Broadband Defined
Broadband in Lebanon
Economic Benefits
The TRA’s View
Role of TRA
TRA Action
Broadband Manifesto: Private Sector Efforts

“Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road,” Stewart Brand, founder of the Whole Earth Catalog.

With progress in mind, the Telecommunications Regulatory Authority’s (TRA) second quarterly newsletter focuses on the importance of broadband, a technology that has been widely available in the United States of America since late 2001.

In the global village, fashioned by the information age, broadband has become essential to the sustainable economic and social development of every nation. The upcoming broadband auction means Lebanon has, in due course, recognized the importance of developing state-wide ADSL services.

Broadband Defined

‘Broadband’ is short for Broadband Internet access; it refers to always on, high data-rate internet access. The state-of-the-art telecommunications systems are capable of providing high-speed transmission of services such as data, voice, and video over the internet.

Broadband technologies include:

• Digital Subscriber Lines (DSL)
• Fiber optic cables
• Coaxial cables
• Various wireless technologies
• Satellite connectivity

24/7 Connectivity

Dial-up access to the internet becomes a thing of the past when it is no longer a lengthy mission to ‘get connected’. Broadband services make connectivity possible at once; communication becomes available all day, everyday.

With good reason, broadband penetration is now treated as a key economic indicator. To begin with, broadband services decrease the overall cost of living. Whether users need to communicate, research, advertise, shop, or find their soul mate, the internet is a one-stop multi-functional domain. As an integral part of daily life, work, socializing, and education are just some of the things that heavily depend on this dynamic portal.

Broadband in Lebanon

History

In Lebanon, broadband deployment began with the implementation of ADSL in May 2007 by way of the Ministry of Telecommunications (MoT). Their authorization was required for local-loop unbundling; this refers to the condition of access to both physical ends of the ‘local loop’, i.e. the physical connection between service providers and subscribers. In brief, multiple telecommunications operators were able to start using the physical wires connecting customers and companies.

Although it is a complex and time-consuming process, the MoT has made great strides in initiating the unbundling. Broadband digital subscriber line (DSL) services introduced in mid-2007, reached a penetration rate of approximately 7.7% of households in 2008. During the last quarter of 2008, an important expansion of DSL, undertaken by the MoT, allowed for the establishment of a total of 45 out of 380 possible fixed networks.

Current Situation Despite such advancements, Lebanon continues to lag in broadband penetration; substantial price cuts are required just to be on par with countries in the region. Corporate users suffer significantly from high-priced internet access. Small businesses, for example, face a common Lebanese dilemma: they cannot afford current broadband rates, but cannot survive without access, lest they fall behind.

Due to the cost of international bandwidth and the bit rate (speed) cap imposed by service providers, residential users do not benefit from broadband during peak hours: the more people online, the slower the internet.

According to the TRA’s market analysis the DSL market is still underdeveloped in terms of bandwidth availability, as compared to the needs of both residential and corporate consumers. The analysis took private sector complaints, and interviews conducted during the field survey, into consideration.

The market offers the average citizen broadband access at less than 1 Mbps. In line with the global trend, “broadband” should no longer be used to refer to such low network connection speeds. Cheaper and higher bandwidth services of up to 100 Mbps should be available to citizens and businesses in Lebanon, and up to 1 Gbps for businesses requesting it.

Economic Benefits

Exploitation of broadband services boosts the growth of businesses and governments by promoting innovation and increasing productivity. Medium-sized businesses with an internet connection faster than 2 mbps have productivity rates that are 4% higher than those with lower speeds¹.

Analysis undertaken in 15 EU countries concluded that the 70% household broadband penetration will contribute to 1% of the GDP whereas 90% household broadband penetration will contribute to 1.6% of the GDP. Considering the currently low broadband penetration, TRA expects increased broadband use to more heavily impact Lebanon than the more developed countries with mature markets.

Pilot studies and available reports¹ show that broadband deployment will increase job opportunities. For every 1% increase in broadband penetration rates, employment increases 0.2-0.3% per year. By 2017, following the liberalization of broadband services in Lebanon, employment is expected to increase by approximately 54,000 new jobs. Even with such optimistic expectations, however, the impact of broadband on job opportunities will be difficult to gauge.

Benefits in Education

Most e-learning programs require high-speed internet connections. Without broadband penetration, those that have access to such programs are few, and often among the elite. With widespread broadband availability, everyone can enjoy flexible educational opportunities, irrespective of social status or geographical location. Nor is the public limited by strict time constraints; learning can be done at one’s own convenience.

Furthermore, educational institutions can save up to 50-70% when they rely on electronic learning instead of instructor-led training.

