Lebanon has among the slowest broadband Internet speeds in the world. This has been well documented, and as Executive went to press the country was ranked 169 out of 170 by broadband monitor Ookala — putting Lebanon ahead of only Iran, while trailing directly behind Mali, Bolivia and Sudan. And not only are Lebanese Internet connections painfully slow, they are also prohibitively expensive.
The grand rollout of the upgraded broadband digital subscriber lines (DSL) in Lebanon is set to take effect on October 1, according to comments made by Telecommunications Minister Nicolas Sehnaoui to reporters in late September. With the assumption that the plan will be realized and broadband speeds will move beyond a crawl Executive found out what the increase in bandwidth could mean for businesses here.
The hold up
Because of the extortionate cost of a decent Internet connection in Lebanon today — by all accounts the most expensive broadband in the Middle East — running a web-based business can be extremely frustrating and logistically problematic. And one does not have to look far to find the source of such frustration. Tom Shepherd, an analyst for telecommunications market research firm TeleGeography says, “On the subject of affordable access to newly increased bandwidth, the overriding factors are local infrastructure and local commercial agreements, often dictated by political decisions, [which is] particularly true in Lebanon.”
Lebanon has had the proper fiber-optic network to handle upgraded Internet speeds in place for years, but government bickering has kept the additional bandwidth unavailable. This inaction has caused “puzzlement” among members of the telecommunications industry and the government, Shepherd says. Most current broadband subscribers would likely use a somewhat less innocuous adjective to describe their feelings about the holdup.
Lebanon is connected to the India-Middle East-Western Europe (IMEWE) submarine cable that runs from mainland Europe to Cyprus, and on to Tripoli. The IMEWE cable has designated levels of bandwidth assigned to each country it is connected to, as Shepherd explains: “Of IMEWE’s overall design capacity of 3.84 Tbps [terabytes per second], 120 Gbps [gigabits per second] is allocated to Lebanon.” And Lebanon is connected to more than just the IMEWE cable.
“Increased bandwidth is also coming via other cables — potentially a larger capacity increase than the IMEWE launch,” Shepherd says, with upgrades planned for the Cadmos submarine cable that also links Lebanon and Cyprus, in addition to upgrades on the Berytar cable running between Syria and Lebanon. Clearly, and unsurprisingly, the main culprit in the failure to bring Lebanon’s connectivity up to date is not infrastructure, but rather government wrangling and bureaucracy.
Average consumers aside, perhaps the biggest beneficiary oft he upgrade will be web developers, who today find themselves constantly behind on the latest technology, trends and software. Put simply, their business is wholly dependent on connectivity. Nagib AbdelNour, head of business development at Koein, a Lebanon-based web and software development company, says that for his developers it is difficult to even download new software that is essential to keep the company current in a highly competitive market, putting the company at a distinct disadvantage to regional rivals.
One such technology currently unavailable in Lebanon is cloud computing, or the sharing of information and software over an online network. “[We’re] left out of new products, like applications. You can’t use them here,” AbdelNour says. “Cloud computing is the future of computing. It could take four years for Lebanon to get into serious cloud computing. That’s a long time in this business. Everyone is moving to cloud computing, and for this you need a good and cheap connection.”
On a consumer level, cloud computing is used to store and share photos, music and other media through services offered by Apple, Amazon and many others. But being years behind on this technology ensures that local developers cannot stay as competitive. AbdelNour says that while the initial upgrade will be “good for today,” he warns that it is far behind other countries in the region, and as others progress Lebanon will “not be ready for tomorrow.”
Another missed opportunity for Lebanon is the global information technology (IT) outsourcing market. “All of the big corporations are outsourcing to Egypt and Dubai,” AbdelNour says. He notes that many Lebanese can speak at least three languages and that the country should, under normal circumstances, be well positioned to attract large-scale IT outsourcing contracts from some of the tech world’s biggest players. But without a fully functional, modern fiber-optics network, “you will never see them in Lebanon.”
While the revolution in Egypt has stifled economic growth and investment, the country remains a perennial favorite atop the National Outsourcing Association’s ‘Offshore Destination of the Year’, and is shortlisted for this year’s award in November. Last year alone Egypt generated over $1 billion in IT outsourcing revenues from overseas contracts, and revenue predictions for the coming years are even greater.
But even as frustrations with bureaucracy and inaction have reached fever pitch, the positive aspects of better bandwidth are countless. As businesses and consumers spend more time online, advertising rates will increase, too. According to a recent study by Omnicom Media Group, online advertising in the Levant and GCC this year should take up some 9 percent of a roughly $2 billion regional advertising market. Lebanon’s share of that can only grow with time as the means and technology catch up.
Mobile broadband is set to take off as well. TeleGeography’s Shepherd points to the vast experience that the management behind Alfa and MTCTouch — Orascom Telecom and Zain Group, respectively — have with mobile broadband networks around the world as reason to be hopeful that up-to-date technology could be quickly and efficiently implemented. “Mobile broadband —using the new upgraded Internet capacity — will of course also be very important as a means of Internet access, as in many countries around the world where cellular has often overtaken fixed access as the primary method of getting online,” he says.
