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Busy Signal in Beirut

Jul
6
2007

As I type this, I’m fuming. My Internet connection, one of the most advanced in Lebanon, is on the fritz again, and it’s not an unusual occurrence.

My situation is not unique. Lebanon lags behind most other countries in the Middle East in access to reliable, high-speed Internet, a fact that isn’t lost on most of its young professionals. They remember the mid-1990s when Lebanon was a trailblazer in Net access, being one of the first Arab countries to make it widely available. It is this digital slowdown that is holding back much of Lebanon’s development.

The slain former Prime Minister Rafik Hariri envisioned Lebanon as a New Media powerhouse of the region, attracting jobs and talent – and drawing upon its deep well of natural talent. Lebanon’s universities brim with smart young Web programmers, coders, graphic designers, marketing majors and advertising whiz-kids. There must be something in the water.

Hariri knew that if he was to rebuild the country after the devastating civil war of 1975-1990, he would need to attract business and investment. To that end, the national phone system was rebuilt with digital lines even back then. Hariri lured foreign investors with – at the time – the beginnings of an advanced telecom infrastructure.

And then, some time around 2000, all that forward moment ground to a halt, in a sort of national “404 File Not Found” error. Dubai, Egypt and, yes, Israel, galloped ahead in upgrading their infrastructures and cutting costs. While Lebanon, ground under the boot of a Syrian occupation that was waking up to the threat of unrestricted Internet access, began to fall prey to its usual ills: corruption, cronyism and a bureaucracy paralyzed by sectarian infighting. This happened in almost every ministry, but it was in the telecommunications ministry that people really felt it — and paid for it.

Like most governments, Lebanon’s collects revenues through taxes. But not income taxes. The state is largely funded by a 10% VAT and tariffs on goods coming into the country. (There is an income tax, but I’ve yet to meet anyone who actually pays it. There’s no real collection mechanism.) And one of the biggest gold mines for tax revenue is the telecom ministry. Last year, according to news reports and the government’s own figures, the ministry provided 38 percent of the state’s budget. Think about that: A single ministry provides almost two-fifths of the state’s revenue.

Which brings us to the Internet. There are more than 700,000 Internet users in Lebanon. Since 1997, GlobalCom Data Services was the exclusive licenser of data lines, a monopoly conveniently owned by a close relative of President Emile Lahoud, a Syrian stooge. GDS took a cut of any Internet installation and there was little incentive to speed things up, given that Syria was in charge. This arrangement gladdened both Lahoud (his family made money) and the Syrians (they got cash and kept control.) Legal residential “broadband” — it could barely be considered that, seeing as it topped out at 128Kbps — was unavailable until 2004. Today, that’s not the case; The Syrians are mostly gone and you can get what is generously called broadband in the home, like I do.

I use a wireless receiver, about the size of a toaster, to suck down Internet access. For $150 a month — three times what you’d pay in most other developed parts of the world — I get 512Kbps download (never happens) and 64Kbps uplaod (ditto.) That means I could theoretically download the average pop song from iTunes in a little over a minute. Unfortunately, that theoretical speed is rarely reached. In contrast, your average American connection is at least 1.5MBps, which is about three times as fast. To add further insult to injury, my data use is capped at 5GB per month. If I go over it, I have to pay $25 for 500 more megabytes. My upload speed is too slow to allow video conferencing or VOIP, which is fine with the telecom ministry, as VOIP calls would cannibalize their mobile phone revenues. Skype is officially banned here.

Craig Barrett, the chairman of Intel, recently paid a visit to Lebanon to on behalf of the Partnership for Lebanon, a private initiative formed in September 2006 after last summer’s war. “Broadband technology is absolutely key in developing Lebanon,” he said. “You need big pipes going into your country.”

That’s not happening. Lebanon’s data cables were only recently updated, to 1Gbps, or about 250 bits per person. The United States has 3,308 bits per person in 2004, according to data from the World Bank.

Barrett and his partners, who include Microsoft, Cisco, Occidental Petroleum and Ghafari Inc., face regulatory tangles, high tariffs and taxes, and infrastructural limitations. They also face a government more eager to wring revenue from the struggling industry rather than encourage its development. “Our message is loud and clear,” Barrett said. “If you regulate and price connectivity as a revenue source, then you inhibit the economy.”

But the unregulated, black market economy is doing just fine, thank you. Jerry-rigged Internet connections and unlicensed ISPs are the norm for most Lebanese. They’re slow and unreliable, but they’re cheap and they don’t have a data cap. These guerilla netheads’ efforts hint at the innovations in services that might be offered if Lebanon’s telecom industries were fully deregulated and left to compete. For example, one operator in Gemayzeh, the East Village of Beirut, sweetens his service by running a local network on his pirated lines and encourages and promotes P2P file sharing of games and movies among his subscribers. Because his subscribers essentially form one big local area network, this file sharing is much faster than the data flow from the outside Internet. Just think if that creativity could be channeled to legitimate access and services.

Which is why in May, when residential DSL finally came to town, there was much rejoicing. The regulatory schemes had been updated, the data pipes into the country had been upgraded, the old switches had been swapped out. Game on.

And what did we get? We got … a little more speed, a little more data, but not enough to jump start the IT economy. Disappointed, Lebanon’s Internet users howled — especially on the forum boards of Michel Aoun’s Free Patriotic Movement, an anti-government, middle-class group of people who stood up to Syria through much of the 1990s and first half of this decade. “The whole connection is a robbery, not just the money payed (sic) for going over the limit,” wrote a guy calling himself Jules3. “It’s a joke!”

“We have the most expensive cell phone rate, and now the most ironic (I think he meant moronic) DSL connection,” wrote someone called Osiris.

It’s this lack of connectivity that is turning off a lot of businesses, which is further retarding Lebanon’s recovery from last summer’s war. According to Zuheir Berro, President of the Consumers Union, the Internet sector in Lebanon has grown only 2 percent in six years, while other Arab countries have averaged 50 percent growth over the same time period. Without foreign investment, there is nothing driving Lebanon’s economy. Furthermore it’s not taking advantage of its greatest resource: the creativity of its young people. Instead, they’re leaving in droves to take advantages of opportunities elsewhere. Dubai is popular, thanks to its booming economy driven by its Media City economic zone – which, not coincidentally, features fast and cheap Net access.

Ultimately, the tangled wires of Lebanon’s IT “industry” is a symptom and symbol of the noisy crosstalk dominating the political scene here. With no political consensus, there’s no stability, which doesn’t encourage businesses to invest here and demand a better communication infrastructure. Without the infrastructure, remaining businesses that depend on communication will flee, meaning there’s less revenue for the state, perpetuating its weakness and making it unable to find or impose a political solution on its non-state and foreign rivals. (I’m looking at you, Hezbollah and Syria.) It’s a vicious cycle.

When it comes to the Internet, communication and Lebanon, the most commonly heard sound is a busy signal. All political and business circuits are jammed; please try again later.

Share  Posted by Christopher Allbritton at 3:32 AM | Permalink

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