Executive Summary
The Telecommunication (Telecom) sector in Lebanon, often dubbed the country’s “oil,” historically stood as the third-largest revenue-generating sector, contributing over USD 1.2 billion to the state treasury in 2016. Over the years, the sector became infamously known for its slow, unreliable, and overpriced services. This was not always the case, however. This report delves into the factors that have led the telecom sector to its current state of inefficiency and dysfunctionality. Venturing beyond statistics, the research probes into the real impact of the sector’s deteriorated services on the daily experiences of marginalized communities across Lebanon. The narrative concludes by presenting strategic measures and policies proposed by SMEX, aiming to uplift the quality and accessibility of telecommunication services in Lebanon.
1950s – 1975
The sector’s humble beginnings can be traced back to 1959 when the Ministry of Post, Telegraph, and Telephone was first established, and regulation laws were first implemented. It attracted foreign investments from key players in the field of telecommunications at the time, including Ericsson. By 1972, the government had established Ogero Corporation to manage and maintain 250,000 direct exchange lines, aiming to enhance the country’s 7% telephone penetration rate.
Lebanese War – 1990s
The outbreak of the Lebanese war in 1975 jeopardized the entire telecom sector, nearly reversing the progress made since the early 1950s. The long war caused irreversible damage to the national infrastructure and the telecom grid, the withdrawal of investments, and the halt of technological advancements. The total damage was assessed at around USD 517 million, foreshadowing immense challenges for the post-war rehabilitation period. In this quickly advancing field, Lebanon’s Telecom sector growth awaited substantive efforts and investments to bridge the technological gap with other countries.
During the 1990s, Lebanon emerged as one of the pioneering countries in the region to adopt GSM network technology, making significant investments in the development and distribution of mobile and fixed phone networks. Despite the government’s monopoly over the sector, leading to suboptimal services and high prices, the telecom sector has grown since the introduction of mobile networks post-civil war.
Last Decade
As communications began shifting from traditional landline or mobile calls to more advanced modes, such as direct messaging services over data and WIFI networks, the sector struggled to adapt. Grievances related to service quality, coverage, and pricing persisted, triggering campaigns like Ontornet (“Wait for the Internet” campaign) in 2011.
Finally, the 2019 banking and financial crisis, stemming from political and financial mismanagement, significantly impacted the already fragile Telecom services. In 2023, the Court of Audit published an extensive report detailing how successive governments and telecom ministries squandered USD 6 billion between 2010 and 2020. The audit exposed how, although the Telecom sector generated USD 17 billion, only USD 11 billion was transferred to the state treasury. The missing USD 6 billion was allegedly lost to corruption, political benefits, and random recruitments for political gains. Currently, six ministers are under investigation for corruption in the telecom sector, marking, possibly, the first instance of public prosecution of high-level politicians in the country.
In response, SMEX’s Telecom Project aims to tackle the challenges accompanying the sector’s development, particularly those arising in recent years. Experts with different backgrounds, whether political, legal, academic, or technical, were invited to share their views on key challenges, missed opportunities, policy solutions, and ways forward to find realistic ways to salvage the sector and draw an action plan for the next decade. This research explores how the Telecom sector arrived at its current state, documents the experiences of marginalized communities facing declining services, and suggests measures to enhance the quality and accessibility of telecommunication services in Lebanon.
Key Findings
Challenges to the Sector
This section explores the challenges faced by Lebanon’s Telecom sector over the past three decades. During the three decades following the 1975 war, the government fell into massive debt during the post-war rehabilitation era. Regulatory and accountability measures were absent, leading to power abuse, conflicts of interest, and corruption practices within the sector. Political interference, failed privatization attempts, and a state monopoly hindered genuine progress and long-term investment. Once considered Lebanon’s economic asset, the sector suffered from financial corruption and political exploitation, rendering it nearly unprofitable and unable to provide adequate services, particularly impacting marginalized communities.
Impact on marginalized communities
High telecom prices in Lebanon disproportionately impact users’ access to mobile and internet services, particularly in rural areas where unauthorized providers monopolize slower and less reliable connections. This exacerbates the digital divide, intensified by disparities within Beirut and worsened by the COVID-19 pandemic, transforming reliable internet access into a luxury for financially able communities. The resulting gender disparities, with women over 35 relinquishing services to cope with financial burdens, further marginalize already disadvantaged groups.
Participants interviewed by SMEX universally cited challenges with Telecom services in Lebanon, including high tariffs and unreliable coverage.
Students, heavily reliant on WIFI and 3G for virtual learning during the COVID-19 pandemic, reported disruptions affecting their education and career prospects. Families faced increased bills due to the need for multiple internet providers, while impoverished families had to forgo subscriptions altogether. Migrant workers struggled with affordability, and Toters and Uber drivers underscored the impact of inadequate coverage on their work performance. Participants also criticized line expiry policies, lack of data carry-over, and difficulties unsubscribing from unwanted services, pointing to additional fees for unreliable or unwanted features. Views on coverage improvements after recent price hikes were divergent, with some reporting worsening WIFI coverage since 2019.
Key Recommendations
Salvaging the Telecom sector cannot exist in a vacuum. The framework needs to be embedded in a system-wide recovery strategy to rehabilitate the country’s diverse sectors after its fall into an economic and political abyss. The solutions can be divided into two categories: financial and legal.
Financial Solutions
- Source financial capital from diverse sources and revive (Private-Public Partnerships), building on past experiences.
- Divert financial revenues to maintenance efforts and expansion of networks to reach rural areas, providing equitable services across all of Lebanon.
- Build upon existing investments in renewable energy sources.
- Revive and update Vision 2020 to advance modernization efforts and pave the way for a swift uptake of 5G connectivity.
- Diversify investments and invite the private sector to help boost the performance of service providers and present service users with an array of packages at competing prices that match the market’s needs, especially for marginalized communities, bridging the acute digital divide.
Legal Solutions
- Introduce legal reforms and establish robust enforcement frameworks of laws to move from exploitative and corrupt practices to establishing a regulatory framework based on transparency and accountability; implement Law 431/2002.
- Separate the functions of the executive powers of the Ministry of Telecommunication from the management and operation of telecom services to avoid conflict of interest scenarios.
- Reinstate the role of an independent TRA that would protect consumer rights, oversee the proper management and operation of the sector, regulate the functions of private operators, and uphold the principles of freedom of expression and privacy.
- Implement industry best practices for issues like misinformation, cybersecurity, AI, and cryptocurrency.
Other
- Mobilize policymakers, private sector entities, and the public to improve the quality of services.
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