Lebanon - progress stunted by poor broadband

[zawya] he World Bank said that broadband services are currently available in Lebanon at low data rates, high prices and low penetration levels relative to peer countries, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group. It added that these factors are negatively impacting the ability of the Lebanese private sector to compete regionally and internationally, especially in the services sectors, and are leading to the loss of jobs overseas with better quality and less expensive communications costs.

It noted the lack of competition in the wholesale broadband segment of the market has limited the growth of international connectivity, or bandwidth, and has allowed prices to remain high.

It also noted that the price charged by the Telecommunications Ministry for one Mbps was $1,350 per month compared to $223 per month for similar capacity for the Istanbul–London connection, and $537 for the Frankfurt–Istanbul connection. The report said Lebanon’s rates were very high for the capacity offered compared with global standards.

As a result, Lebanon has the lowest bandwidth capacity in the region in absolute and per-capita terms. It warned that the cost of not providing access to broadband networks and services in Lebanon would likely widen the gaps in productivity and competitiveness with the rest of the Mideast region, with possible long-term negative impact on the country’s economic development.

The World Bank said the introduction of broadband networks and services in other states has provided a foundation for long-term economic growth.

It said evidence from other economies point to the positive effect on capital spending, boosting service industries such as tourism, media and entertainment, finance and other advisory work, as well as the multiplier effect on employment.

It said that, in order to benefit from the social and economic impact of broadband, Lebanon needs to facilitate the roll out of world-class broadband networks and services in the very near future, regardless of any timetable for the participation of the private sector in the ownership of telecommunications assets.

It noted that broadband penetration in Lebanon is at about 2 percent, similar to penetration rates in the West Bank & Gaza (1.9 percent) and Iran (1.8 percent), but lower than penetration rates in Jordan (3.2 percent), Saudi Arabia (4.1 percent), Qatar (10.8 percent), Cyprus (20.1 percent) and Israel (22.3 percent).

But it noted the existence of a number of constraints on the deployment of broadband in Lebanon. It cited the delay in merging the operations of the Telecommunications Ministry and OGERO into a corporate entity, as well as the constraints placed on the ability of the Telecommunications Regulatory Authority to effectively regulate the sector, as contributing to the lack of effective competition in the sector. Other obstacles include, the apparent abuse of a dominant position by the ministry and OGERO regarding the provision of wholesale services; the delay in the provision and capacity of high-end broadband services; and the persistence of high prices. In addition, the short-term and temporary licensing structure, and issues with frequencies applied to private-sector providers, give little incentive for long-term investments in infrastructure.

According to the World Bank, the overall performance of the telecommunications sector in Lebanon is disappointing and the market now lags behind its peers due to minimal competitive pressures. In addition, Lebanon is trailing behind its neighbors in almost all aspects of broadband networks and services and, as a result, Lebanon’s local telecom market is not growing as fast as others.

The Word Bank expected the roll out of broadband networks and services to have a significant positive economic and fiscal impact on Lebanon. It said if broadband penetration had increased from 2 to 12 percent in 2008, GDP growth would have increased by an additional 1.2 percent to 1.5 percent, or by $348m to $435m on a recurring basis, and the fiscal contribution in would have been between an extra $78-$98 million revenues on a recurring basis.

Lebanon's progress stunted by poor broadband