Lebanon - Telecoms, Mobile, Broadband and Forecasts

Additional Information

Executive summary

The Lebanese telecommunications market has suffered for many years from a lack of political will to make the changes necessary to free up the market in order for it to reach its potential. Consequently, despite a higher GDP per capita, Lebanon languishes well behind neighbouring Jordan in ITC development, with the inevitable consequences of lower economic and social outcomes than would otherwise be the case. As the years go by, Lebanon falls further and further behind with inadequate broadband services, restricted mobile services, no 3G or HSPA and rampant piracy. The new government, which took five months of negotiations to form following elections in June 2009, unfortunately looks no more capable of reaching agreement than have previous governments.

In early 2009 the outgoing government went some way towards releasing the pent-up demand in the mobile market. Lebanon has two government-owned networks, operated by Orascom Telecom of Egypt and Zain of Kuwait in return for a management fee, with all revenue going to the government. All prices are set by the Ministry of Telecommunications (MoT). Previous governments followed a strategy of limiting subscriber numbers and keeping tariffs high, resulting in the highest prices in the Middle East and the lowest penetration rates other than in desperately poor Yemen. Monthly ARPU levels were over US$60. In April 2009 the government took the radical step of lowering tariffs and increasing the maximum number of subscribers for each operator, arguing that total revenue would increase. This had a startling affect on subscriber growth.

For many years, governments have been unable to agree on whether to privatise the two mobile operators. Deadlines for decisions come and go. Consequently, the operators exist on temporary contracts with the attendant lack of incentives to improve services.

Broadband Internet services were very slow in coming to Lebanon and were not introduced until 2007, again leading to much frustration. The long wait for ADSL services, which were ‘imminent’ for over five years, was blamed variously on constraints in the capacity of the international cable, the lack of a functioning TRA to set and enforce prices, the difficulty of enforcing the ban on VoIP once DSL arrived (potentially having a disastrous effect on the state budget), and the protection of wireless broadband providers. The rollout of services was slow during 2008 and although the MoT now claims reasonable coverage, speeds remain slow and prices high.

The Telecommunications Regulatory Authority (TRA) was established in the expectation of further liberalisation. The appropriate law was passed in 2002 and the decrees for its establishment were approved in 2004 but from 2004 to 2007 the TRA board remained unappointed, partly due to political infighting over nominations. However, since beginning work in 2007, the TRA has been energetic and active, in so far as it has been able without new broader Government legislation, and developed a Regulatory Framework designed to cover the entire spectrum of the telecom market.

Plans have existed for many years for the privatisation of fixed-line incumbent Ogero Telecom, together with the operational responsibilities of the MoT, starting with its conversion into a government-owned company Liban Telecom. This is most unlikely to happen any time soon.