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Discussion Starter · #1 ·
New service may be a huge disappointment

New service may be a huge disappointment
Plans will be cheaper, but speeds will be average at best

By Helen Assaf
Special to The Daily Star
Monday, April 16, 2007

While the rest of the world has embraced the popularity of video sharing sites such as YouTube with gusto, Lebanon's Internet users have undoubtedly felt the frustration of trying to watch videos on average connection speeds of 56k on dial-up and 128k on broadband. Watching videos online requires a minimum of 256k, but if consumers think that once DSL gets here fast speeds will be the norm, it's time to think again.

"The problem is that DSL will start at a lower speed than what is offered on the market today. So people tend to get confused, they think DSL will be in 10s of megabits," said Rony Kaddoum, general manager of Pesco Telecom. "The starting plan will be relatively cheap at something like $23 but the speed will be at 128k." In comparison, the wireless residential service that Pesco currently offers starts at 384k and 512k. "So yes the starting package for DSL will be cheaper than today's wireless but it will start at 128k which is much lower than what today's market is used to." The upside is that while speeds start at 128k, consumers who today pay for 126k will find they can pay the same price for 512k under DSL, said Patrick Farajian, chairman and CEO of Sodetel.

However, with DSL working on a fixed telephone line, to access the services, subscribers will need to apply for a fixed line if they don't already have one in their home. Although Maroun Chammas, executive director of IDM, finds the installation fee for a fixed line "not outrageously expensive," Zuhair Berro, president of Consumers Lebanon, described it as illegal: "It used to be LL600,000, then they made it LL400,000 and now it is around LL200,000."

Chammas estimates that there are around 600,000 existing subscribers to fixed lines, including businesses. Berro puts the number at 450,000. Both he and Chammas said that in the past some consumers had stopped subscribing to fixed lines. Chammas ascribed this to a desire to save money among those who also owned a mobile phone. Berro put it down to the expense, citing the fact that after paying the installation fee, consumers have to pay a minimum subscription every month and then LL49 per minute for phone calls on top. "Many people stopped their lines because it is too much," he said. Chammas, however, thinks those who stopped it in the past will go back to having a fixed line for DSL.

Unlike dial-up, DSL works so that when the Internet is in use, the telephone line can still be used. This is thanks to the DSL modem, which needs to be installed before use to ensure that the frequency between voice and data is cut so that data goes to the computer and voice to the phone.

Even once it is released onto the market, a question mark remains over how quickly consumers will be able to access services. Farajian foresees two possible reasons why subscribers might have to wait longer for DSL: One is if the service is not available in their region (Farajian estimates that about 65 percent of Lebanon will have coverage in the first year). The other is if there is a rush for the service (in which case it will be delivered on a first come, first served basis). Based on the latter, Farajian urges people to submit applications through Sodetel's Web site as they will be given priority once the service is launched. Looming large in this debate is the news that Ogero has promised ISPs to connect only 20 to 25 customers a day.

With a slow rollout in the cards, some in the sector, like Hassane Mroue, CEO and general manager of Angel Wireless, may have good reason to be cynical. "I don't believe we will see DSL," he said. "I don't know why they are delaying it so much. Maybe for one reason, for the wireless networking and ISPs like Mobi or Wigo ... When those capture the market, what is the use of DSL?" Mroue's point is that Mobi has the advantage over DSL in that it offers mobility and is more advanced in terms of technology. "If they had launched DSL a year ago then Mobi would have had a lot of trouble entering the market and would have taken a small share," he said. Mroue considers Mobi a successful product meant not for today but for four years from now. "The advantage of the technology of Mobi is that it is going to get married with GSM; it will become the same device delivering voice, data, video, TV, one and the same device," he said, adding that the problem for such technology lies in a lack of legislation.

While the technology of the future awaits legislation, DSL legislation is in place but the public is still waiting. The golden question is for how long? Farajian said he is sure that DSL will be here in summer and that all parties are serious: "I don't see any reason why it wouldn't even if there is political turmoil."

"It's reasonable to assume it will be in ... June or July if nothing happens," said Kaddoum. "Now I can see the light at the end of the tunnel." Hopefully it won't be too long before subscribers see that light, too.

