This document provides an overview of Lebanon's ICT market, including the status of the telecommunications sector and its potential for growth. It notes that mobile and fixed telecom operators are state-owned, limiting competition. The mobile sector has a penetration rate of 83% served by two state-owned operators operating under private management agreements. The fixed line market has a household penetration rate of 64% but is a monopoly. Broadband access has grown but speeds and prices still lag international standards. Recent reforms aim to boost broadband and introduce bundled services to stimulate the national economy.

1. Lebanon ICT Market
Status and Real Potential
Lelia EL KHAZEN
Market Analysis Manager
Market and Competition Unit
Telecommunications Regulatory Authority – Lebanon
ITU workshop
Sharm el Sheikh
June 8, 2012

2. Outline
• Status of the Telecommunications sector
• Potential to Go: Broadband as a booster
for the National Economy
• Regulatory and policy tools
24 March 2013
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3. Status of the
Telecommunications Sector
24 March 2013
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4. The enactment of Law 431 in 2002 and the establishment of the TRA
in 2007 paved the way for telecom sector reform
Before Law 431 After Law 431
MoT MoT: Policymaker TRA: regulator
Drafts and
policymaker regulator Sets general guidelines of implements
the telecom policy regulations
operator Decides on international Awards licenses
representations Ensures competition
Ministry of Approves: Prevents anti-
Telecommunications: • TRA recommendations on competitive behavior
policymaker, regulator individual licenses
Manages radio
and service provider • Frequency pricing
• TRA annual budget
frequency on behalf
CoM: Arbitrary of GoL
regulatory role (e.g.
issuing all licenses) Operators (Incumbents and New Entrants)
No formal regulatory Provides telecom services to the public
regime Installs, owns & manages telecom networks & facilities
Abides by TRA rules, regulations and license terms
1st June 2012
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5. Although reform has started, Mobile & Fixed telecom operators in
Lebanon are state-owned and the market requires “competition”
AS OF MARCH Penetration Number of Service Private/State- Level of
2012 Providers Owned Competition
Mobile Market 83% 2 State-Owned Duopoly
Fixed Market 64% 1 State-Owned Monopoly
(Residential Household
Penetration)
Internet Market 30% 16 Private Competition
(incl. illegal
operators)
Fixed Broadband 27% ~7 for ADSL Private through Limited
Market (Household Penetration) services MoT Local Loop / competition
Ogero
~16 for wireless
services
Mobile Broadband 13% 2 State-Owned Duopoly
Market
24 March 2013
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6. The mobile sector is comprised of 2 state-owned networks operated
under private management agreements;
A structure with no true competition stifles innovation
Mobile Penetration Evolution
Major milestones:
100% 83%
68% Consecutive decreases in prices since
57%
March 2009 for postpaid, prepaid and
34%
50% 29% VAS
New prepaid offers introduced in June
0% 2011
2007 2008 2009 2010 Mar-12
3G services launched in October 2011
Achievements:
Mobile Subscribers Evolution (in thousands)
3,500
Penetration rate increased by 50
4,000 percentage points since 2008
2,900
3,000 2,400
2,000 1,200 1,400 Mobile broadband penetration reached
1,000 13% in 5 months only
- ARPU decreased by 45% since 2008 to
2007 2008 2009 2010 Mar-12 reach an average of USD 39 in 2011
Bottlenecks:
Blended ARPU Evolution Despite the decrease in ARPU it is still
80 $71 considered high compared to the
60 $50 regional average of USD 15
$42 $39
40 Quality of Service is not up to
20 international standards
-
Introduction of advanced and
2008 2009 2010 2011
competitive services and offers is slow
due to the structure of the sector
1st June 2012 www.tra.gov.lb 6

