Finland

The role of alternative networks has traditionally been rather limited in Finland. Due to liberalisation and competition in the telecommunication market the demand for services provided through alternative networks has been low. The existing services offerings and the prices of telecom operators and services providers have been found satisfying by customers. However, during last couple of years the interest in alternative networks has started to increase. Especially Telia, the Swedish state-owned operator has been very active in the Finnish alternative network market.

There are number of alternative networks that could be used by telecommunication operators and services providers in Finland. Most of these networks have been built for internal use of the owners only. Through their own networks the companies seek for better efficiency, and in some cases attempt to support new services offerings to their own customers. Some owners of alternative networks are selling the extra capacity to telecommunication operators that use that capacity in their ordinary services. However, most of the owners of alternative networks have been rather passive in marketing their network capacity.

Especially at local level, the interest in alternative networks is expected to increase due to growing competition between operators and services providers. In addition, the owners of alternative networks are increasingly willing to get more revenues from their networks.

The most important alternative networks are electric and gas networks, the communication network of Railtelia Oy (the former network of the State Railways) and cable TV networks. The digital TV distribution solution will be built during the next couple of years.

2. Different types of alternative networks

2.1 Electrical Networks

The electric utility industry is one of the most interesting when considering potential of alternative networks. Deregulation has moved the electric industry toward an open market structure. Increasing competition is forcing electric utilities to improve their operations as well as consider new value-added services offerings to their customers. The electric utility industry has an important advantage. All households are hooked into electric utilities.

At the moment the Finnish electric utility industry is characterised by acquisitions and growing competition. A challenging issue is the competition at single household level.

Electric utility companies have built their own communication networks to improve their internal operating efficiencies (e.g. power distribution monitoring, load management, district heating activities etc.). In addition, often these networks are used in internal IT applications. Selling capacity to telecommunication operators or services providers is very rare at the moment. Networks of local telecommunication operators have ensured some level of competition at local level, decreasing demand for alternative networks. This is quite clear difference when comparing with the situation in countries with telecommunication monopoly. Now the heating competition is increasing interest also in alternative networks. According to some local electric companies interest from operator side to utilise alternative networks clearly increased during 1997. No major contracts or deals are signed yet.

The state-owned energy company Imatran Voima Oy (IVO) has built a nation wide fibre-optic network in conjunction with its power transmission network. Telia Finland (former Telivo) uses this network. IVO and Telia have signed a long-time agreement of use of IVO´s communication network. Today IVO belongs to Fortum Group.

The Ministry of Trade and Commerce, Imatran Voima (IVO) and Pohjolan Voima have established Kantaverkko Oy, a single Finnish grid company. Kantaverkko Oy started in 1997. The company owns the Finnish grid. Earlier IVO´s grid business covered 90% of Finland´s grid.

Several cities have developed their communication networks to serve IT and communication needs of other city organizations. For example, the energy company of Helsinki is expanding and developing its Helnet communication network. As a result Helsinki City will have e.g. fast fiber-optic based network, serving different types of organizations like all schools, hospitals and health care centers.

2.2 Telecommunication network of the State Railways

VR-Group, earlier the Finnish State Railways (VR), had the oldest communications network (since 1861) outside the traditional telecom operators in Finland. The telecommunication operations of VR were transformed into a company from the beginning of June 1998. VR-Group is the main owner of the new company called Railtelia Oy with 60% of the shares. The Swedish Telia owns 40% of Railtelia. The telecommunication networks and related equipment were sold or rented to the new company. A total of 165 employees moved from VR to Railtelia.

The network includes both voice and data communication capabilities. The network covers the whole railway network of 5.800 km (2.200 km optical), and the network follows the railway lines throughout the country.