Health

With easy access to health or medical information on the Internet, patients can learn how to monitor vital signs and assess their own symptoms. The frequency of visits to doctors, clinics, and hospitals will decrease because information is delivered to them through the Internet. Remote diagnosis, consultation, and patient monitoring are also possible; the inconvenience and expense of staying at hospitals will be minimized.

Higher speed network connections are required for tele-radiology, tele-ultrasound and tele-consultation. Telemedicine services require video display units, computer-supported teleconferencing and videoconferencing systems, storage and forward systems for medical data, and tele-monitoring systems. All of these technologies require high-speed internet and always on, easy access.

Community

Broadband offers what a slow dial-up internet connection has difficulty in delivering; it provides rural areas with information, resources, and conveniences generally enjoyed in urban areas. Better access to other services, such as e-health, e-commerce, banking, and online education becomes readily available. This can make a community more economically self-sufficient as it allows them to be involved in the modern economy. In short, it would help reduce the socio-economic gap, between the rich and poor, caused, in part, by the digital divide.

Geographic boundaries fade with the expansion of broadband services. Internet users establish wider social networks and, with this service, emigrants can stay in touch with their relatives and friends in Lebanon. E-mail is becoming more popular than the telephone and Voice over IP is cheaper than a long distance land-line phone call. Work and community ties are no longer solely between people in certain places but between people at any place, thanks to advancing information and communication technology (ICT).

Business

With broadband, there would be a higher demand for products, such as personal computers, networking equipment, higher capacity disk drives, and other related equipment.

Other benefits of e-business include: improved operational efficiency, enhanced customer satisfaction, more effective management, increased revenue, and reduced costs. New opportunities outside the business’ immediate surroundings become possible when the technology to communicate, receive, send, and distribute information is available through broadband high-speed internet. With the advent of this technology, corporations can find, create, and access new markets that, previously, had not existed.

Better management-employee communication can come about through these services; more timely information is made available as the staff can be reached through electronic bulletin boards, email and/or videoconferencing. Employees can respond to colleagues and customers in a more timely and reliable manner.

Studies have shown that electronic communication leads to greater productivity and better quality of work. Employees may perform their duties outside of the office using telecommunications technologies or computers. Telecommunication services reduce absence of employees by 20%.

Employees can be up to 50% more productive according to studies conducted by IBM. This way, the cost of office space is also reduced because fewer employees are needed in-office. AR&T was able to save $550 million by freeing up unneeded office space. Overall, costs may be reduced by 10-50% when using web-based customer-service functions.

Government

As broadband becomes more widespread, the public will be able to access different opinions and discuss issues that concern them, leading to better understanding and tolerance of people with differing views.

With the information and interactivity option available as a result of broadband, people become more aware and have greater opportunity to be involved in national and local governance, expressing their needs more often because it is possible. Broadband enables the transmission of political news instantly using voice and video services.

Improved efficiency is one of the benefits of the transition into E-Government by using broadband services. Instead of taking a day off at work, and driving to the local government council, one can instead transmit and discuss the information online; positive feedback is made possible. E-citizenship speeds up the communication process.

The size of the public sector and costs may be greatly reduced. Smaller staff would be necessary to provide online services. In addition, sharing and integrating information at different levels and locations is made easier for governments; they will not have to deal with the time and cost necessary to produce, distribute and deliver printed forms. Delays in processing can be eliminated, employee satisfaction and retention improved, costs reduced, and the quality of central government administration enhanced.

Tourism

Tourism is one of the major economic sectors in Lebanon and broadband services may benefit this industry greatly. With the ability to promote local and historical sites, the country will be able to attract more tourists and allow for online reservations.

Recently, people have started to plan their vacations online. With enhanced communication, travel plans can be more precise. Visitors can identify sites they have not visited before and they may have otherwise not heard about. Craftsmen and businessmen can sell products that were limited to chance visitors. In short, the potential economic capacity is increased greatly due to increased awareness, organization, and accessibility to services in this sector.

Entertainment

These days, people spend their leisure time on the internet where they can do anything from playing network games to voicing their political concerns.

With technological advancement, the chores that used to consume peoples days are taking increasingly less time. As people are spending more time on entertainment and media, broadband allows for new media and entertainment services such as online Hi-Fi music, multi-player interactive video games, and digital movies. The quality of online audio and video greatly improves with broadband access.

Games, movies, and books can also be sold online. Internet users can even watch ‘digital TV’ online.

The TRA’s View

While the TRA considers the launch of ADSL services to be a step forward for the Lebanese telecommunications sector, the Authority does not believe that the current situation favors the rapid dissemination of broadband services. It is not in the long term interest of the telecommunications sector to move away from traditional internet applications completely before ensuring the conditions of fair and open market competition.

