Lebanon is bracing itself for a major internet connectivity overhaul. Internet users in Lebanon will experience an internet connectivity improvement from the current 1 Mbps to 100 Mbps (or so we’re promised). This improvement will come gradually over the next 6 months to a year. As for the introduction of GSM based 3G data services, it’s really sad to see Lebanon introduce this service in the same period when Saudi Arabia, UAE, USA and other countries are launching LTE services which are more commonly known as 4G.

The delay behind this improvement was caused by an acute political divide between two main factions in Lebanon for the past 6 years. In this note, we will not go into the political side of the equation except to mention one aspect affecting the issue: in 2013 Lebanon is expected to hold parliamentary elections. The recently formed Government (whose political factions lost the previous elections) has lined up a series of major national reform projects aimed to woo the Lebanese voters to their side to secure victory in the next elections. Among these projects is a major Telecom and internet connectivity reform project, a very pressing issue especially among Lebanon’s youth, particularly young Lebanese digital entrepreneurs.

Previous Telecom Minister Gibran Bassil had announced his intention to turn Lebanon into a digital society by 2013 as outlined in his Policy Paper of May 2009.

In our attempt to assist Lebanese entrepreneurs to understand the situation better here’s a comparative exposé of the current situation and the path ahead for the next 6 to 12 months.

There are 3 ways to “legally” connect to the internet in Lebanon: Fixed line DSL, Wireless DSL and 3G through GSM mobile phone network (coming soon). For Lebanon to improve internet connectivity (through all 3 types of connections), it needs to increase bandwidth connection to the internet global backbone. Currently the entire country is on a 3 Gigabit connection, but with the Cadmus Cable and the IMEWE Cable (India, Middle-East and Western Europe) Lebanon’s capacity has gone up to 120 Gigabit. The IMEWE cable was built as part of a regional consortium out of which Lebanon owns 12%. MoT has recently increased capacity from 3 GigaBit to 10 GigaBit and will gradually keep increasing as and when the need arises. Current Minister of Telecom Mr. Nicholas Sahnaoui vowed to present the new pricing structures to a cabinet meeting for approval within the coming 2-3 weeks. The team over at Ontornet had an inquiry meeting with Mr. Sahnaoui, minutes of which can be found here. Today the MoT leases E1 internet lines to ISPs at a cost 2,700 USD per month, it is estimated that the new pricing structure will see the price of E1 drop to around 500-600 USD, maybe even less, knowing that the Minister admitted on TV that the cost of an E1 to the MoT is around 50 USD. Once that happens the whole scenery will change:

• 3G services : GSM Mobile operators Alfa & MTC will be introducing 3G packages ranging between 2 Mbps and 21 Mbps. This is good news for 3G enabled iPad2 owners and other 3G enabled tablets as well as mobile app developers. There will be 3G-SIM card USB dongles for laptop/desktop owners.

• Fixed DSL : All non-Ogero DSL subscribers will see an immediate offering of new Hi-Speed packages. Ogero DSL subscribers will see a certain delay, as the MoT seems to have certain plans for Ogero. We are not sure what these plans are, but we do not exclude the possibility of the creation of the long awaited Liban Telecom as stipulated in Law decree 431 / 2002. Ogero might have to transfer all its assets over to Liban Telecom. If this scenario occurs, we all know it’s not going to happen overnight, which is why the MoT is pushing for state owned Alpha and MTC’s 3G services. As for corporate connections, around 10 ISPs are still present in the market to lease E1 lines according to the new pricing structures.

• Wireless DSL : Personally I see this sector as the most promising. Currently operated by 4 major brands: MOBI, WIGO, PESCO and IFLY. You don’t need to wait for fiber-optic cable deployment, it’s instantly upgradable to speeds exceeding those of 3G once the new pricing packages are approved, and finally it’s a mobile connection if you use the USB dongle.  However, with the booming iOS, Android and Blackberry based mobile apps, this technology does not address the mobile phone based internet connectivity. But for business or home use, it’s an ideal solution. Hopefully with the new packages, we truly expect traffic limitation increase to at least 20 Gigabytes per month rather than the current 3 Gigabytes that frankly just doesn’t cut it anymore. Since this technology competes the most with GSM based 3G technology, the MoT seems to be suppressing, in its future plans, this type of connection in favor of the state owned 3G packages. In the spirit of free and fair competition, we truly hope the MoT will encourage Wireless DSL with the same intensity it is promoting 3G. It’s up to the end user to decide which internet connection protocol suits his needs the most. Limiting the end-user’s connectivity options is not advisable, especially with a poor GSM voice quality service still unresolved, are the Lebanese willing to have their mobile internet connectivity confined solely to the same 2 companies?

Conclusion for startups in Lebanon: 3G is going to be expensive with limited speeds. Fixed DSL will be the ideal solution for corporate and SME, but it will take time to see implementation for home use and remote areas. Wireless DSL has the best price/quality ratio, it’s an instant solution, however the MoT might give them a hard time by favoring their very own 3G Data-GSM service.