With increased bandwidth will also come the need for better online security. According to Ziad Badaoui, product manager for security systems at BMB Group, a Beirut-based IT consulting firm that partners with Cisco, McAfee and other global online security companies, “Across the years, security threats have evolved from traditional computer viruses, which were commonly detected by legacy antivirus applications, to sophisticated, blended threats with one major target: steal as much data as possible.” Large-scale data theft is a terrifying thought for any business owner.
According to BMB Group’s Product Manager for Security, KarimAbillama, as “businesses are moving into ‘always on’ reliable connections, allowing them to host E-services, web-based and mail services in their data centers,” the multitude of security threats will only grow. “Although this [always on] approach allows organizations such as banks, telcos [telecommunications operators] and universities to offer reliable services such as e-banking, e-portals, e-learning, outlook web access and CRM [customer relationship management], security risks from both the public accessibility of those services and the variety of threat vectors targeted at them make enterprises realize that security is a big concern.”
Abillama points to a variety of constantly evolving threats, such as denial of service (DoS) attacks and distributed denial of service (DDoS) attacks, whereby a website is overwhelmed with a flood of data that can bring a company’s online operations to a halt. These attacks are also used to steal vital information from businesses.
Consultants at BMB Group also tackle the problem of inefficient and, in turn, costly Internet usage in the workplace.
“Solutions include enterprise class cache engines that will enhance the Internet browsing experience, lower the Internet overhead fees and offer better and faster response,” Badaoui says. “These caching solutions are usually bundled with traffic shaping solutions that help IT administrators prioritize bandwidth per service or user. Packet shaping tools ensure the availability of Internet bandwidth whenever needed, as well as fairly distributing the available bandwidth among users.”
At an e-commerce event during Beirut’s Social Media Week in September, Louise Doumet, the co-founder of Lebanese online fashion retailer Lebelik.com, told attendees that she was surprised to notice people from all over the world were suddenly buying from her. As she put it, marketing online through Facebook and other social media brought in “clients [we] never even thought of,” through friends and acquaintances sharing links and pictures, commenting on purchases and passing it on through their personal networks.
At most, one third of the audience at the e-commerce event said they had purchased something online in Lebanon. Better and cheaper connectivity will increase this, opening up countless opportunities for businesses. Running a web-based retail business keeps overhead costs far lower than, say, a traditional storefront with high rents and costly maintenance.
The unlimited potential for small and medium-sized enterprises to thrive in a modern online environment could also spur a new generation of entrepreneurs. “Today’s social, economic and political pressures have driven the corporate environment in a continuous quest for cost reductions. Businesses must increase their responsiveness to change and continue to minimize operating costs,” says Sandra Salame, senior consultant at BMB Group. “New paradigms, such as software as a service and cloud computing are emerging; in the near future, many organizations will, for example, save cost by renting e-mail, backup and security.”
And the future benefits to citizens are endless; “Applying those trends to industries like healthcare, we would see the emergence of tele-health, doctors and medical staff collaborating together, reaching remote locations, smart connected medical devices that would relay information in real time,” Salame says.
Jawad Abbassi, founder and general manager of Arab Advisors, an Amman-based media consultancy firm, calls high speed Internet in Lebanon “essential, like water.” He says that Lebanon “cannot have a vibrant e-commerce or online banking sector without reliable broadband,” and wryly adds, “We’re really just stating the obvious.”
Hurdles to come
In the near term for Lebanon, “average fixed broadband speeds will double or triple,” says TeleGeography’s Shepherd, adding that “Ogero has also piloted direct fiber access [fiber-to-the-home] for end-users in Beirut, which is expected to eventually offer speeds of at least 25 Mbps [megabits per second] and hopefully higher.”
It remains to be seen just how quickly that will come into effect. “The speeds in different areas of the country also depend on how complete Ogero’s fiber-optic transmission network is. Ogero began the roll-ou tof a nationwide next generation [Internet protocol] backbone in 2010 to support the spread of high-speed services,” he adds.
In the long term, the significant increase in bandwidth will bring with it new consumer demands — such as the ability to stream high quality videos, share large media files and open up many new opportunities. It will eventually make Lebanon a far more attractive destination for multinational corporations.
TeleGeography’s research shows that the cost of an Internet connection in Lebanon on average has not changed between 2008 and 2011 “for low and high usage customers,” Shepherd says.
The telecommunications ministry’s new table of rates indicates an 80 percent drop in cost, and there is a cap on how much Internet service providers can charge consumers. With faster broadband Internet, companies can conduct video teleconferences with clients or other branches overseas. Online banking will become quicker and more prevalent. The list of knock-on effects for businesses here is infinite.
While there are many reasons to be hopeful, do not count on your Internet connection becoming lightning fast overnight, either. Shepherd says, “In South Africa too, recent new international cable launches have taken a longer time than predicted to filter down to the end-user in terms of cheaper and faster broadband, largely due to complexities in the competitive domestic wholesale bandwidth provider market.”
The many variables and complexities at play here should keep things interesting, to say the least.