High Hopes and Higher Hurdles

by Sami Halabi

The long wait for decent looks to be coming to a close, but not on time and not without consequences for the sector (Photo: Sam Tarling)


The long awaited introduction of high speed internet and 3G is upon us, insha’allah

Recent history would show that perhaps the only thing slower than Lebanon’s Internet speed is the process the politicians have undertaken to bring about faster Internet speeds. But just as web pages do, eventually, load onto laptop screens in Beirut, it may be that Lebanon’s online evolution from the Stone Age to the modern day will not take another millennia.

Former Minister of Telecommunications Charbel Nahas promised as much when he announced on January 28 of this year that third generation Internet services (3G) “will be available to the Lebanese in all areas within seven months” — alas, such was not to pass, though the country’s telecommunications sector has not been entirely devoid of new life.

The light at the end of the tunnel

3G technology is a means of incorporating high speed Internet with mobile devices such as “smart phones,” but subscribers will also be able to attach a simple device called a “dongle” to their computers and use the service the same way they currently use other wireless Internet products on the market such as the pervasive Mobi and Wise Box. The speed promised by Nahas, who is now the country’s labor minister, was to average 7 megabits per second (mbps) and reach speeds “up to” 21 mbps. That would be a speed 27 times faster than those currently available via a digital subscriber line (DSL) (the current fastest possible Internet connection in the country), 70 times faster than those available using the general packet radio service (GPRS) and 500 times faster than those available to ordinary cell phone subscribers, according to Nahas.

Of course, the August 28 kick-off date has come and gone, but work on the 3G network has been underway, and by September 20 the first round of testing was launched by two state-owned Mobile Interim Companies — MIC1 and MIC2 — managed by Alfa and MTC Touch, respectively.

New prices, same story

Another promise put forth was from the current Telecommunications Minister Nicolas Sehnaoui for a new list of speeds, prices and download/upload caps. Under his plan, speeds would increase between four and eight times their present snail’s pace. Such a measure requires approval from the cabinet, which was confirmed in the official gazette on September 15.

The decree details the new pricing and capacity structures for consumers and data service providers (DSPs) looking to increase their services, and was due to come into effect on October 1.

The reason such an advance in conventional and 3G Internet use has become possible at this point is because an undersea Internet cable dubbed the India-Middle East-Western Europe 3 (IMEWE3) has finally been opened up, after having originally been scheduled to go online in March 2010.

The IMEWE3 cable has a total capacity, for the many countries connected, of 3.84 terabytes per second. Lebanon’s allocation is 120 gigabits per second (gbps), with the potential to be upgraded to some 300 gbps, a game changer for Lebanon, whose legal bandwidth transmitted over the Cadmos cable was around 2 gbps before the IMEWE3 opened up. The problem with the cable was, perhaps predictably, political in nature.

As Executive reported in July, Abdulmenaim Youssef, the head of Lebanon’s fixed line operator, Ogero, refused to hand over the administration of the cable to Minister Nahas. Coincidentally, Youssef also occupies the post in the ministry that is supposed to oversee Ogero. Youssef, who in the past was close to the current opposition and is now believed by many to be supported by the Premier Najib Mikati, is in charge of doling out the needed international capacity to companies like service providers MIC1, MIC2, the DSPs and the Internet service providers (ISPs). This is done by distributing E1s, or bandwidth packages equal to 2 mbps, to those who request them.

The government recently decreased the price of an E1 from $2,700 to $420, ostensibly to facilitate the expected consumption increase. As Executive went to print, 10 gbps of extra capacity had already been opened up through the IMEWE3 cable, according to Firas Abi-Nassif, advisor to the telecommunications ministry.

According to Habib Torbey, head of the Lebanese Telecom Association (LTA), president of GlobalCom Data Services and owner of Internet provider IDM, “The 10 gbps is needed for the initial phase [of the fixed Internet upgrade], but directly afterwards there should be 20 gbps ready [for use].” He added that the government has promised to increase the bandwidth to 100 gbps by the end of the year.

