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French Version

Lack of regulatory body leaves cell. sector in limbo (Daily Star)

Failure to appoint board may have cost billions of dollars
EU-appointed adviser struggles to make headway despite political deadlock that has hindered privatization efforts

For reasons beyond his control, Alan Horne, the head of an EU-sponsored advisory team, is unable to do the job he signed up for: helping to establish a telecommunications regulatory authority for Lebanon.

The job is a critical task that the Lebanese government once backed in earnest as it sought to fulfill international agreements and, more importantly, to benefit its citizens and beleaguered economy. But Horne, who chooses each word carefully, prefers to look positively on the unexpected predicament that has potentially cost the country billions of dollars.

He refuses to speculate on why the government has failed to allow him to establish the regulatory authority, or TRA, which is essential for plans to privatize the lucrative telecoms sector and then funnel revenues from the flotation into reducing the country's $34 billion public debt.

The state's failure to set up the TRA, despite vowing to do so nearly two years ago, has made the prized telecommunications sector, a major contributor to the budget appear, appear risky to international firms. Two months ago this led the government to settle for much less than the privatization plans that were promised to the world after the "Paris II" Donors conference in 2002. It also left Lebanese consumers with some of the highest cellphone bills in the world.

"The government could be making more money and the customer could be paying less," says Horne, 54. But for now, he is coping with the status quo, is working on future, albeit uncertain, plans from his desk at the Telecommunications Ministry's offices.

Instead of advising the nonexistent TRA, Horne helps ministry staff draw up proposals for a regulated telecommunications sector, a prerequisite for Lebanon's accession to the World Trade Organization, which is expected in 2005.

These efforts, which will drastically change the face of the sector, include the development of a new 8-digit numbering system that could mean another 1 million cellular lines by year's end. This would help alleviate the shortage that is blamed for today's exorbitant prices, rigid billing terms and black-market that peaks the summer tourism season.

There are also proposals to regulate the spectrum of bandwidth, as well as plans for tariff reduction. Cabinet, however, has yet to approve the TRA's five-member board, despite all of the ministry's efforts.

"The laws, policies and actions of the ministry are very positive, but when it comes to the Cabinet signing decrees, this is where we come to the blockage," Horne says.

The government passed the Telecommunications Act, Law 431 in July 2002. This stipulated that the TRA would be established within three months of that date.

"This is a political issue," said an official source at the Telecommunications Ministry on condition of anonymity.

"We have done our best and now it is all in the hands of the Cabinet."

To lay vague blame on "politics" has become a common euphemism in Lebanon for the ongoing antagonism between President Emile Lahoud and Prime Minister Rafik Hariri, which has been attributed to failures in implementing a number of national projects and reforms.

Telecoms experts agree that privatization, with its power to enlarge the market and reduce the debt, cannot go forward without independent regulatory bodies, which are also pending in the aviation and electricity sectors.

It is also difficult to imagine a decrease in prices for consumers when little competition exists in the current market. Investors' disappointment with the unregulated market led to unacceptably low bids, and the subsequent signing of four-year management contracts in June. The two new cellphone firms are now operating the networks for around $8 million per month while the government collects all revenues - some $80 million in July alone.

Despite Horne's optimistic tone and praise for the ministry, the prospects for Lebanese consumers and entrepreneurs are obviously waning in absence of the TRA: "Just like roads and electricity, telecoms is essential to business. ... Companies have set up in the UAE and Bahrain because telecoms are cheaper," he said.

Beirut 16-08-2004
Habib Battah
The Daily Star

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