable at the time with an investment of around $3m from Elron, then we can appreciate the novelty of Internet Gold, which started providing Internet connectivity in 1997, by the size of its $10m initial investment. By means of comparison, let us note that Amir Plivatsky, founder and CEO of Actcom, had worked in the computing department of Haifa University; Meny Nachman, founder and CEO of Aquanet, had a long history of involvement in BBSs; Shmuel Kat set his ISP up after serving as an engineer in the Israeli army; and even the founders of the small ISPs in the north of Israel had been kids who spent much of their free time with computers. Let us compare these backgrounds with that of Eli Holtzman, co-founder and CEO of Internet Gold. This is how he is described on the Internet Gold website:
Serving Internet Gold since 1992, Eli Holtzman co-founded Internet Gold and is its Chief Executive Officer. From 1988 to 1992, Mr. Holtzman provided independent marketing consulting services to a number of enterprises. From 1986 to 1988, Mr. Holtzman served as CEO of the Israeli franchisee of the U.S. fast-food chain Wendy’s, and from 1984 to 1986, he was general manager of Arieli Advertising Ltd., a leading Israeli advertising company. In 1977, Mr. Holtzman co-founded SuperPharm, Israel’s largest pharmacy chain, and was its CEO until 1984. Mr. Holtzman holds a B.Sc. in chemistry and pharmaceuticals from Illinois University.[23]

It is immediately obvious that Holtzman’s credentials as the head of an ISP are entirely different to those of previous ISP owners. Holtzman is first and foremost a businessman, and not an engineer, like virtually all other ISP CEOs up until then. Moreover, he is a businessman with global ties (a degree from an American university, the Israeli franchisee of an American fast-food chain), also unlike most of the ISP owners in Israel at the time. In this context, then, he represents the shift from “technological capital” to global financial capital. Although Holtzman himself is not responsible for the devaluation of technological knowledge in the field, he does represent a change in it. This is not to say that today ISPs do not employ engineers: of course they do, but these engineers are not the entrepreneurs and CEOs.

It would appear that Abe Peled and Ruth Alon, as the CEOs of Elronet and NetManage respectively, whose companies would quickly be merged to become NetVision, represent a half-way stage in this process. Both are technical people who came to their positions in Israel from many years of working the United States; indeed, Peled came from a very senior position in IBM. They were both connected to Uzia Galil, one of Israel’s foremost and longstanding technological entrepreneurs (Elronet was a daughter company of Elron; Alon is Galil’s daughter). Alon founded NetVision on the basis of an extremely strong commitment to customer service, a value that she quite explicitly declares she brought with her from America, and a fact which she sees as lying at the root of NetVision’s success. In other words, they would seem to lie between the owners of the small and medium-sized ISPs on the one hand, and Holtzman and others like him on the other. As the ISP field changed, Alon was able to stay at the center of it.[24] Her counterparts at the smaller ISPs, however, were left behind. Their technological capital was losing its value, but they were unable to supplement it with any other kind of capital, particularly the global financial capital required to compete with companies that could afford to lose money on their customers. The fact that they were extremely able engineers became increasingly irrelevant.

This, I maintain, is the source of the comments made by the ISP owner quoted at length above when accusing Bezeq of behaving monopolistically, and describing the imposition of a certain type of router as undemocratic. He and others in a similar position in the field have lost the game. Their technological knowledge can no longer give them any advantage: they cannot convert it into financial gain, as financial capital is no longer distributed in the field according to holdings in technological capital. Hence, all that is left to do is bemoan the situation and decry its rules–in this instance by terming them monopolistic and undemocratic. This, then, is a major part of the explanation for the critical comments made by the owners of the mid-sized ISPs: they could see the dominant type of capital in the field changing in front of their eyes, and were powerless to halt that process. Bourdieu and Wacquant wrote:
… at bottom, the value of a species of capital (e.g., knowledge of Greek or of integral calculus) hinges on the existence of a game, of a field in which this competency can be employed: a species of capital is what is efficacious in a given field, both as a weapon and as a stake of struggle, that which allows its possessors to wield a power, an influence, and thus to exist, in the field under consideration, instead of being considered a negligible quantity (Bourdieu & Wacquant, 1992, pp. 98-99).