7. With the expansion of DSL services, there has been an increase in
demand for new “fixed lines”,
Consumers await the introduction of bundled & IN-based services
Some Indicators:
Total number of PSTN subscribers as of March 2012: 855,000
Fixed line residential household penetration is ~64%, increasing by 2 percentage points
since 2010.
The penetration rate of fixed services in Lebanon is higher than other countries with
comparable GDP per Capita (for example Jordan’s Penetration rate per population is 8%
while for Lebanon the fixed penetration per population is 21%)
Major Milestones:
Decrease in fixed line installation rates in 2009
Continuous Growth in DSL subscribers: major growth since the introduction of high
speed packages in Oct 2011)
Geographical expansion of DSL in 170 Central Offices
Bottlenecks:
Current service offering lacks bundled services, self -selection schemes, NGN services
and Intelligent Network (IN) Services
Illegal VoIP services are widespread despite large international call tariffs cuts by MOT
High Cost related to management and maintenance of current outdated PSTN network
24 March 2013
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8. Required speeds for triple or quadruple play services are still much
higher & prices much lower than the ones currently available
Good efforts are underway to correct the situation
Lebanon DSL services were previously priced well above the regional prices; however with the
decrease in DSL prices in October 2011, Lebanon is now very well positioned when compared to Arab
countries
With decree 6297 (Sept 2011), an entry package of 1Mbps speed is now offered at a price 70% lower
than the previous 1Mbps offer and a usage that can go up to twice the previous one.
SERVICE PACKAGES AVAILABLE IN LEBANON
TYPICAL TRIPLE PLAY SERVICE PACKAGES
(SINCE OCT 2011)
Residential Residential
For around $46/month individual subscription to: For around $40/month :
$16 for the basic entry plan of 1Mbps downlink On average 8 Mbps downlink and 4 Mbps uplink
with a cap of 4 GB (most used DSL plan) with virtually no cap on usage
$15 for very poor quality cable TV subscriptions High speed Internet Access + 100 video Channels
$15 for very low usage of Fixed Voice services (including 1 HD) + unlimited VoIP calls
Business Business
For around US$ 4000/month: For around US$ 500/month:
2 Mbps download and 1 Mbps upstream Up to 10Mbps for business located in remote areas
Internet access High speed Internet Access viable for video
With Service Level Agreement conference, e-commerce, etc…+ 100 video Channels
(including HD) + unlimited VoIP calls
1st June 2012 www.tra.gov.lb

9. Since the launch of DSL in June 2007, this market faced a lot of
bottlenecks hindering the wide adoption of true broadband services
Anticompetitive behavior from the incumbent
Incomplete Reference Access Offers
Unfair access to Central Offices Only 20% Line Sharing
No switchover procedures
DSPs not connected to all ISPs
Unavailability of a true high speed and a high capacity National NGN Backbone Network
Limited fiber optic coverage
Current expansion and modernization of PSTN national transmission network to lay-
down a fully meshed fiber optic network of 4,400 km of backbone is underway
Saturated transmission network despite the latest upgrades
DSPs and ISPs are still connected by a maximum of 100 Mbps network ; there are no
wholesale backhaul bundled offers
Lack of International Capacity
Despite the latest increases in international capacity and the major decrease in
prices, the distribution of international capacity to the private service providers requires
more transparency and fairness
24 March 2013
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10. Potential to Go
Broadband as a booster for the
National Economy
24 March 2013
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11. Next Generation applications and advanced e-services
enrich consumer lifestyle, improve business performance and
deliver value for stakeholders
Virtual
Reality
Tele-
Interactive
Interactivity Level
presence
signboards
Virtual
Tele-medicine sports
Social
Networking
Rich media Quality Video Tele-learning
Streaming
VoIP Interactive IP-
TV Next Generation TV
Browsing
Video
Email Conference
64-256 Kbps 512 Kbps - 2 Mbps 20 Mbps – 1 Gbps
Higher Speed / More Bandwidth
Actual Generation of
Narrowband Next Generation of Broadband
Broadband
PSTN, GSM, G DSL, WCDMA, HSPA+, W FTTx, LTE Advanced, Wimax
PRS/EDGE iMax 802.16e, etc. 802.16m, GPON, etc..
1st June 2012
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12. Broadband is uniquely positioned to stimulate economic
growth, business development and social welfare
GDP GROWTH:
1.38% increase per year
for every 10% point
JOB GROWTH: increase of Broadband
0.25% increase in jobs for Penetration
every 1 point increase in
Social Inclusion:
Broadband penetration Boost human capital
Improve healthcare
Create new income
Business Productivity: opportunities in the
Lebanese SMEs waste BROADBAND poor and remote areas
thousands of hours a year an Economic
due to poor connection – Booster
to illustrate: 5000 hours a Fiscal Returns: 90 million
year represent a loss of USD per year for every 10%
US$ 250,000-US$ 500,000 point increase of Broadband
Penetration
Brain Drain: less youth Government Revenues: new sources of
migrate overseas with revenues to the GoL will be generated
Lebanon as a hub for (auction proceeds, RTU fees, RoW
communication fees, revenue sharing …)
Sources: Economic & Fiscal Impact of Introducing Broadband Networks and Services in Lebanon – World Bank 2009
24 March 2013
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13. The digital divide between Lebanon and the MENA region is
particularly deep in terms of environment, infrastructure and
government usage
Political and Regulatory
Environment
7
Business and Innovation
Social Impacts 6
Environment
5
4
Infrastructure and Digital
Economic Impacts 3
Content
2
1
Government Usage Affordability
Business Usage Skills MENA
Lebanon
Individual Usage
Adv. Economies
Sources: World Economic Forum 2012
24 March 2013
www.tra.gov.lb 13