659 Posts
Discussion Starter · #2 ·
^^is it really that complicated to have ADSL internet in Lebanon :S i mean it must be the only country in the region without ADSL which is weird, knowing that Lebanon was one of the first middle eastern countries to introduce internet back in the 90's!!

Son of the cedars
7,958 Posts
But we have the wireless DSL,we r the 1st country in the region to provide it.
DSL will be operative in lebanon from may 5th.not in summer like the article above saying.

Son of the cedars
7,958 Posts
DSL: State says public won't be on hold much longer
An internet sector in crisis is pinning its hopes on a new and untested regulator
By Helen Assaf
Special to The Daily Star
Monday, April 16, 2007

"DSL is coming." It's a phrase that can elicit raised eyebrows, smirks of derision or serious belief depending on who you talk to. For context, it's important to know that the Telecommunications Ministry planned the first DSL pilot project in 1999. The project was shelved in the political fallout of a change in government but eight years later, the country is still waiting. Even more ironic perhaps is the fact that according to the ministry, the infrastructure and framework are all in place and the service could have begun to be offered, at least from its side, four to six months ago. The reason it didn't offer the service when it could was to avoid having an advantage over the private sector or a "misuse of monopoly," according to Abdel-Monhem Youssef, director general the Telecommunications Ministry and of Ogero, the state-run fixed-line telephone company.

If the public is awaiting DSL with an eagerness sharpened by eight years of dashed expectations, then the private sector seems just as eager for the state's monopoly of the sector to give way to liberalization. It too has had a long wait. Youssef was keen to point out that Internet services opened to the private sector completely in 1996 and that Lebanon was the first Arab country and one of the few countries in the world to begin private sector Internet services in 1994. But behind this rosy picture of free market activity lies the hard fact that from the beginning until now the state has held a monopoly on the sale of international bandwidth or access to the uplink.

The repercussions for the private sector and the public have been enormous. From the former come complaints of overpricing and delays caused by bureaucracy as well as a proliferation of illegal private sector activity.

"If with such a situation and such a monopoly position the ministry would have at least elaborated a policy and defined regulatory principles it would have been acceptable, but the catastrophe is that they decided that they are the only people who have the right to define the policy and principles for regulation but they never did," said Riad Bahsoun, CEO and general manager of Telecommunication Information Technology. "This opened the large highway for illegal providers, using any kind of infrastructure transmission support to provide illegal Internet services."

"Many times, over and over again, every other year, Ogero and the government go and cut the cables and stop that business," said Rony Kaddoum, general manager of data-service provider Pesco Telecom. "But again it's so difficult to control. Weeks later they flourish again and pop up like mushrooms." Unlicensed Internet service providers (ISPs) - and there are dozens of them - tend to get their bandwidth directly, and illegally, through satellite dishes, added Kaddoum.

Maroun Chammas, executive director of Internet service provider IDM, said that the issue was mainly due to government pricing as it used to charge very high fees. "Now [that] the government has lowered their fees, it doesn't make commercial sense," he told The Daily Star. Like Kaddoum, he sees the advent of DSL as a final nail in the coffin of illegal activity since it will make Internet available to the public at low starting fees.

For its part, in April 2006 the ministry decreased the cost of international bandwidth by 70 percent. Prices are now the lowest in the Middle East, according to Youssef. "We don't have the will to lower them further," he added. "They are very low."

While some, like Bahsoun, are highly critical of the insufficient quantity of international bandwidth available to the market, the ministry is confident that it has taken steps to ensure that current and future needs will be met. Youssef pointed to the signing last month of a pact to join the new I-ME-WE submarine cable, as well as a second agreement with Telecom Italia and Cypriot operator Cyta concerning a cable between Cyprus, Italy and New York. These two contracts, along with the upgrading of existing cable Cadmus and other capacity enhancements, will "offer Lebanon its bandwidth needs for the next 10 or 15 years," he said.