Quite clearly, as the Internet in Israel underwent a process of commercialization, the dominant “species of capital” in the field changed, and the value of the technological capital help by the early ISP founders became “negligible”. Bourdieu and Wacquant go on:
… players can play to increase or to conserve their capital, their number of tokens, in conformity with the tacit rules of the game and the prerequisites of the reproduction of the game and its stakes; but they can also get in it to transform, partially or completely, the immanent rules of the game. They can, for instance, work to change the relative value of tokens of different colors, the exchange rate between various species of capital, through strategies aimed at discrediting the form of capital upon which the force of their opponents rests (e.g., economic capital) and to valorize the species of capital they preferentially posses (e.g., juridical capital). A good number of struggles within the field of power are of this type (Bourdieu & Wacquant, 1992, pp. 99-100).

By entering the field of Internet provision, Internet Gold, and later the international telephony companies, Barak and Bezeq International, changed the rules of game beyond the “dumbing down” of the sector described above. One of the ways they did this was through a practice known as cross-subsidizing, namely, using the profits from one branch of the company to cover losses in another.[25] Another was by embarking on extensive marketing campaigns, including television adverts, something which the small and medium-sized ISPs could never do, quite simply because they lacked the finances. Thirdly, they sold Internet connectivity packages at a loss, on the grounds that it was worth losing money today in order to gain customers for the future. Again, the smaller and medium-sized firms were simply unable to do this for the most rudimentary of cash flow reasons.

So far, then, I have argued that the anger directed towards the MoC and Bezeq by the medium-sized ISP owners can be explained in terms of the decline in value of the capital in which they were richest–technological capital. In other words, the large holdings of financial capital of other actors were enabling the latter to undercut the significance of technological capital in the field. This in turn should be seen as the outcome of changes in the field of power, that is, the state, and in particular the trend towards liberalization and decentralization in telecommunications in Israel (Levi-Faur, 1999a, 1999b), for it is this which encouraged and enabled large concerns to enter the ISP industry.

1.3.3.3.2 Local habitus, global field

Another way to explain the position of the medium-sized ISPs is to suggest that their habitus was too local in a field that was rapidly becoming more and more subject to global powers; that they lacked the global orientation of later arrivals to the field. That is, the field was being changed by forces bigger than them, and they lacked the requisite habitus to sustain their position in it. I have already cited the CV of the CEO of Internet Gold and Ruth Alon’s emphasis on American-style service as examples of the global orientations of the large companies. Perhaps the owners of the medium-sized ISPs lacked a sufficiently global outlook in order to successfully play the game in the ISP field. As I shall explain, the ISP field began to be populated by large economic concerns backed by money from overseas and by members of Israel’s economic elite. The senior managers in these companies were people with global business ties and experience (such as Holtzman at Internet Zahav). In this context, the owners of the mid-size ISPs were simply left behind: as explained above, their technological capital became worthless; their financial capital was not only limited in size, but also in its sources, all of which were local; and their social capital too was entirely locally based.

This is not to say that the medium-sized ISP owners entirely lacked a global perspective–far from it. They had a global outlook in two ways: first, in an important sense, their technological expertise was most definitely global in nature; and second, they identified with a political ideology of the Internet that must certainly be seen as global.

Regarding technological expertise, I asked my interviewees where they get their knowledge from. One of them said:
It doesn’t matter where. I don’t check what country I get my information from. I don’t check it, and it could come from all sorts of countries […] The geographical location of the knowledge is not what interests me. Geographic space has no meaning, there is no meaning at all in how it got to Israel. It is open to all and reaches everyone in an equal way. It has nothing to do with geographical space.

This man truly seems to enter a different kind of space when surfing for information, a space without national borders. It is not that national borders are easily crossed, or that it is as if they do not exist, but that for him they simply do not exist. This is surely to do with a quality of such kinds of knowledge–it is extremely easily lifted out of context (see, for instance, Hannerz, 1990). Of course, almost all of the knowledge possessed by these ISP owners comes from the United States, a fact which they are quick to recognize. In other words, to describe these people as lacking a global perspective of any kind would clearly be inaccurate: by working in the Internet industry, they are necessarily tied in to global networks of both computers and knowledge. In other words, technological capital is itself a kind of global capital.

