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.
Your analysis measures the impact of the outage on the ict sector.
Nowadays a generalized internet outage affects every sector of the economy, Just imagine how many business came to a halt without email, without bbm, without being able to download / upload files, companies that host their business software in the cloud, companies that link multiple branches over a vpn, even stupid things like cafes who rely on customers coming in to work using the cafe’s internet connection.
All these small things add up and make up a big percentage of the economy. It is very difficult to estimate the real impact, when looking at other similar outages the number most used is 60% of the economy relying on the internet in a form or another.
another error in your calculations is your division of year to days. you are counting 365 working days a year. in lebanon the number is more like (52 * 5) weekdays – 15 official vacation days – 15 paid vacations = 230 working days.
in that case, the number can go as high as 104 million dollars per day.
Panos,
60% of the economy relying on the internet is a bit too much for Lebanon specially when our internet penetration is still at 33% and connections aren’t that reliable outside Beirut.
As for the working days, internet business doesn’t stop any day of the week does it? unlike other types of jobs.
Anyway like I said, numbers are definitly bigger than what I posted and if it’s really up to 100 million per day, this is more than disastrous.
What about opportunity cost for all the time wasted sending and resending e-mails, and refreshing the browser infinitely with no result?
You should consider the tertiary sector’s contribution to the GDP (about 70-75% I think), as a good chunk of service companies were operating at 50% efficiency today (if not less in some!)
IMO, 40 billion/year is abt 110 million a day (average and don’t forget holidays), 70% of it comes from the service sector (70% x 110 = 77M), and 30% of the operating at 50% capacity is (77 x 30%) x 50% = 11.55M
So we could buy a fu*king cable every day and still come out better than today financially.
We live in the Middle Ages!
Where I live, we had an outage in my area that lasted 9 hours. However, I still had 4g, and it was still hell. I seriously don’t know how people living in Lebanon can take all this crap and still not do anything about it. I wouldn’t last a month in Lebanon.
Man this internet outage is unbearable, I cannot even post comments on blogs, no wait…
Seriously, the only people who are “really” affected are online gamers and heavy downloaders. It’s not a total “blackout” per say, sending e-mails and opening up websites never stopped working for me, it just got a lot slower, and the latency got a lot higher, that’s all. We’re still using the CAMDOS cable.
But rest assured, normal internet activity will not resume for a few weeks, cause that’s how long it takes to fix a submarine cable.
The same thing happened yest