In addition to lowering costs, Youssef said that the application process for bandwidth had improved and that it now takes one month for international bandwidth applications to be approved, a length of time he described as "fast." Some sector players don't share Youssef's estimation or agree that one month is a fair time to wait. Chammas pointed to Jordan, where it takes 24 hours, and Saudi Arabia, where it is approved overnight. "Today as an ISP if we want to get international bandwidth, if we go and submit an application to the ministry, the average time it takes is three months. The best we saw ... was one month and that was exceptional but usually it's between three and six months," said Chammas. He attributes the delays to the lack of bandwidth and an "extremely heavy" procedure that requires paperwork to pass between four or five different departments at the ministry before being signed by the general director.

Patrick Farajian, chairman and CEO of Sodetel, which is 50 percent state-owned, refused to be drawn on the quickest period that it had taken to get new international bandwidth approved but agreed that it varies and that the longest had been a "a few months."

But amid a climate where the ministry retains, at least for the time being, a monopoly on the sale of international bandwidth, sector players remain unsure as to the extent of improvements that can be expected. "We're living in a kind of funny situation between a state monopoly and a fully deregulated market but there are still no laws yet for deregulation, so for all practical purposes it's still a state monopoly," said Kaddoum. "Even if you have four different data service providers (DSPs) and ISPs, if we all are buying the commodities from the government and reselling [them], we could end up being resellers for the local ministry and that would be worse than a clearly stated monopoly as that would be a disguised monopoly. And until the Telecommunications Regulator Authority (TRA) becomes really effective, the minister and the director general of the ministry should be really keen and conscious and aware so that this doesn't happen."

While the ISPs have been getting by despite the limitations imposed by a state monopoly on bandwidth, the knock-on effects for users have resulted in complaints that mainly revolve around connection speeds and quality, as well as poor service from ISPs.

"The real speed is very, very bad and it stops frequently," said Zuhair Berro, president of Consumers Lebanon. "ISPs have all kinds of problems because they oversubscribe their numbers. At certain times of the day you can't work with it."

"We commit to what we advertise so when we say we offer a company a one megabit per second connection, we truly offer that," said Farajian, but he added that some his company's competitors do indeed oversubscribe.

ISPs often bear the brunt of customer dissatisfaction since they are the end-users' first and only point of contact. What end-users should know, though, is that although the ISP is the one selling them their connection, there are multiple actors that collectively determine whether a connection is up to standard.

"We cannot disassociate ourselves from the current economic costs and technical issues that exist in Lebanon," said Chammas. "If the international exchange of the Telecommunications Ministry goes down, we go down and there's nothing we can do." He added that in a developed market, quality of service exists but that the concept of standards is not defined yet in Lebanon.

And it's not just the ministry and ISPs that play a role in quality. ISPs work with DSPs, which provide the technical side of the service. Kaddoum gave the example of a residential user who pays $50 a month to an ISP for Internet service. That ISP's back office will then call a DSP to connect them and pay the DSP their cut of the $50. "The end-user is buying two things," said Kaddoum. "He is buying the communications plus Internet so the ISP is packaging the service made up of the communication plus Internet access. In other countries the ISP does it all." Kaddoum explained that the DSPs operate on frequencies that have been allocated by the ministry. While the number of ISPs has fluctuated in tune with market dynamics, the number of DSPs has remained limited. "It is much easier to acquire an ISP license today than a DSP license," said Kaddoum. "Because if you are a DSP you need to acquire spectra [channels] from the government, and this is a very scarce resource."

Off the record, some industry players raise questions over the extent to which DSPs are backed by political interests in limiting the carving up of the financial bounty of such resources. Kamal Shehadi, chairman of the TRA, was quick to discount the accusation from one industry source who suggested that existing DSPs had been handed their frequencies free of charge. "They have to pay 20 percent revenue sharing to the Telecommunications Ministry. They also paid a fee of LL100 million for the frequencies," he said. Although Shehadi would not speculate on the value that any new frequencies might fetch when auctioned in the future, others have suggested that it could be in the region of several hundred million dollars - a sharp contrast with the LL100 million the government pocketed from DSPs in the past.

Auctioning off frequencies is just one of the many tasks that now reside under the aegis of the TRA. Chammas sees the work of the authority as very challenging but like others in the sector looks forward to the improvement in quality of service and speed that will follow as a result of deregulation.

