Anger in Lebanon as struggling telecoms sector increases rates

Experts fear the increase will make internet, mobile phones and data a luxury for many Lebanese

Antennas are seen on an Ogero Telecoms building in Beirut, Lebanon. Reuters

New rates for Lebanon’s telecoms sector went into effect on Friday, the result of a last-minute law passed last month by the country’s Cabinet days before it went into caretaker status.

The tariff increase means that all phone and internet subscriptions will now need be paid at the central bank’s dollar rate, which fluctuates daily, effectively raising bills exponentially. As of Friday the Central Bank rate was at 25,300 Lebanese pounds to the dollar.

Before the new tariffs came into effect, all subscriptions were paid at the official rate of 1,500 Lebanese pounds to the dollar.

But a devastating and prolonged economic crisis means the Lebanese pound has plunged in value, making the official government rate nearly obsolete.

The Lebanese pound is now worth around 95 per cent less than it was three years ago, when the economy began to enter its steep decline.

Khodr Jaber, a full-time taxi driver living in Beirut, said price increases have added insult to injury for Lebanon’s increasingly impoverished population.

“This isn’t right,” the 57-year-old said. “People can’t handle it anymore. Food is expensive, fuel is expensive, electricity and now our phone bills.”

In comparison to 2019, when a proposed Whatsapp tax was enough to cause mass protests, the sharp increase in the price of telecoms appears to have been grudgingly accepted by a resigned populace.

As the first symptoms of Lebanon’s economic crisis began to show in 2019, a proposed tax on the usage of WhatsApp — the internet messaging app used by most Lebanese — led to nationwide protests against Lebanon’s ruling class that lasted months.

As the revolt to take down Lebanon’s ruling class slowly petered out, the symptoms of financial collapse became more acute. And little has changed for the better in the past three years, with the same political elite in control of Lebanon’s government.

Reforms necessary for unlocking billions of dollars in international aid have yet to be enacted, agreement over a financial recovery road map has dragged and a bailout by the International Monetary Fund remains a long way off.

Commercial banks in 2019 imposed capital controls on small depositors, barring access to dollars and only allowing them to gain access to their money in Lebanese pounds at vastly reduced rates.

And now, the UN reports that about 80 per cent of Lebanon's population has become impoverished.

The small Mediterranean country suffers from chronic shortages of fuel, power, water, wheat and medicine, while prices for goods and services have soared due to severe inflation.

Government subsidies, which before helped keep costs low for the average citizens, have slowly been rolled back on goods such as medicine and fuel, making them out of reach for many.

Authorities hope the increase in prices for telecoms will help boost the failing economy.

Back in February, telecoms minister Johnny Corm said that the struggling sector would not survive if there was no increase in prices. He told local media in May that total revenue for the sector is expected to increase drastically following the implementation of the new tariff, from $70 million to $350m.

For months, Lebanon’s telecoms sector has been on the verge of collapse. Internet and mobile coverage cuts have increased due to power and diesel shortages as well as theft of vital infrastructure.

Mohammed Najem, co-founder of Beirut-based digital rights organisation SMEX, told The National that it is unclear whether the price increases would result in the increase in revenue promised by Mr Corm.

“With these price increases, the sector will just be sustaining itself, remaining on the brink,” he said. “Lebanon will become a place where no one will be able to use telecoms except those who are privileged.

“The prices have increased at least five times what they were. A lot of people can't afford these prices, which means many people will either use much less internet or they will go totally offline.”

Mr Najem cited neighbouring Syria as an example. The war-torn Arab nation increases the price of telephone and internet packages last year, but with a population impoverished by years of war and international sanctions, usage decreased and the country’s telecoms sector did not see the significant revenue bump it had hoped for.

Rather than expanding Lebanon’s telecoms sector and developing infrastructure, Mr Najem said, authorities are “milking it for cash like a cow”.

Imad Kreidieh, head of the state-owned internet provider Ogero, agrees that the revenues would not allow for further development of the sector. He said the price hikes would simply allow the sector to sustain itself as it is now, preventing further collapse, while infrastructure development will remain out of reach for the struggling nation.

And because mobile data will become too expensive for many, Mr Kreidieh predicts there will be a change in consumer behavior, with more Lebanese opting for traditional broadband services over data.

Many Lebanese have voiced concern over being forced to shoulder the burden of their nation’s economic collapse while its politicians bicker and trade blame.

“Nothing will change as long as these mafias are in power. The government doesn’t do anything except raise prices on us,” said Mr Jaber, the taxi driver.

He told The National that he can barely afford his current bills. With the new prices, it will become difficult for him to top-up his mobile phone.

“Soon people will be calling to each other from rooftops like in the old days,” he joked. “Because no one will be able to afford WhatsApp.”