Turning to the interviewees’ political ideology of the Internet, it can also be argued that their perception of the place of the Internet in the world was more global than local. What, then, was the political ideology that shaped the way these ISP owners interpreted the reality in which they found themselves? Given their sense of borderlessness when using the Internet, and given their strongly expressed sentiments regarding the state’s perceived over-involvement in the field, perhaps we can see the attitudes of the owners of the medium-sized ISPs as being rooted in the habitus of the so-called “Netizen”. Michael and Ronda Hauben (1997) coined the term to refer to users of Usenet and the Internet who made a positive contribution to them:
There are people online who actively contribute towards the development of the Net. These people understand the value of collective work and the communal aspects of public communications. These are the people who discuss and debate topics in a constructive manner.[26]

Moreover, the “Proposed Declaration of the Rights of Netizens” starts by recognizing “that the net represents a revolution in human communications that was built by a cooperative non-commercial process”, and goes on to assert that, “[t]he Net is not a Service, it is a Right. It is only valuable when it is collective and universal”.[27] John Perry Barlow’s “Declaration of the Independence of Cyberspace” adopts a similar, of more boldly stated, rhetoric:
We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth. We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity.[28]
In particular, and in a way that perhaps resonates with the dynamics presented in this chapter, he rails against the involvement of “Governments of the Industrial World”, which he terms “weary giants of flesh and steel”, telling them not “to invade our precincts”.[29]

In other words, these writers saw the Internet as the perfect instantiation of distributed power–“decentralization, openness, possibility of expansion, no hierarchy, no centre, no conditions for authoritarian or monopoly control” (Sassen, 1999a, p. 54)–subscribing to what Sassen sees as the utopianism characteristic of the “first era of the Internet” (Sassen, 1999a, p. 50), or to the “utopian, communal, and libertarian undercurrents” that Castells identified in the first generation of internet developers in America (Castells, 1996, p. 357). It would be overstating the case to argue that the owners of the medium-sized ISPs whom I interviewed identified whole-heartedly with the ideology of the Netizen and Barlow’s “Declaration of Independence”. However, their comments definitely resonated with certain aspects of that ideology. In particular, disparaging talk of monopolistic practices; a sense that the government was interfering where it had no right to (deciding who could and could not get online, for instance); the suggestion that business information submitted as part of the ISP license request would be passed on to Bezeq by the MoC; the allegation that Bezeq was (illegally) approaching customers who had asked for Internet connectivity to be provided at their home or office in order to offer them connectivity packages; and the more general charge that the field was being run undemocratically, all chime with the kind of statements referred to above.

So their technological capital was global, and they shared a global ideology of the Internet, but what, however, of the management styles adopted by the medium-sized ISPs? Can they shed light on the relative localism or globalism of their habitus? In order to gauge the extent to which other aspects of globalization had penetrated the way they run their businesses, and recognizing the massive global flow of management ideas and practices (Alvarez, 1998; Frenkel, 2005a, 2005b; Gupta & Govindarajan, 2000), I asked the ISP owners where they learnt how to manage; whether they read management journals or books, and if so which; and whether they implemented a specific kind of management philosophy in their companies. I did not ask these questions to see if they were running their companies in imitation of American ISPs, but rather more generally to see if they had entered into any kind of dialogue with methods of management from the United States. None of them had studied management formally, and nor did they read up on it. Not one of them ran their companies in line with a distinct management philosophy, rather making the decisions that seemed the right thing to do at the time. Indeed, in sharp distinction to the Israeli hi-tech sector of which they form a part (see, for instance, Frenkel, 2005b on the use of imported work-family practices in Israeli hi-tech firms), they were (and remain) quite detached from and unaware of global trends in management practices. For instance, the following is taken from an interview with the founder of a medium-sized ISP:
Question: So where do you know about management from, did you study it, read books about it, or from experience?
Answer: Only from experience and the fact that I worked with people better than me […]
Question: And do you follow developments in management in America, management trends in the United States?
Answer: No. I know, the truth is that I… I just do what I do.

