Lebanon needs to join the interstate highways of the 21st century

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Now, what if the rollout of high-speed broadband increased economic growth?

In this Sept. 12, 2018, file photo, the U.S’s Verizon’s 5G wireless signage is displayed at the company’s booth during the Mobile World Congress Americas in Los Angeles.

BEIRUT: The Internet, first and foremost as a medium of communication, is now universally equated to a utility as valuable as public water, sewer, gas, and electric power.

From a tool for information sharing to becoming the backbone of any business, the case is increasingly being made for the Internet to grow into an integral part of the national infrastructure.

High-speed Internet, or broadband, is the main driver behind vital innovations in the Information Technology (IT) sector such as cloud computing and mobile apps, including modernizations in health, transport, and government.

Yet with some 748 million fixed broadband subscriptions and 2.7 billion mobile broadband subscriptions around the world by 2014, Lebanon still enjoys the fifth slowest ‘Fixed Broadband’ speed in the world as a result of its of 7.1 Mbps average. To illustrate the abysmal state of Lebanon’s broadband infrastructure further, first place Singapore enjoys a download speed of 190.94 Mbps, while the global average is 54.33 Mbps.

 

Lebanon’s Internet woes can be simply traced back to its outdated infrastructure relaying data traffic between the state-owned Telecommunication company Ogero and end-users. This network is mostly still comprised of copper wires, with numerous delays hampering the completion of a state of the art fiber optic project first commissioned in 2011 which has spanned four different telecom administrations till now.

In 2011, then Minister of Telecommunications Nicolas Sehnaoui commissioned a wide scale $55 million project implemented by local civil works company Consolidated Engineering and Trading (CET) in partnership with international telecommunications company Alcatel–Lucent.

Following the end of his term, his successor Botros Harb alluded to the project being hampered with mistakes that need drastic corrections, further delaying its completion by calling for a new tender process.

Fast forward to 2018, and then Telecom Minister Jamil Jarrah announced that Ogero had awarded tenders to three international companies tasked with linking end users to their central offices. Chinese based Huawei, Finnish based Nokia, and American based Calix, were picked to work alongside local companies SERTA Channels, Powertech, and BMB respectively to overhaul Lebanon’s telecom infrastructure, at a total cost of $300 million.

Work was pegged to commence immediately, connecting the already installed grid to Lebanon’s households, universities, and different institutions, albeit gradually, with the most remote areas to be connected by Q3 2021 at the latest. If that timeline is now met under Mohamad Chouceir, 10 years would have elapsed since the project was first commissioned, at a cost of over $350 million.

Lebanon’s economic woes have been well documented, with an already sluggish GDP being further stymied by a debt to GDP ratio ballooning to over 150 percent. Add to that a massive trade deficit, and Lebanon needs all the help it can get to kickstart its ailing economy.

Now, what if the rollout of high-speed broadband increased economic growth?

Both ICT and broadband are two main drivers behind socio-economic development in the modern world.

To be competitive in the global economy, businesses, services, and citizens must be able to benefit from high speed, next-generation broadband infrastructure. That much was said in a study drafted by the European Commission in Brussels.

The study, published in 2015, predicts that “fiber networks, together with the right set of digital skills in the workforce,” improve the way capital and labor are employed in the economy and result in higher GDP growth.

This also leads to job creation, with estimations showing that each “one billion EUR spent on broadband deployment will on average create 9320 jobs.”

Lebanon’s budget deficit came in at $4.8 billion dollars in 2018, with a fiscal deficit equivalent to 9 to 10 percent of its gross domestic product which needs to be brought down to around 5 percent in the short term.

Lebanon finally joining the rest of the industrialized nations, and actively connecting with the rest of the world, can go a long way in achieving that.

According to a paper from Ericsson, Arthur D. Little and Chalmers University of Technology, doubling a country’s broadband speed leads to a 0.3 percent increase in economic output.

The study looked at 33 OECD countries, which includes some of the most prosperous nations, and found that doubling the broadband speed for an economy increases GDP by 0.3 percent.

That’s the equivalent to $126 billion every year, or more than 14 percent of the average annual growth rate of those countries during the last decade.

The Arab world as a whole is lagging behind when compared to other regions in the development of broadband networks.

This results in slower growth and youth unemployment, the World Bank said in 2014, noting that “broadband can radically change the socio-economic prospects for the region and contribute to higher growth and shared prosperity.”

This is achieved by making business processes more efficient, expediting innovation and improving business deployment capabilities with dynamic supply chain management and access to labor, raw materials, and consumers.

If Lebanon succeeds in boosting its broadband infrastructure, the exchange of valuable goods, both services and ideas, will improve, along with meteoric economic growth over time.

 

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