Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Competition in Telecommunications and the Information-Based Economy Kamal S. Shehadi, PhD Managing Director Planet Lebanon 2004 Opportunities in IT and Communications Beirut July 22, 2004 CONNEXUS CONSULTING The liberalization and privatization of telecoms are key to the future of the Lebanese economy Overwhelming evidence that competition in telecommunications “works.” It leads to: Lower prices and better quality of service Higher levels of telecom penetration Higher productivity in telecom and economy Faster rates of technological innovation More investments in the sector There is not one single country in the world that has maintained state monopoly over telecom and succeeded in developing ICT CONNEXUS CONSULTING In the past, governments have pursued a number of objectives from liberalization and privatization Improve Performance of Telecom Sector Redistribute Wealth and Enable Economic Growth Telecom Liberalizatio n Strategic Objectives Sustain Country’s Competitiveness Comply With International Commitments Develop Capital Market CONNEXUS CONSULTING Develop ICT sectors Create new job opportunities in telecom Attract additional investments Improve productivity of traditional sectors Catalyze the growth of information economy Improve integration of the economy with ROW Deliver on WTO, EU and other commitments Meet commitments to international institutions (World Bank, IMF, etc.) Allocate and use scarce resources efficiently Generate revenues from new licenses Raise taxes from new telcos Widen share ownership in List new telcos on stock exchange Increase Treasury Revenues Improve financial performance of incumbent Increase penetration of services Introduce new telecom services Improve price/quality ratios To leap-frog into the information-based economy, a number of requirements have to be in place Requirements of Information-Based Economy 1 Legislation Key legislation needs to be in place to enable the development of ebusiness, e-government, and other information-based businesses Education Educational system graduating computer literate students Educational system graduating skilled programmers, certified engineers, and other IT skills 2 3 Venture Capital Financing for ICT initiatives needs to be available ITC-industrial support mechanisms 4 Infrastructure State of the art infrastructure: wireless and wireline Wide reach and access of large population 5 Competitive Prices Price of telecom services competitive with rest of the world Price of services reflective of market conditions CONNEXUS CONSULTING The mobile penetration rate in Lebanon is among the lowest in the region due to lack of competition and bad regulation Mobile Penetration (in % of Total Population) 2003 Lebanon 21% Saudia Arabia Canada Qatar 33% 41% 47% France 68% Bahrain 69% Germany UAE Spain Italy 79% 81% 94% 99% Source: Informa, ITU, Arab Advisors CONNEXUS CONSULTING Lebanon’s mobile postpaid connection fee is among the highest when compared to other international operators Mobile Post Paid Connection Fee Benchmarking Against Selected Regional and International Operators (2004) (US$) 100 Cellis 75 Libancell 69 Qtel 62 Vodafone 57 MTC 34 Etisalat STC 27 T-Mobile 27 Mobinil 24 Telefonica 24 Telnor 23 13 Batelco Free! SFR 0 Source: Tarifica, ITU, Operators 20 40 60 CONNEXUS CONSULTING 80 100 120 The monthly charges for mobile postpaid lines are also among the highest - and they don’t include any “free” minutes Mobile Post Paid Monthly Charges Benchmarking Against Selected Regional Operators (2004) (US$) Cellis 25 Libancell 25 Batelco 16 STC 16 MTC 14 Q-Tel 14 Meditel 12 Maroc Telecom 12 11 Mobinil 8 Etisalat 0 Source: Tarifica, ITU, Operators 5 10 15 CONNEXUS CONSULTING 20 25 30 The cost of a postpaid minute in Lebanon is among the highest in the region and is due to the high excise tax imposed by the Government Mobile Postpaid Peak Minute Rate Benchmarking Against Select Middle Eastern Operators (2004) (US$ cents per peak minute) Omantel 14 Meditel 14 Maroc Telecom 14 STC (AlJAWAL) 13 MTC 13 Cellis Libancell 6 cents tax 13 6 cents tax 13 Mobinil 10 Batelco 10 Etisalat 8 0 1 Source: Tarifica, ITU, Operators 2 3 4 5 6 7 8 9 10 11 12 13 14 15 CONNEXUS CONSULTING The 6 cents tax makes up 46% of the minute rate The price of a prepaid minute is higher than the rest of the region, with one company billing by 40 second intervals, thereby making prices less transparent Mobile Prepaid Peak Minute Rate Benchmarking Against Select Middle Eastern Operators(2004) (US$ per peak minute) Libancell (Premiere +) 47 Libancell (Premiere) 44 Libancell (Premiere) 38 Cellis - Clic 36 STC (Al Jawal) 32 Mobinil 24 Q-Tel 20 Batelco 15 Etisalat 7 0 Source: Tarifica, ITU, Operators 10 20 CONNEXUS CONSULTING 30 40 50 In addition, prepaid packages on offer have a validity period of 60 days, much less than what is available in other countries 600 Prepaid Validity Periods 500 400 60 360 300 180 200 100 30 360 60 3 120 120 240 180 180 5 60 0 Morocco Bahrain UAE Tunisia Maximum validity period Egypt Jordan Lebanon Maximum grace period Source: Arab Advisors Group, from Operators CONNEXUS CONSULTING On the fixed network side, Lebanon is at par with the penetration rates of selected regional and international operators Fixed Line Penetration (in % of Households) Saudia Arabia Lebanon 69% 80% Italy 85% UAE 86% France Germay 105% 