Fixed Line Telecommunications Services
The main operator of the fixed telecommunications network in Lebanon is Ogero (Organisme de Gestion et d’Exploitation de l’ex Radio Orient), which is a public establishment of industrial and commercial nature, which was created in 1972 to manage and operate the telegraph and submarine networks of the now defunct Franco-Lebanese Radio Orient company. Since 1996, fixed telecommunications services have been provided by the MOT through Ogero whose role includes the operation, maintenance, sales, marketing and billing of the fixed line network.
Law 431 (EN – AR) calls for the establishment of a state-owned operator, Liban Telecom, through the merger of the operations of Ogero and two directorates of the Ministry of Telecommunications. The new company, Liban Telecom, would be an integrated telecom operator to whom a comprehensive telecommunications license will be issued, allowing it to provide services which include fixed and mobile telephony, local and international communication, voice and data access, pay phones, emergency call services, dial-up and printed directory information services.
It is left to the Telecommunications Regulatory Authority (TRA) discretion to grant to Liban Telecom exclusive rights over basic fixed voice service, public international voice service, telex and telegraph services, for up to five years from the date of its establishment.
Following Liban Telecom’s corporatization, Law 431 (EN – AR) calls for its partial privatization through the sale of 40% to its shares to a strategic investor within two years of its establishment. The subsequent sale of the remaining shares is left to the discretion of the Council of Ministers.
Telecommunications Regulatory Authority
Law 431 (EN – AR) calls for the establishment of a Telecommunications Regulatory Authority (TRA) endowed with the legal personality, administrative and financial autonomy. The TRA is composed of the Chairman and four members, who should be dedicated to office on full time basis and appointed by Decree in Council of Ministers for a non-renewable, and non-extendable term of five years. The TRA main duties include issuing, amending, suspending, and withdrawing licenses as well as supervising their execution, while encouraging competition and ensuring market transparency.
The Telecommunications Law gives the TRA the mandate and the responsibility to issue regulations pertaining to competition, interconnection, dispute resolution, pricing, quality of service, consumer affairs, spectrum, and any matter which the TRA considers necessary to meet the objectives of the Telecommunications Law.
The TRA members and chair were appointed in February 2007 for a 5 year term. Since then, several regulations were issued and TRA was fully operational until February 2012, time by which the last board members left office.
Mobile Telecommunications Services
The mobile telecommunications sector was launched in Lebanon in 1994 when the Government entered into Build Operate Transfer (BOT) undertakings with two operators, Cellis (67% owned by France Telecom) and LibanCell, to offer GSM services for a period of 10 years and 3 months, with an extension clause for another two years.
In 1998, as this sector witnessed an unforeseen rise in actual demand, dispute arose between the operators and the Government: operators were accused of breaching the contract as the number of subscribers exceeded the 250,000 cap and of transferring revenues falling short of the amount due by revenue sharing scheme. Facing such dispute and its ensuing litigation, the government decided on June 16, 2001 to terminate the BOT contracts prior to their expiration. While their rights to their outstanding claims and a fair and equitable compensation were preserved, the operators brought the dispute to international arbitration. All litigation issues related to the termination of the BOT contracts have been closed to date.
Following the termination of the BOT contracts, two joint stock companies Mobile Interim Company 1 S.A.L. (MIC1) and Mobile Interim Company 2 S.A.L. (MIC2) were established on behalf of the Ministry of Telecommunications to hold the mobile sector assets which reverted to the Government in 2001. The shares of MIC1 and MIC2 are registered in the name of two banking institutions acting as fiduciary for the Republic.
After two attempts of privatization through the sale of assets and issuance of licenses in 2003 and 2007, the mobile telecommunications sector’s network assets remain today fully owned by the government. The Ministry of Telecommunications has been in charge of conducting tenders for the award of management contracts, alternated with frequent extensions to guarantee the continuity of service amidst recurrent delays in tender execution. The two mobile businesses are currently managed by two private mobile operators, Kuwait’s Zain group and Egypt’s Orascom.