Ghazi Yussuf: Head of the Higher Privatization Council up until the resignation of Prime Minister Rafik Hariri
E: Is there a realistic chance for the privatization of cellular assets in 2005? What, in your opinion, are the best and worst case scenarios for the development of the cellular sector in the coming year?
There is no realistic chance of privatization in 2005. The two managing companies haven’t a track record with which to show off any skills to potential buyers. There has been no expansion. And the ministry doesn’t want to privatize because it wants to determine the true earnings of the two operations. There have been no new numbering plans, no new packages. The government’s promises haven’t been kept. The sector hasn’t matured.
The best case scenario: a regulatory authority is in place by the end of the first quarter. Then there is a serious call for the sale of the two licenses. Development of the networks is left to the newcomers. They, rather than the government, decide pricing policy and packages.
The worst case scenario: there is even more politicization than now. The regulator is nominated under the umbrella of the ministry of telecommunications, despite the fact that such an authority is supposed to be independent. I am concerned that any regulator nominated now won’t be a regulator aiming to open up the sector but a front for political aims.
For the moment, the sources and uses of cellular sector revenue by the government are questionable. For example, I have heard – although I cannot prove – that the government is saying it wants to spend $70 million on each network. How will those funds be spent? I have heard that MTC Touch needs a new platform which supposedly costs $14 million. But MTC Touch didn’t buy a new platform. It brought in a used one and charged $14 million.
I don’t think things will get better. As long as the government is running both operations, it will always be arm-twisting potential in terms of imposing appointments and purchases.
Louis Hobeika: Professor of economics and finance at Notre Dame University, Louaize
E: What measures would be best suited to improving the market position of Lebanon’s fixed line network and operator in 2005? Would you regard privatization of the fixed line network as positive with respect to increasing operational efficiency? How quickly can privatization of the fixed line network be achieved?
The revising and lowering of tariffs is very important. For the moment the government charges per minute. All calls within a local area should be charged on a monthly fee basis. Benefits of using a fixed line should be marketed to people. For example, they should be told that if they spend more than a certain amount on calls in a month, they will get a second month free.
Connection fees should be lowered. People should be billed at home so they can send checks by mail. Customer service should be improved. There should be a quick service for information on numbers, in fact for information on anything, like restaurants and hotels. They should commercialize it, make it value-added.
Privatization is a must. The fixed line operator should be split up into three or four entities, so we have competition on tariffs and services. With a private monopoly there would be no stimulation to improve service. Splitting up would also benefit rural areas, bringing them into an enlarged mainstream telecommunications market.
Splitting up would also allow a much greater reward from the sale. Ogero is a large entity in a small country. If you don’t split it up, almost no one will be able to afford to buy it. You would need to offer it at a discounted level. By splitting it up you would entice more investors. It should have been done years ago but wasn’t because of political feuding and administrative problems. The intellectual readiness is there. We could do it in a few months. But frankly, I’m not expecting it. I’m not sure the government is ready or willing to do it. It’s lost. It has no objectives.
Maroun Chammas: Managing Director IDM; President & CEO Berytech
E: Do you anticipate that broadband internet will be fully available to interested residential users in 2005? When can consumers expect to be able to choose from a variety of access technologies, including cable? What is needed to create a digital society in Lebanon? Are the problems of pricing and illegal connections the main obstacles to its implementation?
Since November 1, we have been deploying high-speed broadband to homes in the greater Beirut area. Our target is 20,000 in the first year. However, we can’t say if we’re still on track. In late 2004, delays occurred as a result of the weather and also because installing the service in buildings in Lebanon is not always easy. You need proper electricity, access to roofs, and all the cabling.
We’re currently installing broadband fixed wireless –128 kbps at $45 a month, 256 kbps at $75 a month and 512 kbps at $175 a month. The set up fee is $75. We would like to offer greater speeds at a lower price, but the price of the bandwidth is high. We purchased two megs from the ministry of telecommunications at $20,000. In Europe, it costs around $500. We want the price to be in line with world prices. The government must understand that the internet can help the economy grow.
The government will apparently soon be providing internet service using a phone line. The three speeds I mentioned will be available. The price will be very similar to fixed wireless. Obviously people who have only one phone line will need another with which to call.
Today, there are 30,000 illegal internet cables hampering development of the sector. The government hasn’t taken real action. Once the government provides ADSL and we can provide high speed internet at reasonable prices, the illegal business will cease. But it is essential that people be offered access to broadband at a reasonable price, and that will only happen when the government reduces the price of the bandwidth.
Kamal Shehadi: managing director at Connexus Consulting
E: Do you expect the independent telecommunications authority to be fully functional by the end of 2005? Does the framework comprise all the elements necessary for efficient regulation of the communications sector? What benefits can cellular and fixed line consumers expect when the regulator is functional?
The government has announced that the Telecommunications Regulatory Authority (TRA) is to be established shortly. If the government displays the political will to undertake serious economic reforms, including the liberalization and privatization of telecommunications, they will need to appoint the board of the TRA very soon. They will need to appoint individuals with a commitment to liberalizing the telecommunications sector – the TRA’s principal responsibility according to Telecommunications Law 431 – the expertise to do the job, and international standing to bring credibility to the process.
If the board is appointed in early Q1 2005, the key staff of the TRA could be in place and fully operational by Q2 2005. The board’s first responsibility will be to outline a strategy for an efficient transition to a competitive market. It will then have to tackle key regulations such as interconnection, the rebalancing of tariffs (mainly requiring the lowering of international tariffs), and consumer protection (confidentiality of information, billing, billing disputes, etc.).
The framework for efficient regulation of the sector is still incomplete – it requires a number of key decrees to be promulgated by the Council of Ministers. The most important decree – presented to the Council of Ministers more than 18 months ago – provides for the organization and financing of the TRA. Other decrees are also needed on licensing; allocation of radio frequencies and their pricing; and access to the right of way and public property.
Consumers should expect the TRA to be not only the regulator issuing licenses and monitoring licensed operators, but also the driver for better consumer choice in services and service providers, better quality of service, and lower prices.
Khalil Daoud: General manager at Libanpost
E: What are the aims and priorities of Libanpost for the year 2005, and where can service be improved in the coming year? Will increased transportation costs have an impact on end prices and is the value proposition of Libanpost secure for all stakeholders: the state, the operator, and the public?
Our key objectives for 2005 are to continue improving the quality of our services at the retail and distribution levels by implementing various training programs, increasing services and retail products and maintaining the renovation program of the post offices. This will also include completing the automation at the post offices; introducing the automation at the letter carriers’ level (handheld computers for the distribution of mail with proof of delivery); refining the existing processes and procedures; and reorganizing the customer service department.
We are also working on a new collection system that would enable us to collect mail not only from the post offices, but also from residences. Libanpost will be introducing new services, like “International Express Mail.” We also want to see the proper implementation of the new warehousing and logistics, and insurance brokerages divisions. Expansion is expected in the post print division by attracting customers other than Ogero, like utility companies and private institutions.
As for the impact of increased cost of transportation, the prices of the postal services are stipulated in a government decree and simply applied by Libanpost. Proposing a change in the tariffs should be dictated by a number of factors, among which the cost of transportation. Considering the tight economic conditions prevailing, Libanpost is trying to postpone such a price change by absorbing the costs variance.
Whilst continuing to improve the quality and variety of services to its customers, and to expand the size of its investments, Libanpost is rapidly moving towards a profitable situation. The majority of clients are satisfied with the Libanpost offerings, be it with its postal or non-postal services. As for the government, and in the event the restructuring proposed by the ministry of telecommunications is implemented, the situation will become profitable.