And the following is from an interview with another owner of a medium-sized company:
Question: Are you familiar with American business culture?
Answer: No. […] I’m only familiar with books from the Internet.
Question: But have you read books on management…
Answer: A bit. Not much.
Question: So the way that you run your business…
Answer: I don’t know anything about it.
[…]
Question: So what directs the way you manage?
Answer: What directs the way I manage? Um… I don’t know how to answer that. […] I never studied it, and I’ve never read about management methods.

This should be compared with how a former VP of NetVision talked about the management philosophies in that company, in particular, the belief in open-space offices (Davis, 1984; Steen, Blombergsson, & Wiklander, 2005):
Question: You say that you had an American attitude about providing support
Answer: Absolutely.
Question: Were there other American aspects about how the company was managed?
Answer: Yes. The company was managed as an American firm in every way.
Question: How did that manifest itself?
Answer: First of all the workers were completely involved in everything. It was the employees’ company […] and when someone had an idea or something they would knock on [the CEO’s] door, it was open space. I sat in the open space, out of principle, I didn’t want to move to a room, until my last year when they made me move into an office, I sat with everyone in the open space
Question: That was out of American management principles?
Answer: Yes. Totally. … I came from Digital, Sasson came from Intel, Ruth came from America, she’d been there for 14 years. … It was the American system that we all saw at Digital, that’s how we worked.
[…]
Question: You say that you were always looking at what was happening in America
Answer: All the time.

In other words, NetVision was consciously applying management ideas–such as having an open plan office–that had been imported from the US, in contrast to the medium-sized ISPs, which were managed on a much more ad hoc basis, and whose owners had minimal formal knowledge of management. I suggest that this lack of a global outlook goes some way to explaining why the medium-sized ISPs failed to turn themselves into very large ones.

This view–that the owners of the medium-sized ISPs lacked the global orientation that could be found among the senior staff of the larger companies–is reinforced by their answers to questions about their Israeli identity in relation to their working in what is in important ways a global industry. This too reflects on the absence of what we might call a global habitus, defined as “a cognitive and emotional disposition to move easily and smoothly from one national context to another, to quickly adapt and adopt different cultural outlooks, and to think of [oneself] as an agent operating in the world as a single unit” (Illouz & John, 2003, p. 211). For instance, when I asked an interviewee from one of the large ISPs said whether he saw himself as a “world citizen”, he replied:
I feel at home in America. The place I lived in France [for 3 years] I feel very at home. I don’t know what a world citizen is. I feel versatile. Wherever they put me I’ll live, I won’t have a problem.
Despite claiming not to know what a world citizen is, this interviewee shows that he surely is one.

Compare this to the medium-sized ISP owners, one of whom said he was no more a “world citizen” than his car mechanic (because they are both equally exposed to global culture), while another defended his Israeli identity in extremely strong terms:
Question: Have you become less Israeli [through working in this global industry]?
Answer: No, no
Question: You don’t feel…
Answer: Not at all
Question: … that working with the Internet all around the world and
Answer: Well, me, I’ve got my faults of over-Israeliness, you might call it, I’m really really into that and nothing can “spoil” me
Question: There is an idea that people talk about today of world citizens, are you one of them?
Answer: No

In sum, the medium-sized ISP owners held large stocks of global technological knowledge that came to be devalued. As the field shifted, they lacked the global orientation, or habitus, that characterized those who succeeded in the field. Their approach to managing their firms, for instance, was entirely isolated from trends in global or American management, just as hi-tech companies in Israel were assimilating American management practices as a matter of course (Frenkel, 2005b). This notion that the medium-sized ISP owners were locals in an increasingly global field was reinforced by their own descriptions of themselves as not being world citizens. On the contrary, they saw themselves as just belonging to the specific locality of Israel as much as, if not more than, their fellow citizens. As the field in which they operated became more global, their local orientation became inappropriate. In the following section I point to an additional way in which the field was becoming global, namely, via the entrance of global capital.

