lebanon ict market - eng. lelia el khazen (ravacom)

Lebanon ICT MarketStatus and Real Potential

Lelia EL KHAZENMarket Analysis Manager

Market and Competition UnitTelecommunications Regulatory Authority – Lebanon

ITU workshopSharm el SheikhJune 8, 2012

May 3, 2023

Outline

2www.tra.gov.lb

• Status of the Telecommunications sector• Potential to Go: Broadband as a booster

for the National Economy• Regulatory and policy tools

May 3, 20233www.tra.gov.lb

Status of the Telecommunications Sector

1st June 20124www.tra.gov.lb

MoT

Ministry of Telecommunications: policymaker, regulator and service providerCoM: Arbitrary regulatory role (e.g. issuing all licenses)No formal regulatory regime

policymaker regulator

operator

Before Law 431

MoT: Policymaker

Sets general guidelines of the telecom policy Decides on international representationsApproves:• TRA recommendations on

individual licenses• Frequency pricing• TRA annual budget

TRA: regulatorDrafts and implements regulationsAwards licensesEnsures competitionPrevents anti-competitive behaviorManages radio frequency on behalf of GoL

Operators (Incumbents and New Entrants)Provides telecom services to the publicInstalls, owns & manages telecom networks & facilitiesAbides by TRA rules, regulations and license terms

After Law 431

The enactment of Law 431 in 2002 and the establishment of the TRA in 2007 paved the way for telecom sector reform

May 3, 2023

Although reform has started, Mobile & Fixed telecom operators in Lebanon are state-owned and the market requires “competition”

AS OF MARCH 2012

Penetration Number of Service Providers

Private/State-Owned

Level of Competition

Mobile Market 83% 2 State-Owned Duopoly

Fixed Market 64%(Residential Household

Penetration)

1 State-Owned Monopoly

Internet Market (incl. illegal operators)

30% 16 Private Competition

Fixed Broadband Market

27%(Household Penetration)

~7 for ADSL services

~16 for wireless services

Private through MoT Local Loop /

Ogero

Limited competition

Mobile Broadband Market

13% 2 State-Owned Duopoly

5www.tra.gov.lb

www.tra.gov.lb1st June 2012

2007 2008 2009 2010 409690%

50%

100%

29% 34%

57%68%

83%

2007 2008 2009 2010 40969 -

1,000

2,000

3,000

4,000

1,200 1,400

2,400 2,900

3,500

Mobile Penetration Evolution

Mobile Subscribers Evolution (in thousands)

Blended ARPU Evolution

Major milestones:Consecutive decreases in prices since March 2009 for postpaid, prepaid and VASNew prepaid offers introduced in June 2011 3G services launched in October 2011

Achievements:Penetration rate increased by 50 percentage points since 2008Mobile broadband penetration reached 13% in 5 months onlyARPU decreased by 45% since 2008 to reach an average of USD 39 in 2011

Bottlenecks:Despite the decrease in ARPU it is still considered high compared to the regional average of USD 15Quality of Service is not up to international standardsIntroduction of advanced and competitive services and offers is slow due to the structure of the sector

2008 2009 2010 2011 -

20

40

60

80 $71

$50 $42 $39

6

The mobile sector is comprised of 2 state-owned networks operated under private management agreements;A structure with no true competition stifles innovation

May 3, 2023

With the expansion of DSL services, there has been an increase in demand for new “fixed lines”, Consumers await the introduction of bundled & IN-based services

7www.tra.gov.lb

Some Indicators:Total number of PSTN subscribers as of March 2012: 855,000 Fixed line residential household penetration is ~64%, increasing by 2 percentage points since 2010. The penetration rate of fixed services in Lebanon is higher than other countries with comparable GDP per Capita (for example Jordan’s Penetration rate per population is 8% while for Lebanon the fixed penetration per population is 21%)

Major Milestones:Decrease in fixed line installation rates in 2009Continuous Growth in DSL subscribers: major growth since the introduction of high speed packages in Oct 2011) Geographical expansion of DSL in 170 Central Offices

Bottlenecks:Current service offering lacks bundled services, self -selection schemes, NGN services and Intelligent Network (IN) ServicesIllegal VoIP services are widespread despite large international call tariffs cuts by MOTHigh Cost related to management and maintenance of current outdated PSTN network


SERVICE PACKAGES AVAILABLE IN LEBANON(SINCE OCT 2011)

ResidentialFor around $46/month individual subscription to:

$16 for the basic entry plan of 1Mbps downlink with a cap of 4 GB (most used DSL plan)$15 for very poor quality cable TV subscriptions$15 for very low usage of Fixed Voice services

BusinessFor around US$ 4000/month:

2 Mbps download and 1 Mbps upstream Internet access With Service Level Agreement

TYPICAL TRIPLE PLAY SERVICE PACKAGES

ResidentialFor around $40/month :

On average 8 Mbps downlink and 4 Mbps uplink with virtually no cap on usageHigh speed Internet Access + 100 video Channels (including 1 HD) + unlimited VoIP calls

BusinessFor around US$ 500/month:

Up to 10Mbps for business located in remote areas High speed Internet Access viable for video conference, e-commerce, etc…+ 100 video Channels (including HD) + unlimited VoIP calls

Lebanon DSL services were previously priced well above the regional prices; however with the decrease in DSL prices in October 2011, Lebanon is now very well positioned when compared to Arab countries

With decree 6297 (Sept 2011), an entry package of 1Mbps speed is now offered at a price 70% lower than the previous 1Mbps offer and a usage that can go up to twice the previous one.