"There is no room for cynicism," is Shehadi's straightforward response to suggestions that some skepticism may linger over whether the TRA can put the sector in order. "Are you asking me if I am absolutely confident that my colleagues and I on the board will do our job? Of course," he said. "Why else would we have accepted? Politics will not interfere in our work. Not with the recruitment, not with the decisions on licensing - politics cannot interfere at all."

But while the government has made it clear that it wants to privatize its state-owned entities in the telecoms market, Shehadi warned that the TRA's ability to bring the benefits of competition to the end-user would depend on how soon that privatization takes place. Unfortunately, tangible progress on that front is yet another waiting game the public has grown only too familiar with. Shehadi believes that the only thing that will convince the most hardened of cynics is results. The latter is something that Lebanon eagerly awaits.

2,204 Posts
Minister announces Lebanon will launch DSL next week
'It's a start,' says hamadeh of planned 100 lines
By Michael Bluhm
Daily Star staff
Friday, May 04, 2007

BEIRUT: The long-awaited and oft-delayed rollout of DSL high-speed Internet is set to begin next week, with Internet subscribers in the country's most-populous quarters scheduled to gain access to working DSL connections this month, according to the Telecommunications Ministry. Monopoly telecom provider Ogero will hook up Internet service providers (ISPs) for the DSL network next Monday and Tuesday, while Telecommunications Minister Marwan Hamadeh will hold a public ceremony for the launch a few days later, Hamadeh said.

"Next week we'll have the first 100 lines in operation," Hamadeh told The Daily Star on Thursday. "It's a start."

Internet service provider IDM, for example, will begin on Friday signing up customers who live in Jounieh, Tripoli Mina, Zahle and Saida, as well as in the Beirut areas of Mina al Hosn, Riad al Solh, Achrafieh, Ras Beirut and Bir Hassan, said IDM executive director Maroun Chammas.

In addition to the above nine locales, other areas in Greater Beirut and Jbeil are scheduled to be connected by the end of May. In all, DSL connections will be available in 23 of Lebanon's 200 telecommunications districts, known as central offices, by the end of May, Hamadeh said. In June, another 13 central offices will tap into the DSL system, including outlying regions such as Akkar, Hamadeh said.

He said the ministry plans to create 45,000 DSL connections this year and another 100,000 next year, but questions remain as to how the ministry will reach such a figure. The ministry's goals for DSL penetration far exceed Ogero's capacities, while the recently founded Telecommunications Regulatory Authority has vowed to ensure that demand for DSL is met in a timely fashion.

Ogero has told ISPs that Ogero will be able to set up 50 connections per day, which would allow at most 7,000 users access to DSL this year, Chammas said. Hamadeh promised that the ministry would take the necessary steps to meet the projected level of demand, while TRA chairman Kamal Shehadi made clear the regulator would intervene to compel the ministry to disseminate DSL service rapidly.

"We will be taking any measures necessary, including corrective measures, in the coming weeks," Shehadi said.

Hamadeh said the ministry has plans to increase the number of workers installing DSL according to demand, which should soar with DSL prices slated for levels competitive with the rates now paid for the illegal and unreliable satellite connections used for up to 30 percent of Lebanon's Internet connections.

"Tariffs are going to be low - that's why we have to expect to have a big demand and that's why we have to get more [installation] teams," said Hamadeh. After years of delays, ISPs said they remained wary, but would wait to see how the pilot connections turn out in the coming weeks.

"DSL is not a simple technology," Chammas said. "Obviously, there is going to be a lot of troubleshooting at the beginning. The project is now starting to see the end of the tunnel."

Widespread access to high-speed Internet could provide a much-needed boost to the country's moribund economy, which has missed out on "major opportunities" because of its feeble IT infrastructure, said Carol Hage, sales manager at the ISP Terranet.

"We used to be sad when international companies would come to Lebanon and find out there's no DSL and Internet is expensive," she said.

The ministry had planned to get DSL under way last October, but the summer 2006 war with Israel delayed improvements in the undersea cable connecting Lebanon to the Internet and enabling the service.

