Cellular tariff hurts the Lebanese, fails to solve telecom sector

One of the main challenges is failure to implement law 431
Cellular tariff hurts the Lebanese, fails to solve telecom sector
Mobile sector Lebanon

The last thing Lebanese needed was an additional burden coming from the new telecom tariff, which has been in effect since the beginning of July.

This tariff is many times more costly than their ability to continue to receive this vital service under the current difficult economic conditions.

Also, this tariff exceeds companies’ ability to bear the increase in operational burdens after the rise in the dollar exchange rate.

In its last session on May 20, before the government turned into a caretaker one, following the holding of the parliamentary elections, the Cabinet approved two decrees amending the tariffs for telephone services, internet and cellular communications.

This proposal, issued by Minister of Communications, Johnny Qurum, was not on the agenda, but it also was not surprising. The Minister had previously lobbied for its approval, given its importance to the continuity of the telecommunications sector, which will be exposed to great risks in the event current tariffs stay unchanged.

Lebanon is suffering from a severe economic crisis that has led to the deterioration of its local currency by more than 90 percent against the dollar, and from a multiplicity of exchange rates at a time when the official exchange rate is still being met on the basis of 1,515 pounds, while its price in the parallel market has reached the 30,000 limits.

This is at a time when citizens with dollar deposits in a bank are allowed to withdraw a local currency amount with a specified ceiling per month, on the basis of the exchange rate of 8,000 pounds to the dollar. The state meanwhile is still collecting its revenues, to strengthen its budget, on the basis of the official exchange rate.

The first approved proposal reduces the price of communications by 66.7 percent but is calculated on the basis of dollars at the current exchange rate platform (and its price today is 25,400 pounds). This means that the bill is now calculated according to “exchange” dollars, while it was previously calculated on the basis of the official exchange rate of 1,515.

This would increase the burden on subscribers, but in return, it would allow the two companies that operate the cellular phone in Lebanon, “Alfa” and “Touch”, a greater ability to face the financial difficulties they are encountering, according to the Minister of Communications.

What all this means is that the monthly mobile bill that the citizen will pay will be variable as it is linked to the price that is traded through the “exchange” platform.

For example, someone who used to pay $50 a month at the official exchange rate of 1,515 will now start paying $16.7 as of July 1, but at the rate of the current “exchange” rate (over 25,000 pounds).

In other words, the citizen who previously paid the equivalent of 75,000 Lebanese pounds, is now obligated to pay about 400,000 pounds when calculating the bill on the basis of “exchange”. This is an increase of more than 530 percent.

Pre-empting this, extensive monopoly operations were recorded during which powerful people had previously bought large quantities of pre-clearance cards on the basis of the official exchange rate, and today they are benefiting from the large margin between the previous and current rates.

Workers in the sector revealed some of the names of the monopolists during a television interview with the Minister of Communications last week, and this matter is supposed to be news on the basis of which the judiciary will take action.

A source in the Ministry of Communications justifies the adoption of the decree, saying in a statement to “Economy Middle East” that a decision should have been taken to change the prices so that “Alfa” and “Touch” could cover their expenses, which rose insanely because of the exchange rate, as the costs of purchasing diesel have come to account for more than 60 percent of their operating expenses.

From this point of view, “following several studies, the decision was made to divide the current prices by three and multiply them by the price of an exchange platform, and it turned out that this is the most appropriate option to increase revenues.”

Sector reform


The telecommunications sector, which was once described as Lebanon’s oil, suffers from grave dangers that threaten its survival. Note that most of the revenues enter the state treasury. Between 2011 and 2020, $13 billion came into the treasury from this sector. Today, however, it has become a heavy burden on the state at a time when it needs fresh dollars that are not available to complete projects and carry out maintenance operations.

Among the most prominent challenges facing the telecommunications sector, and still are, is the failure to implement Telecommunications Law 431 and also efforts to prevent activating the sector’s regulatory body.

This is for a simple reason, which is that successive ministers in this ministry wanted to monopolize decisions thus avoiding abiding by that body’s rulings, which is supposed to keep a close eye on the sector, having the kind of robustness and independence that guarantees equal opportunities for fair competition between operators on the one hand, and consumers’ rights to quality service, best prices, and respect for their privacy, on the other.

Consequently, the ministry’s decree to increase the prices of some services is not an effective solution to restore the sector’s health. The money that will be collected is a temporary solution to stem the deterioration of the sector at a time when funding must be provided in order to improve a very poor internet service in Lebanon, which today is considered the backbone of the revival of the economy.

Note that Lebanon was one of the first Arab countries to launch a cellular communication service, and the first country in the East to provide its citizens with Internet service in 1996.

Today’s decisions also open the door to illegal Internet subscriptions, which constitute 62 percent of total subscribers, according to the statement of the Minister of Communications himself, who estimated it at 1 trillion pounds per year in lost revenues.