1.4 Zooming Out–Globalization, Israel, and the Field of Internet Provision

So far, my focus has been at a very micro level, taking into account the individual biographies of the specific actors involved. This strategy is possible because the field itself is small, with relatively few people involved. However, as I hope has become increasingly clear throughout, this analysis of the field of Internet provision has been conducted in the shadow of macro level processes, in particular the globalization of Israeli society[30] and the liberalization of the country’s economy. Indeed, it is in this regard that the field under study has become increasingly global, thus gradually squeezing out the small and medium-sized firms.

Both of these processes–globalization and liberalization–are reflected in the ownership of the ISPs that appeared in Israel in the second half of the 1990s, and which basically put paid to the hopes of the medium-sized ISPs to make their businesses very successful. For instance, Barak’s website describes the company as follows:
013 Barak was established in 1997 by three of the world’s leading telecommunications companies – Sprint, France Telecom and Deutsche Telecom, and two major Israeli companies – Clalcom and Matav. 013 Barak has grown rapidly and is now Israel’s leading provider for international calls. In 2005, the company was acquired by IDB (81.5%) and Matav (18.5%).[31]

And Internet Zahav is described in an external site in the following way:
INTERNET GOLD is a leading Internet service provider (ISP) in Israel in number of subscribers, based on recent surveys. Established in 1996, the Company is controlled by two of Israel’s most reputable corporations, Eurocom Communications and Arison Investments.[32]

Two aspects of these companies’ ownerships are immediately clear: firstly, the involvement of foreign investment; and secondly, the involvement of the Israeli economic elite.[33] Barak was founded by three foreign communications firms, in conjunction with two large Israeli companies. Clalcom is itself a subsidiary of IDB, whose CEO is Nochi Dankner, one of the most influential figures in Israeli business. Eurocom Communications, which shares in the holdings of Internet Gold, was bought by the Elovitch brothers in 1985. Until that point, the company had manufactured and marketed telecommunications systems, though within a year, the new owners set up Eurocom Marketing, with the aim of importing telecommunications equipment to Israel, quickly becoming a major player in the retail communications market in Israel, exclusively representing firms such as Panasonic and Nokia in the Israeli market. Eurocom’s own website makes the claim that “The group has been largely responsible for bringing the global telecommunication revolution to the consumer”.[34] The other corporation with a holding in Internet Gold is Arison Holdings, owned by Shari Arison, Israel’s richest person. Arison Holdings’ assets are valued at around $1bn,[35] while Arison herself is said to be worth $5bn.[36]

After a few years in the early- to mid-1990s during which companies such as Actcom, Aquanet, Israsrv, and Shani could command a decent portion of the market share along with NetVision, then the dominant actor, the Internet provision industry started to attract the attention of some of the biggest players in the Israeli economy, not to mention concerns from overseas as well (see Barak’s initial ownership structure as cited above). Many of the holding companies and firms that began to take an interest in the ISP industry had been active in the Israeli economy for quite some time, such as the Dankner family (on the place of large holding companies in the Israeli political economy see Maman, 2000; for descriptions of the part of the Dankners and other families in the Israeli political economy see Nitzan & Bichler, 2002). What was new, however, was their ability to access the telecommunications industry following its liberalization. For Internet provision to become an attractive investment, the prices of overseas connectivity had to come down drastically, and Bezeq, which still had a monopoly on telecommunications within Israel, even if this has since changed, had to begin operating more efficiently and with a stronger emphasis on customer support.

These two processes took place during the mid-1990s in a way that would seem to have been unconnected to party politics. That is, the MoC pressed ahead with an agenda of liberalization in quite a uniform way regardless of whether the minister was a representative of Shas (Rafael Pinchasi, June 1990 to July 1992), Labor (Moshe Shahal, July 1992 to June 1993), Meretz (Shulamit Aloni, June 1993 to June 1996), or the Likud (Limor Livnat, June 1996 to July 1997). This suggests that while the drive to liberalization has been associated with Israeli left-wing secular elites, who were also behind the Oslo agreements with the Palestinians (Y. Levy, 2007; Shafir & Peled, 2002), it is actually an issue with broad support, at least with regard telecommunications. Indeed, the perceived apolitical nature of telecommunications policies can also be seen in the appointments of Shlomo Waxe and Danny Rosenne as Directors-General of the Ministry of Communications, both of whom told me in interview that they had been “professional”–as opposed to political–appointments; that is, that were made without party political considerations.

