Lower revenues as a result of the Cabinet’s decision to cut the rate of phone calls and Internet data plans will be offset in the medium to long term by a growing base of subscribers, provided that the government upgrades the country’s telecom infrastructure, experts told The Daily Star.
The Cabinet Friday voted in favor of three proposals by Telecoms Minister Boutros Harb to cut the cost of landline subscriptions, pre- and postpaid mobile calls and Internet data plans.

Effective June 1, subscribers to postpaid mobile lines will benefit from an additional 60 minutes of free calls in exchange for the current $15 monthly subscription fee, while the rate of calls on prepaid mobile lines would be reduced by around 30 percent from $0.36 to $0.25 per minute.
The registration of a new landline will come at no cost, as opposed to a previous $33 one-time fee, while the monthly subscription fee will be reduced from $8 to $6.
As for Internet data plans, a subscriber to the 2 megabits per second data plan will enjoy a quota of 40 gigabytes at a monthly $19, compared to the current rate of $50 per 20 GB, while the cost of the HDSL service will be reduced from $150 to $83, and the quota doubled from 40 GB to 80 GB.

The financial impact of the rate cut will be assessed in a report to be filed to the Cabinet by Harb.
Critics of the Cabinet’s decision have voiced concerns that the telecom rate cuts would result in lower revenues to a cash-strapped treasury, with projections for 2014 putting the total deficit to GDP ratio above 11 percent.

Telecom revenues, which reached around $1.43 billion in 2013, are one of the largest sources of state income, accounting for around 15 percent of all financial receipts by the Lebanese treasury, which stood at around $9.46 billion.

While telecom revenues are expected to drop at first due to the discounted rates, head of economic research at Byblos Bank Nassib Ghobril told The Daily Star that the decrease in income would only be short term.

“At first, we will see a drop in telecom revenues, but it will be offset by an increase in the number of subscribers over the medium to long term,” Ghobril said.

However, he added that the government needed to upgrade the country’s telecom infrastructure and improve the quality of its mobile networks in parallel with the reduction in rates.

A telecom expert who spoke on condition of anonymity said Lebanon’s private mobile operators, who are managing the two state-owned telecom networks, should complete their deep indoor 3G coverage to be able to tweak the network in order to improve the quality of calls and avoid interruptions.

Earlier this month, the telecom minister asked both Zain Group, which operates the touch network, and Orascom Telecom, which operates Alfa, to repair network malfunctions or face the termination of their contracts.

The contracts with Zain Group and Orascom Telecom were extended last February and will expire at the end of the month. The government is expected to launch a new tender to award the management of both networks to private companies, and if unsuccessful, might consider the direct management of the networks.

The state also needs to upgrade the backbone and nodes of the Internet infrastructure to handle higher speeds, the telecom expert said.

For example, the link between households and service points is still made of copper, the source explained, arguing that the fiber optic network should have been operational by now.

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