“We have signed all requests for E1s from private sector companies,” said Abi Nasif, when asked if the providers had received their requested capacity. “Once the minister signs, the execution is in the hands of Ogero. If this does not take place, kul hadis illu hadis,” an Arabic expression that roughly translates as a veiled threat that there will be consequences. Youssef did not respond to Executive’s request for comment. But at press time, several ISPs had confirmed that they still had not received their requested E1 lines.

Torbey also stated that the minister’s office had informed him that private DSPs will be allowed access to more of Ogero’s central offices (COs), distribution centers in each neighborhood that are needed to dole out DSL to customers. In 2006, when DSL Internet was being introduced to the market, the telecommunications ministry signed a memorandum of understanding with private sector players stating that the government intended to compete with them on a level playing field. Ogero, under Youssef, opened up the initial 35 COs to the private sector but later rescinded that privilege and eventually blocked them from entering any of the 171 total COs that were created. Ogero capitalized on their market position and scooped up the lion’s share of potential customers around the country, leaving the private sector unable to compete.

If progress is not achieved in the current environment, the minister could technically ask the cabinet to remove Youssef from one or both of his posts. The fact that he is both head of Ogero and head of Ogero oversight, as far as the telecommunications minister’s party leader Michel Aoun is concerned, is already illegal. With a cabinet that, at least until recently, was described as ‘one color’, putting pressure on Youssef may be much more feasible than at any time since Youssef was held in jail for several months on charges of wasting public funds and illegally using official telephone lines in 2004, though he was eventually cleared and released.

Aoun has already hinted that Prime Minister Najib Mikati is protecting government officials who are violating regulations. Aoun and Mikati recently came to loggerheads over the electricity file currently before cabinet [see story page 108], and there has been speculation that if Youssef does not implement the planned expansion of the network, then Aoun’s party, the Free Patriotic Movement, will lobby the cabinet to have Youssef removed.

Minister Sehnaoui's October 1 deadline turned out to be a flop of embarrassing proportions (Photo: Sam Tarling)

Faulty framework

Even if everything goes according to plan, come October 1 there are other potential roadblocks in the way of an efficient telecommunications network. According to studies carried out by private sector operator Cedarcom, the majority of subscribers will choose either plan two (1 mbps with a 10 GB cap) or plan three (2 mbps with a 20 GB cap). But even if the bandwidth becomes available, there are doubts about Lebanon’s infrastructure.

“The situation of our ground networks is very catastrophic,” said Riad Bahsoun, an expert at the International Telecommunications Union, the United Nations agency for information and communications technology. “In its present state the [local] network cannot cope with any expansion.”

The government currently does not have a standard and functional quality of service system to monitor if breaks and outages are occurring on a regular basis and where. While a new fiber optic network is being built around the country — and will take at least another year to become functional — the present outdated network relies on a mix of fiber, coaxial cables (made for voice, not data) and old copper wires.

Indeed, last year saw several outages that cut off entire swathes of the country from the Internet access for days. “There will be more and more cases where people ask for the 6 mbps and they cannot get it,” said Imad Tarabay, chief executive of Cedarcom, which distributes the Mobi wireless service, and secretary general of the LTA, which represents the country’s private sector Internet providers.

Even so, Abi-Nassif, who specializes in Internet traffic engineering, said the network will be “fine”, although he admitted “things will not be 100 percent smooth on October 1.”

Bahsoun, however, called the much-publicized plans to upgrade an effet d’annonce, a French term for an announcement made for effect whose veracity is in doubt.

“The media was sold the issue of the Internet [upgrade] under Sehnaoui but all he did was apply the things that have been around since [former telecom minister] Gebran Bassil,” he said. “But it is good that he went forward and did it.”

Private sector exclusion

So with faster and cheaper fixed Internet a possibility this October, or some time thereafter, the option of mobile Internet is still on the table. The ministry has not yet set pricing for the service, but according to Abi-Nassif it will be announced on October 20 when the minister will unveil the coverage areas, details and dates. He said that the process of covering the country would take roughly a year and the rollout would be gradual.