I do not, however, wish to present an economically reductionist account of the failure of the medium-sized ISPs–and hence their attitudes as described above–and the success of the large ones, with their impressive financial backing. The ISPs in the field in the mid-1990s, before “big business” arrived on the scene, had a chance to entrench their positions, but, NetVision excluded, did not manage to do so. This is not for merely economic reasons, though they too are surely relevant. It is my contention that the men heading those companies lacked the necessary background that would enable them to accurately read the field and leverage their position as pioneers in the field into one of dominance. Lacking the social capital of, say, Uzia Galil or Abe Peled, they could not gain access to representatives of the field of power (in the form of the Ministry of Communications), and were thus unable to influence the changing rules of the game, or at the very least, make the changes in the rules work to their advantage. They no doubt lacked the financial clout of the newer members of the field, but as their comments on management showed, they were ill-equipped in other ways to make their companies very much larger.

Paradoxically, however, by espousing libertarian notions and attacking what they perceived at the over-involvement of the MoC, it would seem that they were actually tilting at windmills. The indignation expressed in interview with me was directed at what they perceived as over-regulation by the MoC and its excessive pandering to Bezeq. As mentioned in section y’4.3.2.2 above, they expressed their frustrations using terms such as democracy, fairness, freedom and equality. For instance, they complained that they were forced to charge their customers high sums for Internet connectivity because of Bezeq’s monopoly on overseas telecommunications. The paradox, of course, is that by loosening its regulatory reins–issuing more ISP licenses, allowing competition in the overseas telephony industry–the field of power was only hastening the demise of the medium-sized ISPs. Liberalizing the industry meant opening the doors to big business, with whom the medium-sized ISPs could not compete. Indeed, the latter would have found themselves more profitable under a much tighter regulatory regime in which further ISP licenses were not issued. Moreover, their stress on deregulation seems to entirely ignore the great efforts expended by the MoC to prevent Bezeq itself from becoming an ISP, the consequences of which would have been far-reaching for the ISP industry, and most certainly destructive for all other ISPs.

1.5 Conclusion

Having ruled out various concepts of community as being inapplicable here, in this chapter I have approached the ISP industry in Israel as a field, using the tools provided by Bourdieu to analyze it. This enabled me to theorize three observations of the industry (see section y’4.3.2 above) and try to understand why the sets of attitudes towards the MoC and Bezeq should have been distributed between the ISPs as they were.

They key to the topography of the field lay with the medium-sized ISPs: while the small ISP owners accepted that they could not be serious players in the field, and while the large ISP owners were quite naturally pleased with their location in the field, the medium-sized ISP owners expressed a strong sense of indignation at how the field had developed. Given that indignation is an emotion that arises when one reads reality through a certain moral lens, I described that reality and asked which morals the interviewees were bringing to bear on it. The reality I described was one whereby technological capital was losing its ability to structure the field to the mid-sized ISPs owners’ advantage. With the globalization of the Israeli economy and the liberalization of the telecommunications regime, global financial capital was coming to play a much more dominant role.

This is not to say that these interviewees were entirely local. As I noted in the introduction to this chapter, I do not assert that this is a simple victory of the global over the local. Indeed, the ISP owners were tied in to significant global processes. However, their affiliations with globalism–in terms of technology and a political ideology of the Internet–were of the “wrong” kind. They were being usurped in the field of Internet provision by actors who were enmeshed in global networks in an entirely different way. These were people with access to global capital and ties with multinational corporations. Their habitus was that of the Transnational Capitalist Class (Sklair, 2000), and not that of the Netizen. In such circumstances, the only resource left for the medium-sized ISP owners was their indignation.