Son of the cedars
7,958 Posts
Beirut introduces affordable high-speed Internet

Beirut introduces affordable high-speed Internet
By Michael Bluhm
Daily Star staff
Tuesday, May 15, 2007

BEIRUT: High-speed ADSL Internet officially arrived in Lebanon Monday, as Premier Fouad Siniora and Telecommunications Minister Marwan Hamadeh welcomed the most populous areas into the ADSL network. Monday's ceremony was largely symbolic, as one week ago the country's Internet service providers (ISPs) tapped into the new lines installed by monopoly telecom operator Ogero. So far, the service covers 10 telecom districts, known as central offices: Riad al-Solh, Achrafieh, Karantina, Ras Beirut, Mina al-Hosn, Bir Hassan, Jounieh, Zahle, Sidon and Mina in Tripoli.

Customers in these areas who order now will have to wait one to two weeks for installation of the service, which uses existing analog phone lines to establish an uninterrupted connection while still allowing for simultaneous phone conversations.

The service has rolled out at prices rivaling those for unpredictable dial-up connections, and ISPs reported brisk demand for ADSL since they started accepting applications last week.

The ado accompanying ADSL stems not only from its competitive pricing, but also because many countries have seen their economies goosed by the multiplier effect of providing widespread access to high-speed Internet.

"Lebanon was outside the knowledge economy, and now it enters it through the front door," said Hamadeh.

The dynamics of ADSL in Lebanon also have to take into account rampant piracy, as roughly 30 percent of all Internet connections go through illegal satellite providers. To fight piracy and reap the economic benefits associated with ADSL, all parties' concerned stress the key factor will be how quickly ADSL can be made available to as many people as possible.

"The most important thing is how fast we deploy," said the provider's executive director, Maroun Chammas. "I'm sure it's going to help the economy."

The next round of central offices, slated for connection in mid-June, includes Mazraa, Ras al-Nabeh, Zouk, Antelias, Jal al Dib, Mazraat Yachouh, Qornet Shehwan, Broummana, Mansourieh, Dbayyeh, Badaro, Adlieh and Jdeideh. Twelve more central offices have been tabbed for ADSL this year: Tripoli Tell, Dora, Sin al-Fil, Hazmieh, Dekwaneh, Mreijeh, Amrousieh, Elissar, Aley, Choueifat, Damour and Shiyah. Next should witness about 60 more central offices, such as Baalbek, the Bekaa and the rest of the South picking up the service, which would mean 90 percent of the nation's active phone lines would have access to ADSL connections.

To hasten the spread of the product, ISPs have been pressuring Ogero to increase its capacity to connect new clients. Ogero has promised to hook up 50 customers per day, while Hamadeh told The Daily Star he will take the steps to meet the ministry's goal of 45,000 connections this year. Looking over the ministry's shoulder will be the recently established Telecommunications Regulatory Authority (TRA), which has issued its input on how it expects the rollout to proceed.

"For this service to be launched on a sustainable basis a lot more needs to be done," said TRA Chairman Kamal Shehadi. "This is just the beginning of a long process before we can say we have nationwide ADSL coverage."

ISPs and Ogero are offering ADSL for an installation charge of $38 and monthly fees based on connection speed: 128 kilobits per second (kbps) at $23.90, 256 kbps at $33.90, 512 kbps at $46.90 and 1 Mbps at $76.90, with respective monthly caps of 2GB, 3GB, 4GB and 5 GB of free monthly traffic.

659 Posts
Discussion Starter · #8 ·
DSL: A government achievement or 'disaster'?
Internet service providers say state is engaged in unfair competition with private sector
By Osama Habib
Daily Star staff
Monday, July 23, 2007

DSL: A government achievement or 'disaster'?

BEIRUT: A few months ago billboards were erected on highways across the country announcing that the much delayed Internet revolution had finally arrived in Lebanon. Successive governments had been promising the arrival of broadband Internet since 2001, but it was not until this year that limited DSL subscription was finally unrolled in selected neighborhoods.

Broadband has been trumpeted as the solution to Lebanon's IT woes for the past five years. Not only would replacing the antiquated dial-up IT infrastructure with DSL allow more users to be accommodated - boosting the lackluster penetration rate which has long hovered at 15 percent - but the Telecommunications Ministry's pledge to allow independent Internet service providers (ISP's) to compete with the state-owned telecom monopoly Ogero in service provision would supposedly lower the country's sky-high subscription rates.

