Home Economics & PolicyAnalysis A continuously battered infrastructure

A continuously battered infrastructure

by Yehia El Amine

Crumbling. Crippled. Delicate. These are some of the words used to describe the ailing state of Lebanon’s infrastructure for the past two years by experts, media outlets, and international and local organizations. On the operational side, telecoms in Lebanon are characterized by high usage fees and low fixed network quality. Fees for both data and voice services have sparked outrage, most notably in October 2019. While these fees have been dropping in comparison to other costs of living since the beginning of 2020, this welcome relief was attributable entirely to the depreciation of the Lebanese pound and decreeing a hike of tariffs was the last thing that the Lebanese Council of Ministers did before constitutionally reverting to a “caretaker cabinet” status after the May 2022 (yes, under the country’s convoluted state ownership of telecommunications operators, communication tariffs astoundingly are the cabinet’s business). 

This political decision on higher tariffs, however overdue for preservation of crumbling network infrastructures in the mobile and fixed-line sectors, brings back the memory that connectivity charges have long been exorbitant when compared with regional benchmarks. According to McKinsey & Company’s 2018 report detailing Lebanon’s Economic Vision, mobile data and voice levies in Lebanon were around two to three times more expensive than in Morocco and Egypt – while the country, perhaps even more shockingly, according Speedtest.net’s Global Index measured between April 2021 till April 2022, ranked 159th out of 181 assessed countries worldwide in fixed broadband speed, behind Iraq and Syria. In absolute numbers, the average fixed broadband speed, as measured, was said to be around 7.91 Mbps in Lebanon, at a time when the five top jurisdictions – notably all small, developed territories – achieved average speeds far exceeding 180 Mbps and the global average speed had risen to 63.46 Mbps as of April 2022.

A series of involuntary stress tests

It has to be noted that Lebanon did invest into upgrades of its telecommunications infrastructure especially in the 2010s – but some of these upwards developments were halted by budget constraints while still incomplete and others have been imparied due to unforeseen disruptions of society and economy. In this sense, a major surprise blow to the country’s telecom infrastructure occurred just after the Covid-19 pandemic hit in the first quarter of 2020. As the pandemic-induced lockdowns forced most of the population to shift from their usual behaviors and exclusively conduct their work, education, and entertainment online, usage pressure on the broadband infrastructure increased tremendously, as demonstrated in the government’s decision to order a doubling of internet speeds by state-owned provider Ogero. 

The forced shift to digital living and working actually can serve as an indicator of the importance of constantly maintaining and improving the national telecommunications infrastructure, and furthermore as signal that full commitments of the key telecommunications stakeholders have the potential to generate massive benefits to Lebanese society and enterprise community (which was during the evolution of the pandemic further proven by the role that internet Ogero played in the creation and implementation of the Impact e-government platform).

However, a 2022 report and survey conducted by Konrad Adenauer Stiftung and Arabnet, highlighted that the degradation of the Lebanese infrastructure had an overwhelming effect on local startups. The impact has been widely felt across the ecosystem, with 91.3 percent of respondents having confirmed that the decline in the quality of infrastructure services had in fact affected their productivity, with 37 percent reporting missing targets as a result.

Similarly, support services – business incubators, NGOs, education institutions, internet and banking service providers – have unanimously complained about infrastructure failings challenging their ability to operate effectively.

Thus, as dips in reliability and coverage were frequent at the height of the data explosion during the pandemic, the involuntary stress test of the broadband infrastructure unmasked weaknesses and deficiencies but also ascertained that the provision of internet connectivity, albeit realized imperfectly, is of fundamental importance for the society and economy, and that care and development of this infrastructure is therefore a primary public need.  

Due to the country’s currency collapse, the telecoms industry soon faced another internal hard blow on top of the pandemic. Staff members of Lebanon’s two mobile operators, Touch and Alfa, officially went on permanent strike, an act of objection to their salaries now being paid in Lebanese pound but provided at the official FX rate of 1,507 to the dollar while the cost of many goods and services was effectively indexed to the parallel market rate where the pound wes depreciating from one daily low to the next, which meant some salaries were merely sufficient to cover daily transportation costs to the office. 

The third punch, and what could have been the knockout one, came in the Beirut Port explosion, which, along with destroying telecom infrastructure components in the immediate urban blast zone and neighboring districts of the capital, ripped through the new headquarters of operator Touch in downtown Beirut. 

Unanswered questions still loom

Apart from noting the damages to the telecommunications infrastructure, it is worth to recall that a report by the World Bank, EU, and UN put the economic cost of the damages of the August 4, 2020 man-made catastrophe in Beirut at $3.8 to $4.6 billion, with losses to financial flows of $2.9 to $3.5 billion. On the other hand, proper assessment of the aftermath of the catastrophe and its impact on telecommunications infrastructure includes recognition of the rapid actions that were taken by several entities to ensure continued communication services to Lebanon’s busiest districts. This included operators Touch and Alfa installing makeshift base stations in the areas that would otherwise have suffered total communication breakdown and also international NGOs such as Telecoms Sans Frontier which immediately acted to provide support and assistance. Teams deployed to Beirut in collaboration with the United Nations Disaster Assessment and Coordination (UNDAC) and the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA) rapidly restored reliable communications in the area of the disaster.