Required speeds for triple or quadruple play services are still much higher & prices much lower than the ones currently availableGood efforts are underway to correct the situation

May 3, 2023

Since the launch of DSL in June 2007, this market faced a lot of bottlenecks hindering the wide adoption of true broadband services

9www.tra.gov.lb

Anticompetitive behavior from the incumbentIncomplete Reference Access OffersUnfair access to Central OfficesNo switchover proceduresDSPs not connected to all ISPs

Unavailability of a true high speed and a high capacity National NGN Backbone NetworkLimited fiber optic coverage Current expansion and modernization of PSTN national transmission network to lay-down a fully meshed fiber optic network of 4,400 km of backbone is underway Saturated transmission network despite the latest upgradesDSPs and ISPs are still connected by a maximum of 100 Mbps network ; there are no wholesale backhaul bundled offers

Lack of International CapacityDespite the latest increases in international capacity and the major decrease in prices, the distribution of international capacity to the private service providers requires more transparency and fairness

Only 20% Line Sharing


Potential to GoBroadband as a booster for the

National Economy

Next Generation applications and advanced e-services enrich consumer lifestyle, improve business performance and deliver value for stakeholders

Higher Speed / More Bandwidth

Virtual Reality

Quality Video Streaming

Tele-presenceInteractive

signboards

Tele-learning

Virtual sportsTele-medicine

Social Networking

Rich media

Next Generation TV

Video Conference

Interactive IP-TV

VoIP

Browsing

Email

Inte

racti

vity

Leve

l

64-256 Kbps 512 Kbps - 2 Mbps 20 Mbps – 1 Gbps

Narrowband Actual Generation of Broadband Next Generation of Broadband

PSTN, GSM, GPRS/EDGE

DSL, WCDMA, HSPA+, WiMax 802.16e, etc.

FTTx, LTE Advanced, Wimax 802.16m, GPON, etc..

1st June 2012www.tra.gov.lb 11

May 3, 2023www.tra.gov.lb 12

GDP GROWTH:1.38% increase per year

for every 10% point increase of Broadband

Penetration

Fiscal Returns: 90 million USD per year for every 10% point increase of Broadband Penetration

JOB GROWTH: 0.25% increase in jobs for every 1 point increase in Broadband penetration

Business Productivity: Lebanese SMEs waste thousands of hours a year due to poor connection – to illustrate: 5000 hours a year represent a loss of US$ 250,000-US$ 500,000

Social Inclusion: Boost human capitalImprove healthcareCreate new income opportunities in the poor and remote areas

Government Revenues: new sources of revenues to the GoL will be generated (auction proceeds, RTU fees, RoW fees, revenue sharing …)

Brain Drain: less youth migrate overseas with Lebanon as a hub for communication

Broadband is uniquely positioned to stimulate economic growth, business development and social welfare

Sources: Economic & Fiscal Impact of Introducing Broadband Networks and Services in Lebanon – World Bank 2009

BROADBAND an Economic

Booster

May 3, 2023 www.tra.gov.lb 13

Political and Regulatory Environment

Business and Innovation Environment

Infrastructure and Digital Content

Affordability

Skills

Individual Usage

Business Usage

Government Usage

Economic Impacts

Social Impacts

1

6

MENALebanon

Adv. Economies

Sources: World Economic Forum 2012

The digital divide between Lebanon and the MENA region is particularly deep in terms of environment, infrastructure and government usage


Pillars Lebanon’s Value Scale Lebanon’s

RankingNumber of countries

Accessibility of digital content 4.5 1-7 94 142

Internet and telephony sectors competition 0.67 0-2 131 138

Households with personal computers 31.7% N/A 72 140

Internet access in schools 3.8 1-7 85 142

ICT use and government efficiency 2.5 1-7 140 142

Impact of ICT on access to basic services 3.1 1-7 136 142

E-participation index 0.27 0-1 44 138

Lebanon still suffers from important weaknesses in terms of ICT development that hinder its capacity to take full advantage of the benefits accruing from the deployment and use of advanced technologies

Sources: World Economic Forum 2012


Regulatory and Policy Tools


Economic Diversification and Growth

Innovation and Productivity

Access to Education and Healthcare

Government Modernization

Social Equity

Environment Safeguard

National Competitiveness

Sustainable development

16

Aspirations towards a knowledge-based economy should focus on two main ICT policy areas: liberalization of the telecom market and an ICT development strategy

National ICT Strategy and Policy

Liberalization

Telecom Policies

Sector Governance &

Regulation

National coordination

Cross Sectorial vision

Corporatization of LT and Mobile

networks

SMP, Cyber security, Net

Neutrality, etc.