But so far the introduction of DSL has yet to bridge the national "digital divide," since the state has not relinquished its stake in the IT sector enough to promote the competition necessary to bring down cost and increase the quality of service.

All successive governments since 2001 promised to introduce DSL at affordable rates, but officials always came away with different excuses for the delay such as poor infrastructure or the absence of bandwidth and cables.

But in January 2006, the Telecommunications Ministry and the state-controlled OGERO Telecom company finally drafted a memorandum of understanding and persuaded the main Internet providers to sign this agreement to bring DSL to Lebanon.

Desperate to launch DSL, most of the Internet service providers inked the memorandum, but many now say that under the terms of the agreement, OGERO has been given an unfair advantage in the small Lebanese market.

The memorandum stipulates that the Telecommunications Ministry and OGERO are to compete with the private sector on equal footing. The agreement also stresses that both the ministry and OGERO would not abuse their dominance in the market to weaken the private sector.

But many service providers say OGERO has an unfair edge over the competition, since the company maintains ownership of key infrastructure, such as land lines.

"The competition is rather unfair," one Internet service provider (ISP) told The Daily Star. "OGERO has more than 700,000 land lines and this means that they can provide the DSL service much quicker to the users."

It is estimated that OGERO has acquired between 3,000 and 5,000 DSL subscribers since the service was launched less than three months ago, whereas all of the country's ISPs combined have acquired fewer than 1,000 DSL customers.

Some telecom experts such as Riad Bahsounm say that it is illogical for a state-owned entity to be competing with the privately owned ISPs.

Bahsoun believes that the launch of DSL started with a miscalculated step. "You can't treat a patient with an aspirin all the time. The DSL solution which was launched by the current government, which claimed that Lebanon entered the IT know-how era, is a disaster," Bahsoun said.

He added that the DSL offered in Lebanon cannot even be considered broad band because it is too slow compared to other systems in the world.

"In Lebanon, the state is the only merchant which buys and sells bandwidth in the local market," Bahsoun said.

He added that some of the ISPs buy and install the bandwidth illegally. "Some of the ISPs buy some bandwidth from the state to cover up for their illegal purchase of this bandwidth from different sources," Bahsoun said.

He added that the Lebanese government does not have sufficient bandwidth to meet local demand and has even negotiated with Cyprus to buy one extra Gigabyte of bandwidth.

"The DSL in Syria is operating at under 1.8 Gigabytes while Lebanon is using a few hundred Megabytes," Bahsoun said.

According to Bahsoun, the number of DSL users in Syria is close to 700,000, and the service is less expensive than it is in Lebanon.

He emphasized that the DSL subscriber may not take full advantage of a DSL connection because there are lot of people connected to the same line, making the service tediously slow at certain hours.

"In some instances, you may share a 128-DSL connection with 50 people in certain hours. It all depends on your luck," Bahsoun said.

Bahsoun also said that the state, which is represented by the Telecommunications Ministry and OGERO, is handling the issue of DSL without coordinating with the Telecom Regulatory Authority, an independent body responsible for monitoring the market to ensure compliance and quality of service.

Bahsoun estimated that the Finance Ministry is collecting around $800,000 per year in revenues from the DSL and Internet business in Lebanon.

"We could easily have over 600,000 DSL users in Lebanon if we had real open competition and allowed any ISP to buy the bandwidth from abroad and without any restrictions," he said.

Bahsoun also criticized the fact that DSL services are offered with a cap or limit on the number of gigabytes that customers can download. He explained that other countries that are considered IT developed allow DSL users to download as many files as they want. "Qatar for example has 4.8 gigabytes for a population of 700,000 and this huge bandwidth permits the user unlimited downloads."

Some ISPs also complain about the prices being offered by the ministry. "Pricing of the services was a political stunt aimed mostly at demonstrating government and ministry achievements - one of too few - rather than the actual provision of such services to the public," said one provider, who spoke on condition of anonymity.

One provider also charged that the prices offered to the end users in Lebanon are too cheap and do not cover the ISPs' main expenses of offering the service.

