July
1999
Lebanon
Master Report
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Lebanon Master Report |
I - General background
In spite of the long lasting war (1975 – 1990) and the challenges of the reconstruction, the economic system of Lebanon has maintained its free market orientation. This system is characterised by extremely liberal commercial tradition and has always been marked by:
However the basic infrastructure and public services have always been provided by the central government. This applies of course to the telecommunications infrastructure.
Until the year 1996, the ministry of Posts and Telecommunications (MPT) had the upper hand over every single project relating to the infrastructure, its maintenance and extension, its modernisation and its upgrading. The government instated in October 92 (first cabinet of prime minister HARIRI) however it showed a clear willingness to introduce structural reforms. These reforms, especially in the telecommunications sector, were deemed necessary and essential to generate substantial revenues through the development of the sector activities and services.
The BOT scheme was considered the best way to reach this objective. This scheme was a topic of hot public debate as it has to take into account the social and cultural peculiarities of the general public and in particular their perception of the role of the state in conducting economic affairs.
2. Institutional structures in charge of the regulatory issues
2.1. Ministries in charge of the telecommunications issues
In spite of this, the sole and only authority deciding in matters relating to posts and telecommunications is the Ministry of Posts and Telecommunications (MPT). This ministry is composed of two general directorates and is organised according to the French-type of ministries. The highest decision maker being the general director under the authority of the minister in charge.
However, because of the urgency needed in speeding up the administrative process and due to the fact that the ministry of planning has been suppressed in 1972, a public authority has been established in early 1977 by decree no 5, partially in replacement of the suppressed ministry. This authority called Council of Development and Reconstruction (CDR) is considered as the government unit responsible for reconstruction and development. With the help of each ministry’s staff, it prepares general plans for the country, investment and implementation programmes for reconstruction and developments projects. It also mobilises external financing for priority projects within the investment plan, and implement projects by appointment from the Council of Ministers. In all instances, it took action in rehabilitating the public administration and reconstructing the infrastructure. It also served as official negotiator in foreign financing agreements. Especially since 1992, the CDR has prepared and implemented gradually the "Horizon 2000" plan that calls for 18 billion dollars of public investment through 2007 in co-ordination with all the ministries.
2.2. National regulatory authorities
As a consequence of what is presented above, it appears that in the Lebanese case, the national regulatory authority is the Ministry of Posts and Telecommunications. However, if we consider the political system structure, any ministry is under the control of the Council of Ministers who is the supreme executive body. It is assumed that whatever decision is taken within this Council, this decision will be implemented. For some issues related to the telecom activity, the ministry of Justice is consulted as far as legal topics are concerned.
2.3 Frequencies allocation authorities
It is a matter of fact that the allocation of frequencies is a competence of the MPT. This ministry has within its staff the expertise to do so. But for national security reasons, this allocation has to be approved by an expert body pertaining to the ministry of defence and the ministry of interior.
Office for the protection of economic competition
Two ministries, Justice and Economy and Commerce, have in their mission to guarantee the protection of economic competition. The law governing this protection is being amended and modernised by specialised commissions in the Parliament to match the new trend in this respect. New laws or old amended laws are expected to be voted during the coming months.
2.4. Consultative Councils
As a general rule, one can say that consultative Councils are bodies composed of experts from within or outside the administration designated for a special mission on an ad hoc basis. Some bodies are more formally constituted however as is the case with the recently instated National Council for Information, whose members are by half designated by the government, the other half being elected by the parliament.
2.5. Public telecommunication operators
In Lebanon, there has been, traditionally, only one public telecommunication operator: the Ministry of Posts and Telecommunications. However, some activities were sporadically subcontracted to private firms. The Lebanese government departed from this position in the early nineties when it considered awarding the cellular (GSM) system to be implemented to two private operators on a BOT basis:
The implementation of these two GSM projects brought into play international companies supplying the equipment: FTML got it from Ericsson, Alcatel and Siemens, while Libancell got it from Siemens and Motorola.
The terms of the BOT agreement stipulate that both operators are granted for ten years licence (extensible to 12 years). Each operator is now reporting having around 250 000 subscribers.
3. International relationships and agreements
Due to the traditional openness of the Lebanese economy, the telecom system had to be linked to similar systems in the neighbouring countries. Agreements exist between Lebanon and Syria, Jordan, Egypt and Cyprus.
Thanks to these agreements, many improvements in international connections have been implemented through companies with international credentials: fiber optic submarine link between Lebanon and Cyprus (AT&T), digital microwave link between Beirut and Damascus-Syria (Siemens), fiber optic network linking Alexandria–Egypt to Tartous-Syria to Tripoli-Lebanon to Beirut and Saïda (Alcatel Submarcom).
4.1. Historical overview
Since the early 1980s many western countries considered seriously moving towards a privatized scheme in the telecommunications sector. Many Asian countries have also done so in the late 1980s.
Although the official stance of the Lebanese government has been towards state monopoly in the telecommunications activity, some early breaches are now nearly thirty years old.
In fact in 1968, the state monopoly was breached when a semi-private company was created and got the licence to maintain the marine cables. This Société de Développement des Télécommunications du Liban (SODETEL) was incorporated with a capital owned by the government of Lebanon (50%), by France Cable et Radio (40%) and by Italy’s ITALCABLE (10%). Then came a period of inaction during the war, until 1991, when the US firm MCI was licensed to build an Intelsat satellite earth station for voice and fax communication, the licence was granted to MCI on a BOT basis.