110% Bahrain 113% Spain 114% Qatar 145% Source: Informa, ITU, Arab Advisors CONNEXUS CONSULTING Despite the 35% reduction in per-minute tariffs for international telephony, connection and per-minute tariffs remain relatively high Tariff in US$/ 3 minute call to NYC, average of peak and off-peak rates Morocco 1.1 Lebanon 2 Jordan 1.85 UAE 1.43 0 0.5 1 Source: Tarifica, ITU, Operators CONNEXUS CONSULTING 1.5 2 2.5 Internet penetration in Lebanon compares favorably to the region, but the “digital divide” with developed countries is readily apparent Internet Users per 100 Inhabitants (2003) 1.5 Other All Arab 2.3 Morocco 2.4 Egypt 2.5 3.2 Palestine Tunisia 6 Jordan 6 KSA 6 7 Oman 10 World 11 Kuwait Qatar 12 Lebanon 12 25 Bahrain 37 UAE 41 Devlp'd 0 5 10 15 20 25 CONNEXUS Source: ITU CONSULTING 30 35 40 45 Lebanon has only recently introduced ISDN technology, but it is overpriced and has long been overtaken by more advanced technology such as ADSL ISDN Tariffs 40 Lebanon 550 21 Jordan 422 9 United Arab Emirates 55 0 100 200 Installation 300 400 500 Monthly subscription Source: Telecommunications Operators For Lebanon, the ISDN BRI Monthly subscription rate used is the average of residential and business rates CONNEXUS CONSULTING 600 International connectivity is prohibitively expensive and detrimental to the development of an information-based economy 2MB/s International Half-Circuit Rental Prices to Nearby Countries (US$) Denmark Finland Ireland Sweden Luxembourg Netherlands Belgium Greece Italy France Portugal Austria Spain KSA Lebanon Oman Kuwait 3176 3970 4591 5705 6197 8398 11408 11827 12140 13685 15512 16520 18631 22667 25305 31422 54400 0 10000 Source: Teligen 2003 and Tarifica 2004 20000 30000 CONNEXUS CONSULTING 40000 50000 60000 Lebanon has one of the lowest international connectivity ratios in the region Comparison of International Trade versus International Internet Bandwidth 3 International Internet Bandwidth per cap in bit/s 5 4 4 15 3 15 114 351 Algeria Morocco Tunisia Egypt Jordan Lebanon Saudi Arabia Greece Portugal 617 Italy 618 Spain Source: Telegeography & GDF WDI CONNEXUS CONSULTING Were Lebanon to open telecommunications to the private sector for competition, mobile penetration will double in five years … Full Competition 1,800,000 45 2,000,000 1,600,000 40 1,800,000 1,400,000 35 1,600,000 30 1,400,000 35 1,200,000 30 1,000,000 1,200,000 28.6 1,000,000 800,000 600,000 800,000 500,000 13.8 25 20 20.3 15 1,000,000 800,000 600,000 1,740,000 43.5 800,000 500,000 13.8 50 45 40 25 20 20.3 15 400,000 10 400,000 200,000 5 200,000 5 0 0 0 0 1998 2003 2008 1998 Source: Connexus Consulting CONNEXUS CONSULTING 10 2003 2008 Penetration Subscribers Government-Owned Duopoly … the number of internet hosts will increase by a factor of ten … Potential Impact of Different Liberalization Scenarios on the Spread of the Internet Predicted internet hosts per 10,000 people 20 18 16 14 12 10 8 6 4 2 0 MENA Source: World Bank Restricted Market Access Moderate Market Openness CONNEXUS CONSULTING Full Market Openess … expenditure on telecommunications (as a percentage of GDP) – net of taxes – will almost double … Potential Impact of Different Liberalization Scenarios on Expenditures on Telecommunications Predicted Telecommunications Revenues in % of GDP 2.5 2 1.5 1 0.5 0 MENA Restricted Market Moderate Market Access Openness Source: World Bank CONNEXUS CONSULTING Full Market Openess … investment in the telecom sector will increase fourfold and add another US$ 150 million/year of investments … Projected Investment in Telecommunications (US$ Millions) 200 100 50 Restricted Market Access Moderate Market Openness Source: Connexus Analysis CONNEXUS CONSULTING Full Market Openess Finally, competition in telecommunications will allow Lebanon to become a hub for ICT and create thousands of high value-added jobs Direct Opportunities from a Better Data Telecommunication Sector Software development: Designing, coding, testing and implementing software for several industries Consultancy Services: Training and seconding of IT personnel Data Telecommunications Voice Center Operations: Technical assistance centers for service companies CONNEXUS CONSULTING High-end remote processing and knowledge management: Database management, data mining/ warehousing, GIS, content creation Low-end remote processing/teleworking: Key punching, data entry The liberalization and privatization of telecom in Lebanon is a daunting challenge, but the roadmap is clear and simple The Government of Lebanon (GOL) needs to adopt a clear policy to liberalize telecom and open it to competition Policy Independent Regulatory Authority Privatization Policymakers should cease to look at telecommunications as a cash cow, whether for the treasury or for their cronies GOL must implement Law 431/2002, which calls for the establishment of an independent regulatory authority Appointment to the authority must be on the basis of merit and not on the basis of allegiance GOL must begin the process of privatizing the two mobile operators and the fixed network immediately, bringing a strategic investor for each A certain percentage of shares must be listed on the stock exchange New Licenses The regulatory authority, once appointed, must issue new licenses to establish alternative networks to carry data, voice, and media, both domestically and internationally CONNEXUS CONSULTING