He added that in order to offer Internet services at such low prices, the quality of service will be compromised given that the costs are high relative to price. "Simple calculations indicate that E1 [bandwidth 2Mb/s] cost to ISPs stands at $2,600 per month, which when divided by 8 gives a 256k service that would have to be shared by 10 to cover the cost of Internet only, let alone to cover network investment, maintenance, staff to provide good efficient service, customer help desks as well as marketing costs," one of the providers said.

He added that in order for providers to meet costs, they will have to make 30 to 40 customers share a connection at early stages of the service. Although this number will come down if the number of subscribers decreases, it will never be less than the 10:1 ratio, he said.

Some of the providers say that until very recently, the price of E1 stood at around $16,000.

"This [price] was by far the highest in the region if not in the world. Under pressure from the private sector to lower capacity prices hence to pass savings to consumers, the Ministry of Telecommunications/OGERO dropped prices almost six-fold to $2,600/E1. Still such prices are relatively higher than in other places in the region and Europe where prices stand at $400/E1."

The provider stressed that the presence of the ministry and OGERO in the market constitutes unfair competition with the private sector, since both the ministry and OGERO have extensive and powerful marketing throughout the country and are better equipped to access potential customers.

The provider also claimed that both the ministry and OGERO, like any other public/government organization, have no cost-accounting structure. "In other words, revenue is not balanced against costs. This may be fine for the DSL user now, but at some stage such a system and under privatization is expected to collapse," the provider said.

Other providers expressed similar views. "Abdel-Menhem Youssef, the director general of OGERO, repeatedly said that DSL represents a small percentage of the ministry's revenues. If this is the case then why would OGERO and the Ministry compete with the private sector in such a manner?" another provider asked.

He warned that such practices by OGERO are likely to put some of the ISPs in the red, hence removing the Internet service quality long enjoyed in Lebanon and killing off any prospects of new investment in the sector.

The provider also agreed that well before the introduction of DSL, there was a shortage in the market for international capacity such as bandwidth and broadband. He added that OGERO booked 53 unused E1s for itself while ISPs have applied for more than 150 E1s and been provided with only 30 E1s.

One provider said that when Internet services were first offered back in 1994, the incumbent minister of telecommunications sought to be an infrastructure provider for ISPs and not to enter the ISP business. "This has changed with DSL," he said, adding that the ministry and OGERO were now using their "dominant position ... to stifle the private sector."

He added that the Telecom Regulatory Authority (TRA) has a duty to protect ISPs and DSPs and their investments, to ensure fair competition.

"So far, for political reasons and the inability to operate, the regulator has stood aside watching. Who will stand up and save the private sector and investments?" he asked.

But Kamal Shehadi, the chairman and CEO of the newly established TRA, explained his position on the issues raised by the ISPs. "It is good that DSL was launched and there are always sources of friction in any country when the DSL or any service is introduced in the beginning," Shehadi said.

He added that introducing DSL is a complex matter that needs time to fully address.

"All over the world, DSL was introduced gradually," he added.

He admitted that there were some matters regarding DSL that should have been pursued differently, but added that the TRA is addressing these issues. "The TRA is currently working on ground rules for the DSL in Lebanon and these guidelines will be submitted in the near future," he said.

He added that the TRA will review, assess and make amendments to the DSL memorandum if the need arises.

"If the question is will the introduction of DSL go down in the annals of history, then the answer is no. But nevertheless the launch of this service at this particular time was an achievement," Shehadi said.

He added that this is the first time in Lebanon's history that a ministry had managed to offer DSL, even before transforming OGERO into LibanTelecom, a first step in privatization.

"The DSL in Lebanon is a double-edged sword. You can look at it as solution and you can perceive it as a problem at the same time," Shehadi said.

Shehadi explained his argument for the DSL prices in Lebanon. "There are prices for the end users and there are prices to the Internet operators who then sell them to the end user."

He added that the prices offered to the end users are based on administrative decisions. Shehadi acknowledged that some of the prices offered to the end users were not discussed with the ISPs. He added that usually the operators negotiate the prices of DSL with the ministry.