The TRA has identified several factors that hinder the rapid development of broadband in Lebanon, including, limited international, as well as local, bandwidth capacity, high-priced international bandwidth services, and unbundled local loop services. Further limiting broadband deployment is the absence of detailed, written, pre-approved procedures for the processing of requests.

Additionally, Lebanon currently lacks the necessary infrastructure for widespread broadband use. The main reasons are:

• Lebanon does not have a special network to transport data (also called core IP network or backbone). The data is still transmitted over the existing fixed telephone network.
• The international capacity is very low and limited. The Ministry of Telecommunications maintains the exclusivity to establish international gateways and to handle international traffic.
• There is no true competition in the Lebanese Telecommunications market. Ogero and few Data Service Providers (DSPs) share the market in a stagnant and status quo environment. The telecommunications markets have been liberalized and opened to competition in most of the rest of the world.

In a country like Lebanon, where the resources of the government are limited, it is more effective to exploit the market power by promoting fair and open competition. Private investments can rapidly bring about broadband services.

Developing the broadband infrastructure requires the investment of hundreds of millions of dollars. The total cost of such a project depends on the policies the government chooses to espouse; this includes decisions about the selection of equipment and which roll-out conditions will be adopted.

It is important to mention that the cost of the network is relatively low; the GSM infrastructure was 1.3 billion dollars.

Role of TRA

The TRA has recognized that the development of broadband services is a key driver of economic growth and development. Thus, the TRA intends to promote broadband penetration in all areas of Lebanon. By achieving such a goal, citizens gain a competitive edge on both local, and international, levels.

The TRA aims to:

• Speed-up and expand the deployment of broadband technologies including any, and all, platform(s) capable of transmitting high-bandwidth condensed services
• Ensure fair regulatory treatment of competing broadband services
• Promote an environment that encourages creativity and innovation in broadband technologies and services.

A well structured and privatized market will enhance competition and satisfy consumer needs and expectations. With this in mind, the TRA developed and submitted a draft broadband policy to the Minister of Telecommunications in August 2008:

The National Broadband Strategy is a project initiated by the TRA in cooperation with Partnership for Lebanon. The Broadband plan is expected to provide larger, high speed communication pipes that will allow Lebanese citizens faster access to information and, ultimately, change their way of life.

In January 2008, the TRA, in collaboration with Partnership for Lebanon, organized a broadband workshop to discuss their vision for the liberalization of the market. The initial liberalization plan was based on a model developed by Cisco Systems, Inc.

The broadband policy was then drafted and submitted to the minister. The plan emphasized the establishment of competitive broadband infrastructure by auctioning off two national broadband licenses, and offering Liban Telecom the third. This policy works to liberalize the broadband market within current physical capacity. The licensed companies would work to upgrade system performance in the metro and access networks.

TRA Action

As an initial step in the TRA’s reform and liberalization plan, and pursuant to Telecommunications Law 431/2002, Article 48, interim licenses which initially expired on December 31, 2008 were extended until December 2009.

Throughout the year, the TRA has undertaken extensive preparation for the liberalization of the broadband market. With the assistance of consultants, the organization has drafted the National Broadband Licenses (NBLs), as well as the technical requirements for NBLs and Broadband Access Licenses, such as the, provisional, minimum rollout coverage requirement.

The success of the broadband liberalization will depend on the issuance of decrees related to the rights of way and the sharing of MoT’s infrastructure. The TRA has been drafting these decrees to be submitted in the first quarter of 2009 to the Minister of Telecommunications.

The TRA has begun to prepare for the design and rules of the auction as well, taking into consideration the advantages and disadvantages of the single bid versus the multiple rounds bids. The timing and priorities of each type of licenses to be auctioned were also discussed.

The TRA has also been working on an infrastructure sharing regulation that will allow providers with significant market power to share existing infrastructure.

Another pillar of the liberalization of the broadband market is the spectrum refarming and packaging plan that was issued by the TRA for consultation in October 2008. Refarming is when spectrum in a specified band, for a certain technology, is re-designated for a different technology than the spectrum was originally licensed for. Current spectrum allocation does not comply with international standards; it limits competition, the introduction of new technologies and market development; it does not reflect the real value of this scarce resource. The purpose of this plan is to:

• Accommodate increased competition and future growth
• Optimize spectrum usage
• Optimize Lebanon’s return from spectrum usage
• Harmonize the current assignment with International Telecommunication Union (ITU) allocation and technological developments

Broadband Manifesto: Private Sector Efforts

The broadband Manifesto is an initiative from the private sector. It is a petition request for the government to facilitate and take necessary steps and measures to speed up the implementation and development of broadband services in Lebanon. This is in line with TRA priorities and strategy and the TRA is supporting this initiative.