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Lebanon's prepaid mobile rates highest in Middle East

State monopoly unlikely to lower costs

Lebanon has the highest prepaid mobile-phone rates in the Arab world, according to a newly released study by the Amman-based Arab Advisers Group. Lebanon's prepaid rate of $0.44 per minute is the highest among 18 Arab countries studied by the Advisers Group, a media and telecom research center.

"The Lebanese market has no effective cellular competition," said Jawad Abbassi, president of the Advisers Group.

Lebanon's two state-owned mobile networks are run by Alfa - a Saudi-German consortium mostly owned by Deutsche Telekom - and MTC Touch, part of Kuwait's Mobile Telecommunications Company. The Lebanese government controls the sector's revenues and sets prices, leaving MTC Touch and Alfa little incentive to compete.

"Proper privatization, liberalization, and the introduction of more competition is what the government must do to lower prices," Abbassi said of the market in Lebanon. "The issue is, the government is one of the main sources for high rates."

He added: "Lebanon started with having the lowest regional rates in the mid-1990s, but then had more and more taxes on the service, which increased the rates on consumers."

The U.A.E., whose telecommunications market is monopolized by the state-owned Etisalat Corporation, boasted the lowest average minute rate at $0.06 per minute, the study found.

"It is a bit of a paradox that the lowest average rates are in the monopoly market of the U.A.E.," Abbassi said. "This indicates a savvy marketing approach of the operator there, which consistently provides good value to secure its position in its home market. Still, the story across the region is of falling rates and prices."

Libya has the highest postpaid mobile rates in the Arab world at about $0.22 per minute. Lebanon, at about $0.18 per minute, ranks fifth in the postpaid category, according to the study.

Revenues from Lebanon's two state-owned cellular networks reached $701 million last year and are an important ballast for the country's debt, which stands at $36 billion, or nearly 190 percent of GDP.

"Because of the pressure from the Finance Ministry to increase revenues, the government is applying high mobile rates knowing that people will pay anything because otherwise they will lose their line," said Riad Bahsoun, general manager of Telecommunication Information Technology. "People use the lines for business and for daily activity and they can't avoid it whatever the cost."

Demand for lines, Bahsoun said, far exceeds the approximately 900,000 available and he has lobbied the government to build 700,000 new lines.

"This must be done and it can be done within six months for about $100 million," he said.

Sixty-two percent of Lebanon's approximately 900,000 cellular phone subscribers use prepaid lines, which consumer groups say fleece customers by charging per minute instead of per second.

Thirty-eight percent of Lebanese consumers use the postpaid system which requires a monthly subscription fee of $25 in addition to a per-call fee.

"We're asking the government to cancel the subscription fee and reduce rates across the board by 30 percent," said Zuheir Berro, head of Consumer Lebanon, a consumer rights lobbying group.

Berro helped lead a series of strikes last year, in which consumers across Lebanon shut off their phones for a day, which met with little response from the government.

The Telecommunications Ministry admits that rates are high but has not met a promise made at the 2002 Paris Donors conference to privatize the sector in response to demands by international creditors.

Berro said reform efforts are currently stalled by the lack of an effective government.

"I don't expect any progress until after the elections," he said.

Beirut 18-04-2005
Will Rasmussen
The Daily Star



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