"You should understand that the ministry operates differently from a corporation and that's why the prices were not discussed with the operators."

He said that the prices offered to the end users should be based on the cost of the bandwidth.

"Because it is a monopoly service and there are no alternatives, the basic principle is that the service should be offered at cost," he said.

He added that the ministry has been unable to calculate its cost for launching DSL. "We [TRA] have suggested two proposals and are examining each of them," he said.

He added that the TRA wants to release what it terms as unbundling guidelines which stipulate that the Telecommunications Ministry and the private sector will re-negotiate a new contract for the DSL, including new prices.

"Second, the TRA will be studying the prices of the DSL service and evaluate the benchmark for the launch of the DSL," he added.

In Shehadi's view, the prices offered to the end user in Lebanon are similar to those offered in other countries in the region.

"But the prices of services offered to the private sector are much higher than they should be, and there should be equal treatment between the data providers and OGERO."

He added that no decision by the TRA can change that price structure if LibanTelecom is not established soon.

In other words, the ISPs must wait for the creation of LibanTelecom before re-negotiating new prices for the DSL bandwidths.

"We will look at the guidelines and have a good look at the current prices before issuing our guidelines," Shehadi said.

He added that once the TRA completes its study, the providers will then come to the TRA and say whether the proposed prices are reasonable.

"We have also recommended that both the ministry and OGERO should not be in the playing field of the DSL business," Shehadi emphasized.

He added that the fairest way to ensure competition in the end-user market is for the ministry and OGERO not be in the ISP business.

"Had the ministry been corporatized in LibanTelecom, we would have put these remedies in place very quickly," he said.

He added that while the TRA is implementing the medium- and long-term plans for DSL in Lebanon, the TRA and the Telecommunications Ministry will work jointly on short-term measures that will preserve the viability of the telecommunication market.

"We have to open up the international gateways because that would relive the pressure and create more competition in the market."

He rejected the notion that the government only launched DSL to boost its image. "The question that should be asked if the ministry was badly advised on the issue of DSL. The most important thing to me is what we should do now," Shehadi said.

For his part, Abdul Minum Youssif, the director general of OGERO, assured the ISPs in a recent meeting that OGERO is assessing the performance of the technical service delivered by DSL.

He also stressed that OGERO does not discriminate between one ISP and another.

"It is natural for the land line telephone subscribers to call OGERO for the connection of the DSL because we have 700,000 land lines," he said.

He also promised to meet the needs of the ISPs as soon as possible.

Memorandum of understanding

BEIRUT: The Ministry of Telecommunications (MoT), OGERO and the country's Internet service providers (ISPs)engaged in lengthy negotiations before the launch of DSL this year and signed a memorandum of understanding outlining the terms under which DSL would be offered in Lebanon.

The MOU was seen as a launching pad for the highly anticipated high-speed Internet connection, although some of the providers now say that the memo has lot of loopholes and should have been negotiated more thoroughly.

It is worth mentioning that all successive governments promised to launch DSL since 2001 but none of them translated their pledges into concrete action.

Memorandum of Understanding

Back in January 2006, under the auspices of Minister Marwan Hamadeh, an MOU was signed between the MoT and the private sector that heralded a new era of private-sector involvement in the development of telecommunications in Lebanon. The MOU laid down conditions for the launch of DSL in Lebanon, creating a framework for a joint effort between the public sector and the private sector. The ISPs, including Terranet, Cyberia and IDM, signed the deal as did the DSPs, including Cable One, Pesco and GDS.

The MOU outlined key criteria that were to be met in order to ensure success:

1. MoT/OGERO are to compete with the private sector only on equal footing

2. MoT/OGERO shall not abuse its dominance in the market to weaken the private sector

3. MoT shall ensure that international bandwidth/capacity (the Internet pipe) would provide sufficient capacity for all operators in order to meet market demand

4. International capacity rates shall be competitive and would be much reduced

5. Charges by MoT for use of its infrastructure are not to kill competition but to encourage it in order for the IT sector to prosper

6. Services are to be universal and offered all around the country

The private sector was to make a huge investment in equipping MoT central offices with its own equipment while the MoT was to offer co-location rights (space), use of facilities and transmission.
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