14. Lebanon still suffers from important weaknesses in terms of ICT
development that hinder its capacity to take full advantage of the
benefits accruing from the deployment and use of advanced technologies
Lebanon’s Lebanon’s Number of
Pillars Scale
Value Ranking countries
Accessibility of digital content 4.5 1-7 94 142
Internet and telephony sectors
0.67 0-2 131 138
competition
Households with personal
31.7% N/A 72 140
computers
Internet access in schools 3.8 1-7 85 142
ICT use and government efficiency 2.5 1-7 140 142
Impact of ICT on access to basic
3.1 1-7 136 142
services
E-participation index 0.27 0-1 44 138
Sources: World Economic Forum 2012
24 March 2013 www.tra.gov.lb 14

15. Regulatory and Policy Tools
24 March 2013
www.tra.gov.lb 15

16. Aspirations towards a knowledge-based economy should focus on
two main ICT policy areas: liberalization of the telecom market
and an ICT development strategy
National ICT Strategy and Policy
Economic Diversification and
Growth
Telecom Policies ICT Industry Development
Innovation and Productivity
Sector
National Cross Sectorial Access to Education and
Liberalization Governance &
coordination vision Healthcare
Regulation
Government Modernization
Promote digital
E-education, E-
Corporatization SMP, Cyber Literacy, Social Equity
health, Smart
of LT and Mobile security, Net develop on-line
grid, E-gov,
networks Neutrality, etc. content, e-
transportation Environment Safeguard
commerce
National Competitiveness
LARGE TALENT POTENTIAL
Availability of a large, young population
Sustainable development
Develop strong local talent pools
Increased enrollment into high education and focus on training
1st June 2012 www.tra.gov.lb 16

17. The development of the ICT sector in Lebanon is hindered by a slow
decision making process and a lack of consensus on the current
policies and laws as well as future directions
Barriers to the ICT Sector
Availability
development
Affordability
Lack of political consensus
regarding the Telecom Law
431
SERVICES
USERS
Very low government
engagement in the enactment
of modern laws and policies
Usage
RELIABLE & Absence of a overarching
ADVANCED economic vision
TELECOM
APPLICATIONS INFRASTRUCTURE ICT-focused activities within
& CONTENT the government institutions
ICT MAIN are not integrated in a way to
ENABLER
fully harness ICT potential in
Lebanon
1st June 2012 www.tra.gov.lb 17