As Executive reported last March, Cedarcom was planning to bring forward a lawsuit against the telecom ministry at the Shura Council, Lebanon’s highest court, seeking to halt the 3G project, not because they are against it in principle, said Tarabay, but because it would effectively neutralize the private sector and nationalize the telecommunications industry. That lawsuit has since been submitted and is being considered by the Shura Council.

The thrust of the allegation is that MIC1 and MIC2 have been granted neither the licenses nor the frequencies required to legally provide 3G service — yet they are proceeding with plans to do so anyway — while private sector players are being disallowed from entering the 3G market because they do not have licenses to do so. The initiation of a wholly public sector 3G service would almost immediately price the private sector out of the market because of the large fiscal imbalance between the two in terms of taxation and operating costs.

Tarabay said that as part of the legal proceedings both Cedarcom and the ministry were asked to present their operating licenses to Shura Council. Accordingly, Cedarcom did so, while the ministry did not present the licenses of Alfa and MTC within the timeframe allotted. A copy of the Shura Council decision obtained by Executive indeed declared that the decision to launch 3G by the ministry was not in line with legal standards for a number of reasons: that the decision was taken during a caretaker government, that it is the job of the TRA and the cabinet to issue the licenses, and even that the decision contradicts the principles of fair competition. The decree furthered that the 3G projects should be halted for a period of a month and the ministry given 15 days — starting September 15 — to renege on its decision to proceed.

When Executive asked Abi-Nassif to confirm this information he said he was not aware of the issue but would transfer this and all other legal questions to the person in charge. Several days later, he called back to say that the ministry would “rather not” comment on legal issues at the time.

Despite the Shura Council ruling the minister has claimed on his Facebook page that he will proceed with the plans, because, “no one can stand in the way of change and reform [and] the minister will show the weakness of those trying to slow down this project”.

As such, when it becomes time for the cabinet to price the service for the public, it may technically be pricing a service that is illegal.

Compromise or cop out?

There may be a compromise solution to the public-versus-private sector dispute over 3G, however. According to Abi-Nassif, ISPs could serve as mobile virtual network operators (MVNO), an industry term for a company in agreement with the owners of a telecom asset that performs services ranging from complete resale with separate branding to merely offering a back office service such as billing. Abi-Nassif confirmed that this was the ministry’s “orientation” at the moment but did not confirm that this was the final policy.

The LTA’s Torbey confirmed that he was in talks with the ministry on this very subject. “If the government gives me an MVNO that would be enough for me,” he said. But he will not accept to be “just a reseller,” seeking instead to be a “real added value service provider.”

“At the end of the day we started Internet in this country, we know more than anyone what our customers want. Why would they put restrictions on us and say ‘you can install this but not that?’ It’s not right,” said Torbey. “We shall see what we will do if they don’t let us [install what we want]. That’s why there are negotiations.”

Even if an MVNO is agreed upon it would not necessarily solve the problem. If 3G is launched in its full capacity before the MVNO, then the same thing that happened with DSL — public sector control of market share — could happen again, leaving the private sector out to dry.

“We are pressuring the ministry so that we start at the same time as Alfa and MTC. Otherwise there will be a conflict,” Torbey said. “There are people on the other side who are pushing in the opposite direction, saying ‘why should you give the ISPs the right to sell on 3G? We as MTC and Alfa want to sell on our own.’ There is a conflict of interest for sure,” he concluded, while saying that he will accept no less than to be allowed to have an MVNO that gives them “everything but infrastructure.”


Author: Sami Halabi

Sami Halabi is a policy consultant who covers a range of policy issues and analyses development programmes, particularly in the Middle East and North Africa. Sami specialises in analysing policies and programmes in order to provide evidence-based recommendations to policy-makers and international development agencies. Sami holds a Master of Public Policy with Distinction from The University of Edinburgh.

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