Promote digital Literacy, develop on-line content,

e-commerce

E-education, E-health, Smart

grid, E-gov, transportation

LARGE TALENT POTENTIAL Availability of a large, young populationDevelop strong local talent poolsIncreased enrollment into high education and focus on training

ICT Industry Development


USERS

APPLICATIONS& CONTENT

SERVICES

RELIABLE & ADVANCED TELECOM

INFRASTRUCTURE

Availability

Usage

Affordability

17

The development of the ICT sector in Lebanon is hindered by a slow decision making process and a lack of consensus on the current policies and laws as well as future directions

Lack of political consensus regarding the Telecom Law 431

Very low government engagement in the enactment of modern laws and policies

Absence of a overarching economic vision

ICT-focused activities within the government institutions are not integrated in a way to fully harness ICT potential in Lebanon

ICT MAIN ENABLER

Barriers to the ICT Sector development

1st June 2012 www.tra.gov.lb

The liberalization of the telecom sector requires the elimination of existing bottlenecks and the development of competition within an enabling regulatory framework

18

HEALTHY AND FAIR COMPETITION

Main driver for infrastructure based competition

Infrastructure based competition

Healthy and fair competition

Main driver for infrastructure based competition

Complete the corporatization & subsequent licensing of Liban Telecom

Enforce Regulation on Service Providers with SMP

Healthy and fair competition

Open access regime on essential facilities owned by dominant players (local loop, backbone, etc…) Access to Public Property & Rights of Way (duct sharing reduces around 70% of the cost of laying fiber)structural separation between wholesale and retail segment of vertically integrated players

Ensure infrastructure based competition

Abundant national and international capacityHigh grade of servicesCompetitive prices

LTNGN networksMobile LicenseesLong term licenses to ISPs and DSPsMVNO

Ensure service based competition

Create a healthy corporate structure (in terms of human and financial resources)Reinforce position on the market Increase value on the market Pave the way for a healthy retail versus wholesale corporate identity


Draft Ready Stage Final Review after consultation

Awaiting Board approval

Issued

Type Approval Regulation

Accounting Separation Regulation

SMP RegulationAccess to the Local Loop Regulation

Lebanese National Frequency Table

Liberalization Roadmap

Interconnection Regulation

Decisions: • VSAT, • Trial IPTV• Spectrum trial

Allocation for MoT• Interim licenses for ISP

and DSPs (+ extension)• Licenses for Trisat,

LCNC and MADA

VOIP Policy Statement

Pricing Regulation

National Roaming

Interconnection Interim Pricing

Decision

Spectrum Refarming and Packaging Plan

Quality of Service Regulation

Decision for establishment of call centers

Universal Service

CS / CPSImproving FM

Broadcasting

Study on the Use of Public Property

Numbering Regulation

National Numbering Plan

Code of Practice for VASDraft RTU Fees & SAC

decree

Digital Migration Strategy for TV

Broadcasting Plan

Access to Information Regulation

Broadband Licensing Plan

Technical requirements for NBCLs

Spectrum Management &

Licensing Regulation

Consumer Affairs Regulation

Licensing Regulation

Class and Frequency License fees regulation

Sent to MoT – Need to transfer to State Council

EMF Regulation

Sent to MoT- Need CoM decree

Rights of Way Draft Decree

New building Requirements for

BB delivery services

Drafting Stage

Emergency Communication Plan

19

Since its establishment, TRA has been working extensively on setting a regulatory framework that would ensure successful telecom sector development


Empowerment of TRA1-Full transfer of regulatory functions

2- Staffing and organization3- Nomination of Board Members

4- Financing

Government of Lebanon

Fair treatmentFair competition

Broader range of servicesLower prices Better quality of service

Investment opportunitiesLower risks Regulated environment

New and recurrent revenue streamsEconomic boost

Investors

ConsumersTelecom

Operators

20

Sustainable policy and empowerment of the TRA are essential to ensure successful telecom/ICT sector development and highest benefits to all stakeholders

Some demand-side promotion policies should be encouraged and adopted by the Government to stimulate growth of e-services

Promote digital literacy

Raising public awareness on benefits of e-services and promote their useGovernments providing training on the use of PCs and Internet Digital literacy program integrating both demand and supply sides (i.e. financial support to schools for network construction and broadband use)

Subsidize low-cost user devices

Policies aiming at making user devices more affordable Wide range of policies to be adopted for subsidizing CPE: from complete government subsidization to private initiatives.


Have government serve as an anchor tenant

Computerizing public information and providing e-government services E-government also encourages citizens to subscribe to broadband services and provides businesses with more information

Develop online content and media

Governments should support content and media development in local languages, with locally relevant content.

Encourage businesses to use e-services

SMEs, representing most of the private sector, often lack understanding of broadband impact or cannot afford itSpecial policy measures for SMEs: free/low-cost applications, tax breaks for investments in ICT and Web-based services, tax cuts to ICT related businesses

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