x Abu Dhabi, UAEWednesday 17 January 2018

Broadband promise to lift fortunes of Lebanon

As state invests in infrastructure to connect with under-construction international cable, economic growth are amongst expected benefits.

Lebanon's government is believed to receive more than 50 per cent of its revenues from internet and other telecoms services.
Lebanon's government is believed to receive more than 50 per cent of its revenues from internet and other telecoms services.

BEIRUT // The frustration of watching halting YouTube videos via US$45 (Dh165) a month connections should end next year for many Lebanese internet users. A dramatic increase in the country's measly international bandwidth and a modest investment by the government in the national internet backbone are expected to bring some relief to home and business users.

"With this new capacity we foresee a drop in the prices and a more widespread use of the internet," said Antoine Boustani, an adviser to Charbel Nahas, the minister of telecommunications. While the exact tariffs are not yet clear, he said a decrease of about 30 per cent in the price of internet subscriptions could be expected. The upgrade of the internet in Lebanon is meant to put the country on a par with or ahead of other countries in the region. Once an internet pioneer in the Middle East, with many internet service providers (ISPs) offering access from the 1990s, Lebanon has lagged its neighbours in recent years. Available international bandwidth is a meagre 2 gigabits (Gb), although some say that it is less, compared with 5Gb in Jordan, which has recently booked several successes in the IT sector.

The most dramatic, immediate increase will be through the traditional copper cables connecting Lebanon internationally. The installation of an STM-1 copper-to-fibre converter will add 155Gb before the end of the year, Mr Boustani said. Lebanon has also signed up for 10Gb on the new India-Middle East-Western Europe (IMEWE) cable, which is expected to be in place before the end of next month. Testing and other technical issues will take several months at least, with the connection slated to be operational in the second half of the year. Lebanon has the option of taking a total of 1.2 terabits on the IMEWE cable.

To ensure that the bandwidth can be delivered to businesses and homes, Mr Nahas announced last month a $166 million investment in the local internet backbone. The money will be used to finish the national and regional optic-fibre loops that will connect all the major locations in the country. The spending does not, however, extend to bringing the high-speed optical-fibre connections to the home. The upgrading of the country's internet infrastructure has been welcomed by the business community. Gabriel Deek, the president of the Professional Computer Association, said it would "solve the bottleneck of international bandwidth".

But the upgrade was not enough, he said. "It means that we will have fibre to specific places, but how then do we deliver from the exchanges to the home." Mr Deek bemoaned the current state of the internet in Lebanon, which he said was detrimental to economic development. Lebanon stood to benefit from providing capacity for technology interests such as the developers of computer games, Mr Deek said. "I know some of them who have rented places in Europe to test their product because they cannot test it here."

The importance to the economy of adding international bandwidth is being underlined by the country's banks, which have already claimed most of the capacity that the IMEWE cable will bring. The World Bank in a recent presentation in Beirut calculated that a 10 per cent increase in broadband penetration in Lebanon in 2008 would have meant an additional 1.2 to 1.5 per cent in economic growth and an increase in annual tax revenue of $78m to $98m.

The presentation laid out several ways of achieving this, but all involved "pro-liberalisation and pro-competition policies" in the telecoms and internet sectors. These concepts may be hard to swallow for the Lebanese state, which receives a sizeable portion of its revenues - believed to be more than 50 per cent - from its ownership of the telecoms sector. A foreign telecoms expert who has talked to Lebanese officials said reform of the telecoms sector was affected by Lebanon's fiscal situation. "Whatever path of reform you choose, it has to go hand in hand with fiscal reforms," he said.