In combination, the three heavy punches inflicted upon the physical integrity, maintenance quality, and load of the telecommunications infrastructures appear so massive that a total knockout of all mobile and fixed infrastructures for data and voice communications around Beirut and the entire country has been averted under the conditions of these incidents and the epic economic crisis that has beset. Seeking to understand the current and future needs in the preservation and continued securing of telecom infrastructure, Executive over more than two months reached out incessantly to top management of operators Touch and Alfa but was only given a written response on the extent of blast damages by one operator. Interview requests and inquiries into current, pressing infrastructure issues met with polished and politically correct answers (if any) that largely obscured the current and impending challenges faced by the mobile communications sector with regard to infrastructure.

“Touch network was severely impacted in the close areas surrounding the explosion at the port, where more than five sites were completely damaged,” the operator acknowledged in an emailed statement, providing as further details that damages to 20 sites in other strongly affected areas and outages involving in excess of “40 sites in the neighboring areas” required one month of repair work that was further impeded by limited availability of spare parts and lack of funds due to budget cuts.  

Enter 2022

Against the undeniable and excessively documented reality of massive detriments that have been disabling the Lebanese economy in recent months, examples being the removal of fuel subsidies by the central bank of Lebanon, Banque du Liban, in course of 2021, skyrocketing energy costs and exorbitant inflation suffered by households, it is a no-brainer to see the country’s vital telecommunication infrastructure as having been badly, continually, and increasingly impaired.   

It is not just that internet cuts have been creeping up around the country due to insufficient amounts of diesel being at hand to run the generators that run base stations, telecommunication towers, internet switches, and the like. Imad Kreidieh, chairman and director general of Ogero, has since before the end of last year not been shy to repeatedly hit out at the Ministry of Telecommunications, alleging that political red tape was to blame for the supply delays, and threatening to resign if the situation did not improve.

At the end of 2021 and again in February of 2022, Johnny Corm, the Minister of Telecommunications, confirmed the existential struggle for fuel as being one of the sector’s big problems, as he publicly warned that network operators were unable to power critical infrastructure and that the cost of fuel, previously a mere 7 percent, has been projected as soaring to two thirds of the state-owned sector’s budget this year. 

Much publicized additional headaches about the existing infrastructure have arisen from the mundane matter of physical pilferage of copper cables and organized thieving intrusions into cable shafts. Instead of providing the vital public good of connectivity, the fruits of these intrusions end up on the black market to the great disadvantage of society. “Every day, there is a robbery, to the extent where we have asked for support from local municipalities to help safeguard the equipment; however, even they no longer have the capacity,” Corm was cited in Arabic media.

While many of these cables could be replaced, the cash-strapped telecom provider has halted preventive and significant maintenance due to its inability to acquire equipment and spare parts as they are imported from abroad using foreign currencies. “We are not doing maintenance because we do not have the funds for it,” Kreidieh told reporters.

At the opposite end of the situation, matters of infrastructure and development of new technical capacities in the ground, air, and under the sea involve investment needs for further submarine cables, possible consolidation of existing network infrastructures, and the general aspect of the ever-advancing telecommunications technology. Investment by the private sector is much needed to complement and upgrade existing infrastructures (fiber rollout, 5G, submarine cable, data centers, etc.) and increase the overall competitiveness of IT in Lebanon. 

Political and civil society stakeholders have told Executive that such investments would be both relatively easy to implement because of the country’s small size and existing hard telecommunications infrastructure and be very feasible and productive because of the positively formidable cost-benefit ratio of expanding our digital economy. It would nonetheless have been valuable to gain the insights of the long-time guardians of mobile infrastructures, operators Touch and Alfa, for assessing the current state and best path forward in this regard. As mentioned above, Executive’s attempt at obtaining interviews from the CEOs or CFOs of Alfa and Touch, however, did not meet success.  

One fact that is known is that the government’s ambitious program for complete roll-out of fiber-optic telecommunications cables around the country was only completed to a minor portion when the plug was pulled by Ogero because funds for the $300 million endeavor were no longer available. 

International telecom operators and private sector conglomerates with wide footprints are today seen as optimally prepared to fuel innovation and adopt best practices to foster and grow the local IT ecosystem, Yet, at time of this writing, much remains to be learned as to how the government will look to utilize the telecommunications industry to fuel the economy, whether it be privatization, liberalization, or continuing its cascade of milking the telecom cash cow. But as the dust settles following Lebanon’s parliamentary elections, many of the reforms required to lift the sector back on its feet can be categorized in the meantime as loading…

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Yehia El Amine

Executive Magazine's managing editor.

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