This post is written by Mai Barakrat, an Informa Telecoms & Media analyst
When I first read the statistic, I wasn’t quite sure what to make of it. The country has low mobile-SIM penetration: At end-3Q12 the figure was 94.93%, compared with the Middle East average of 104.80% for the same period. Lebanon also has some of the highest prices in the region: ARPU was US$37 at end-3Q12, against a Middle East average of US$14.58. The country’s high ARPU is due to prices rather than usage.
My initial thought was that people were buying smartphones because of the prestige attached to ownership, rather than for the devices’ functionality. They have the phone, but they don’t have a mobile broadband subscription, a cultural phenomenon that is very much evident in Lebanon.
But a bit more research into this smartphone statistic made me realize that growing smartphone use in Lebanon is another indicator of the untapped demand for Internet connection in the country, and that smartphones are becoming the de facto way to access the Internet for a large and growing percentage of the population.
Users are proving willing to pay what on the face of it are unaffordable prices to be able to access sites such as Facebook and Twitter, and to use messaging apps like WhatsApp and BlackBerry Messenger on a mobile and easy-to-use interface.
This shouldn’t come as a shock when considering the socioeconomic conditions in Lebanon. The country has a large population of young people, who are very tech savvy and westernized in their interests. And, of course, the status that comes with having a smartphone and being able to use all the popular apps is an important driving force for take-up.
What’s particularly noteworthy is that this demand is being tackled in a different way from the norm. Prices are not dropping, but operators are increasing efforts to ensure quality of service:
- In September, both Touch and Alfa Mobile upgraded their networks in a bid to tackle mobile-connectivity problems. The operators were commissioned by the Lebanese government to build 400 new base stations and install 1,200 antennas across the country.
- The Telecommunications Ministry recently announced that fourth-generation mobile networks were ready for deployment when the need to upgrade arises.
- From a fixed side (mainly relating to connecting to Wi-Fi on handsets), submarine-cable capacity has increased 11 times in the past year. It is now 33Gbps, up from 3Gbps a year ago. And Mitsubishi Electric’s new India-Middle East-Western Europe (IMEWE) Cable Network, a 12,091km cable with 10 terminal stations, has just been completed. IMEWE is owned by a consortium of nine leading telecoms carriers in eight countries, one of which is Lebanon.
- What’s more, locally produced content is booming, spurring further Internet use among young people. The most recent example is the launch of Lebanese digital-music provider Anghami, the first mobile and Web music-streaming platform to be introduced in the Middle East.
Although ensuring high QoS for users and providing them with relevant content is inevitably going to ensure growth, the Lebanese market is still being held back by government control of the ICT sector, discouraging healthy price competition.
Both mobile operators are government-owned, as is most of the country’s fixed infrastructure, so there is no need to compete. As a result, mobile broadband prices are still more than double what they are in other Middle East markets. For example, the average 4GB mobile broadband package costs roughly US$14 in neighboring Jordan, whereas people in Lebanon pay US$79 for a 3GB plan.
Yet demand for Internet access is so high that subscribers will pay such prices, highlighting the unexploited potential of the Lebanese market if operators introduce competitively priced offers.