18. The liberalization of the telecom sector requires the elimination of
existing bottlenecks and the development of competition within an
enabling regulatory framework
Ensure service based LT Abundant national
Main driver for
competition NGN networks and international
infrastructure based
Mobile Licensees
competition capacity
Long term licenses to High grade of
Ensure infrastructure ISPs and DSPs services
based competition MVNO Competitive prices
Infrastructure based
competition
Open access regime on essential facilities owned by
dominant players (local loop, backbone, etc…)
Enforce Regulation
Access to Public Property & Rights of Way (duct sharing HEALTHY AND
on Service Providers FAIR
reduces around 70% of the cost of laying fiber)
with SMP COMPETITION
structural separation between wholesale and retail
segment of vertically integrated players
Create a healthy corporate structure (in terms of human
Complete the and financial resources)
corporatization & Reinforce position on the market
Healthy and fair
subsequent licensing competitionvalue on the market
Increase
of Liban Telecom Pave the way for a healthy retail versus wholesale
corporate identity
1st June 2012 www.tra.gov.lb 18

19. Since its establishment, TRA has been working extensively on setting a
regulatory framework that would ensure successful telecom sector
development
Drafting Stage Draft Ready Stage Final Review after Awaiting Board Sent to MoT – Need to Issued
consultation approval transfer to State Council
Access to the VOIP Policy Spectrum Refarming Access to Information Licensing Regulation SMP Regulation
Local Loop Statement and Packaging Plan Regulation
Regulation Spectrum Decisions:
National Roaming Liberalization Roadmap New building Management & • VSAT,
Accounting Requirements for Licensing Regulation • Trial IPTV
Separation Broadband Licensing BB delivery services • Spectrum trial
Regulation Plan Consumer Affairs Allocation for MoT
Digital Migration Regulation • Interim licenses for ISP
Universal Service Technical requirements Strategy for TV and DSPs (+ extension)
for NBCLs Broadcasting Plan Class and Frequency • Licenses for
CS / CPS License fees Trisat, LCNC and MADA
Pricing Regulation Improving FM regulation
Broadcasting Interconnection
Interconnection National Numbering Regulation
Sent to MoT- Need Interim Pricing Plan
CoM decree Decision Type Approval Regulation
Numbering Regulation
Study on the Use of
Public Property Emergency Quality of Service
Communication Plan Code of Practice for Regulation
Draft RTU Fees & SAC VAS
Decision for establishment
decree
EMF Regulation of call centers
Rights of Way Draft
Decree Lebanese National
Frequency Table
1st June 2012
www.tra.gov.lb 19

20. Sustainable policy and empowerment of the TRA are essential to ensure
successful telecom/ICT sector development and highest benefits to all
stakeholders
Investors
Investment
opportunities
Lower risks
Regulated
environment
Empowerment of TRA Broader range
Telecom Fair treatment 1-Full transfer of regulatory functions of services
Operators Fair competition 2- Staffing and organization Lower prices Consumers
Better quality
3- Nomination of Board Members
of service
4- Financing
New and recurrent
revenue streams
Economic boost
Government of Lebanon
1st June 2012
www.tra.gov.lb 20

21. Some demand-side promotion policies should be encouraged and
adopted by the Government to stimulate growth of e-services
Raising public awareness on benefits of e-services and promote their use
Promote Governments providing training on the use of PCs and Internet
digital literacy Digital literacy program integrating both demand and supply sides (i.e. financial support
to schools for network construction and broadband use)
Subsidize low- Policies aiming at making user devices more affordable
cost user Wide range of policies to be adopted for subsidizing CPE: from complete government
devices subsidization to private initiatives.
Have Computerizing public information and providing e-government services
government
serve as an E-government also encourages citizens to subscribe to broadband services and provides
anchor tenant businesses with more information
Develop Governments should support content and media development in local languages, with
online content
and media locally relevant content.
SMEs, representing most of the private sector, often lack understanding of broadband
Encourage impact or cannot afford it
businesses to
use e-services Special policy measures for SMEs: free/low-cost applications, tax breaks for investments
in ICT and Web-based services, tax cuts to ICT related businesses
24 March 2013 www.tra.gov.lb 21

22. THANK YOU