Again in 1996, the MPT put forward a project for the creation of a public entity to be called Liban-Telecom. This new entity would be in charge of the investment and the maintenance of the equipment. Tariffs for different services would be set by the MPT but the entity would enjoy financial and administrative autonomy in order to avoid bureaucratic inefficiency.
4.2. Present general legislation
There has been much debate concerning the privatisation issue in Lebanon. Not all arguments exchanged between pros and cons are ideology-free. The fact is however that, facing a persistent public deficit and consequently a huge public debt, the present government is considering privatisation to be one way out, even if not sufficient by itself, of this financial turmoil. The government now in office has promised to go ahead with the privatisation once the legal framework has been set in accordance with rules and standards sought from the international bodies of expertise. As yet no new text of law has been sent to the parliament for discussion.
4.3. Key legislative measures
In the meantime, however, the commission for modernising the law system is considering some proposition to be submitted to parliament for discussion.
4.4. Issues
4.4.1. Liberalisation
The issue of liberalisation seems to be settled as more and more emphasis is put on its benefits by the political leaders. They consider mainly that the liberalisation of telecommunication services is recommended in order to stimulate economic growth and to facilitate the socio-economic integration of the various sections of the population. However their decision to introduce reforms required for liberalisation would not be taken until serious studies have been made to determine the most effective means applicable to each particular case, and to evaluate the different impacts these reforms might have on the population, the level of employment, the financial revenues perceived by the government etc...
4.4.2. Licensing
As a general rule a licence can be granted for the exploitation of parts of the public network. This will be frequently in practice once a specific law will set the framework for a given activity. This is the case for the TV networks licensed to operate on the Lebanese territory.
4.4.3. Universal Services
The public operator is by definition bound to serve everybody everywhere on the national territory. A private operator licensed for a given service can however be restricted to some area (electricity network). In the telecom sector a national coverage has been imposed to the GSM operators.
4.4.4. Tariffs policy
This aspect is not fully liberalised yet. The MPT has its say on the tariff issue in as far as its financial revenue is affected.
4.4.5. Quality of service
Under the control of the operator usually. The MPT has the right to oversee the quality control implementation.
4.4.6. Interconnection
Under the control of the ministry.
Freedom is a right guaranteed by the Lebanese constitution. It has always been enjoyed on a large scale by all nationals and other residents on the territory.
5.1. Copyright and intellectual property
A law has recently been adopted by the parliament protecting copyright and intellectual property. This law became effective early June 1999 and is deemed to serve the economic interest of all parties engaged in production and commerce.
5.2. Privacy, data protection, consumer protection
Legally, consumer protection is in the attributions of the ministry of Commerce. It concerns basically matters related to consumer prices and quality of goods. No specific laws are edited concerning data protection and privacy apart from basic statements provided by the constitution.
5.3. Electronic protection, legal protection and security
Specific laws are under consideration.
5.4. Freedom of expression and
information:
Guaranteed by the constitution. Lebanon has always been known
as a land of freedom.
6. Information society policies
6.1. Umbrella policies
The basic trends in the Lebanese society towards being an information society are obvious. The open-mindedness of the population, its cultural openness on the world, gives it the ability to acquire and accept the modernity in every day life. New technologies spread easily even within somehow economically disadvantaged groups. The rate of literacy is high and mastery of more than one language is very common.
6.2. IS application areas
As a result of the political action of the government towards the modernisation of the administration, many decisions have been taken, that fall under one of the Information society aspects.
6.2.1. Government
The government is pushing forward for a better efficiency in the administration, less bureaucracy and greater transparency. With the help of international organisations, reform programs are undertaken that call for the implementation of advanced practices and modern technologies. Computers and telecommunications are efficiently used in some public offices to handle paperless work and get efficient results.
6.2.2. Education
New technologies are now implemented and used at different levels in the universities. The extension of the link to the schools has yet to be promoted. International organisations are offering support to make this networking happen in the medium term future. The private sector schools are well in advance in this respect on the public sector schools.
6.2.3. Transport
The transport sector is undergoing a fundamental transformation. Special programs to enhance the productivity of this sector are implemented with the assistance of international bodies. Some mergers are being witnessed in the air transport field.
6.2.4. Medicine
Tele-medicine is not yet in practice and medical databases are only considered on a small scale. Visio conferencing are used however when medical seminars are held in Lebanon with participants from abroad (especially US).
A very important turning point in the official attitude concerning the future of the telecommunications sector has been revealed by the minister of Posts and Telecommunications and reported by the National agency on the 31st of may 1999.
The minister’s declaration followed a strategic workshop held from the 27th to the 29th of May under the patronage of the prime minister on the subject: "What future for the telecom sector". At this workshop international consultants (Deloitte and Touch) as well as high ranking representatives from the concerned ministries and also from the World Bank were present. It is worth noting that this is the first time that such an event is organised to evaluate and discuss different scenarios concerning the telecom with the help and participation of various concerned parties.
Four basic recommendations can be cited in this respect:
1. The Lebanese telecommunication market has to be fully liberalised by the end of year 2002. The participants, while recognising the necessity of opening up this sector to competition, realised that this could not be done unless appropriate rules and regulations are set up. There also was a general agreement on the fact that the success of the operation implies the existence of a well-structured and competitive National Operator.
2. The entire regulatory framework has to be set up by the end of 1999. This will imply the provision for a regulatory authority and the setting up of a National Operator.
3. The regulatory authority will be set up by June 2000. This will be an independent authority overseeing the implementation of efficient and fair competition so as to promote the telecom sector and preserve the Lebanese interests.
4. The creation of a national operator partially privatised during the year 2000. The main idea behind partial privatisation is to have strategic associations with expert companies that could boost the efficiency and the competitiveness of the National Operator.
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