[1] Ministry of Communications — Overview, http://www.moc.gov.il/new/english/index.html, accessed 24/5/2007.
[2] The forms that ISPs were required to complete in order to ask for a license or renew an existing license included demands for information on the ISP’s business plans for the next five years. The ISPs were far from happy about having to provide this kind of information to the MoC when they saw that body as having quite intimate relations with Bezeq.
[3] http://www.ispa.org.uk/, accessed 14/6/2007.
[4] http://www.afa-france.com/, accessed 14/6/2007.
[6] Searching for “associations of ISPs” in Google (results at: http://www.google.com/search?hl=en&q=association+of+isps, accessed 14/6/2007), one receives links to the sites of no less than 9 national ISP associations in the first 30 results, as well as links to state-level associations in the United States.
[8] Doron Shikmoni was described by Ido Amin, an Internet correspondent for the Haaretznewspaper, as “an Internet ‘guru’ from the founding generation of the Internet in Israel” (Amin, 1998).
[9] The website of the IIX can be found at http://www.isoc.org.il/fs_isoc_2x.html (accessed 10/8/2006).
[10] Today, however, the Israeli surfer using the 135 service is offered a list of ISPs to choose from before he actually starts surfing.
[11] One of the definitions of “community” in The Compact Oxford English Dictionary,http://www.askoxford.com/concise_oed/community?view=uk (accessed 21/5/2007).
[12] The three companies were NetVision, Internet Zahav, and Bezeqnet.
[13] Barak, Bezeq BenLeumi and Golden Lines all sell overseas telephone calls.
[14] Even today a number of bodies hold ISP licenses but do not provide services to the public.
[15] Efforts to track down the founders of some ISPs were fruitless.
[16] NetManage was set up as an ISP in 1994, and was one of the first ISPs to receive a license from the MoC, along with Elronet. In mid-1995, however, Elronet and NetManage merged to form NetVision. The two companies had strong informal connections before the merger: Uzia Galil, CEO of Elron, the concern that founded Elronet, is the father of Ruth Alon, founder and first CEO of NetVision. Like Elronet, NetManage had also been founded with the help of an investment from Elron. From interviews with a number of people associated with the companies, it seems that the merger was welcomed by all as a sensible step. From here on, when referring to NetVision, that also includes the time when it was actually known as NetManage. Hence, for the sake of convenience, I might say that NetVision was founded in 1994.
[17] Over the next years, however, Bezeq would change its dialing codes, thus making it no more expensive for an inhabitant of Tiberias to call a PoP in Haifa (where NetVision is based) than Tiberias. One interviewee told me that the number of dialing areas was reduced from 30 to 5.
[18] Today there is competition in both of these sectors; see below.
[19] A founder of one of the medium-sized ISPs claims that his early document for the regulation of Bulletin Boards actually served as the basis for the eventual ISP licenses.
[20] I interviewed Waxe at his home.
[21] I interviewed Peled in the luxurious surroundings of the Royal Garden Hotel in Kensington, London.
[22] I conducted this interview in January 2004.
[24] Peled left Israel in 1995 after being headhunted by Rupert Murdoch to head one of his companies. It was an offer one does not refuse, said Peled in interview.
[25] Of particular importance was the decision made by the Ministry of Communications to break Bezeq’s monopoly on overseas telephony in 1997. The main consequence of that decision was to immediately and drastically reduce the cost of communications with the United States. Private companies were permitted to buy bandwidth between Israel and the rest of the world, and it seemed logical to them to offer Internet services as well as overseas telephone services: after all, the technological infrastructure linking the international telephone companies to the United States, say, could just as easily transport packets of data as voice. In addition, because the international telephone companies were buying bandwidth for both phone calls and Internet traffic together, they could negotiate a better rate for the cost of that bandwidth, something that the medium-sized ISPs were unable to do, and not only because they were unlicensed to do so: they also lacked the financial resources.
[29] Rheingold (1993) also makes utopian claims for the social potential of the Internet.
[30] Nitzan and Bichler (2002, p. 3; see also, Nitzan & Bichler, 2002) point out that “the country’s development has been embedded in the global political economy from its pre-state beginnings”; crucial here, then, is not the fact of globalization in and of itself, but rather the kind of globalization. Indeed, having pointed out that all ISP owners possessed global technological knowledge, this notion sits well with my own analysis.
[33] Nitzan and Bichler (2002) have provided an extremely thorough empirical description of the Israeli economic elite.
[34] http://www.eurocom.co.il/, accessed 3/7/2007.