The internet outage Lebanon is going through at the moment is the worst in years as it is nearing the 24 hours mark. The cost of downtime is hard to estimate as there are many parties involved and no decent reports on that matter, however it is possible to have a near estimate by using the available statistics and numbers.

outage cost is usually estimated as follows:
Outage cost = downtime hours X cost/hour of downtime

In order to compute the cost/hour of downtime, we need to know how much does the internet sector contribute to Lebanon’s GDP that was $41.484 billion in 2012.
Let’s take the GDP as being $40 billion dollars and the ICT sector contribution as being 5% of it as of 2012. It was 3.8% back in 2008 according to this report and the market has been growing ever since. Given that 70% of the ICT sector contribution to GDP comes from Hardware companies, we can assume that web companies contribute with around 2-3% of the overall GDP.

We need to add to that the number of credit/debit cards online authorizations. Knowing that there are around 2 Million cards in Lebanon (given the yearly growth) with a yearly spending of almost 9 billion dollars (Byblos Economic Report 2011), let’s say 5% of the total transactions are online, which gives us 5% * $9Billion = 450 million dollars per year.

2.5% * $40 billion + 450 million = 1.45 Billion Dollars yearly or 120 million dollars per month which gives us around 4 million dollars per day.

Assuming there are many additional factors that are internet-related, let’s add an extra 2 or 3 million dollars which gives us 7 million dollars lost in one day of internet downtime. To be honest, I thought the number would come out much bigger than 7M but again this is not a scientific or economic study. Nevertheless, I strongly doubt that it would be less than 5 million per day.

On the other hand, what I am sure of is that we only need $10 million dollars to setup a backup line and avoid what has happened in the past three days.

NB: As I stated in the post earlier, my estimate was based on general knowledge, common sense and few numbers and stats and is NOT a reliable economic study. Corrections are more than welcome.