The telecommunication operations of VR consisted of the following elements:

• telecommunications networks including the transmission network, the radio network, the telephone exchange network and the data transmission networks
• telecommunication networks used in VR´s business activities and in traffic control
• organizations and persons responsible for the telecommunication operation
• operation patterns implemented in the maintenance and development of the telecommunications activities

The current network offers all the same basic telecom services as public operators, and also includes a wide range of different railway specific systems.

2.3 Natural Gas Network

Finland´s natural gas network consists of 900 km of transmission pipeline and around 1000 km of distribution pipelines. The natural gas network covers the major cities in the Southern Finland.

The network is owned and operated by Gasum Oy, the gas company of Neste. Neste is part of Fortum Group. Russian-based RAO Gazprom owns 25% of the shares.

In conjunction with the pipeline Gasum has built a communication network. Computers and radio links are used in monitoring the gas network operations. In addition, the network provides new ways to communicate with customers.

The network based on radio links is used also in data communications. The local area networks of the company are interconnected through the network. In addition, the telephone exchanges are connected through the network. All these uses are for internal use only.

Some of the capacity of the network is sold out to telecommunication operators.

2.4 Cable TV

The cable networks are mainly owned by telecom operators in Finland. In addition, some co-operatives etc. have their own networks. The following numbers are based on information from the Finnish Cable Television Association (FCTA) and the Ministry of Transport and Communications.

The number of households connected to cable network totalled about 910.000 at the end of 1997. About 40% of the Finnish households have the access to cable TV.

The biggest cable operators at the end of 1997 were:

Most of the licensees are operating in small networks with some thousands of subscriptions at highest.

Total revenues of cable TV operations accounted for FIM 444 million in 1997. Helsinki Televisio derived of cable TV business FIM 107 million, Sonera FIM 52.5 million and Tampereen Tietoverkko FIM 30.5 million. There were about 360 persons working around the cable TV transmission activities in the end of 1997.

Cable transmission is governed by the Cable Transmission Act and Decree, as well as the Decisions given by the Ministry of Transport and Communications.

2.5 Satellite TV

Satellite TV is one of the main competitors for cable TV networks. In the end of 1997 a total of 261.000 households had access to satellite TV through satellite equipment, an increase of 30.000 households over 1996.

2.6 Digital TV Network

The working group of the Ministry of Transport and Communications proposes that three digital transmission networks should be built in Finland in the coming years (June 1998). According to the plan, two networks would be built first so that in 2000 they would cover 70% of the population. After that the construction of the third network would be started. The experimental phase of the digital television could begin already in 1998.

According to the proposal the digital television would consist of twelve television channels of present standards, eight of them totally new. The first new TV channels could be founded in 2000, at the earliest, when the actual broadcasting operations are planned to be started. Prerequisites for this are user interface and reliable receiver equipment. The television companies will complete the so-called national user interface, enabling the viewer to choose the programmes and supplementary services from the supply of the digital television. The user interface would make the interactive network services available at homes as well.

Establishing new television channel will cost more than one billion FIM for television companies between 1999 and 2002. According to first estimates it would cost approximately FIM 500 million to construct the networks.

The Ministry of Transport and Communications declared the licences for digital television and radio operations open for applications. In practise, the digital television broadcasting licences may bring 12 terrestrial channels to Finland. According to the Ministry, regular terrestrial digital television transmission will probably commence in the beginning of 2000.

As the digital distribution channel can allocate channel capacity flexibly according to the transmission rate required by the services, there will be a need to distribute capacity on the basis of demand and supply. The multiplex administrator has to be independent and impartial regarding the services providers and the contents provided.

The Finnish Broadcasting Company Ltd. (Yleisradio Oy, YLE) has established Digita Oy, a separate subsidiary to administrate the distribution networks. Digita Oy started its operations at the beginning of 1999.

The receiver equipment will be set-boxes connected to televisions in the beginning. The basic technology has already been defined. Issues related to programmes of the equipment processors are not agreed yet. The aim is to develop open and uniform solutions. Updating the receiver equipment of households is estimated to take approximately 10-12 years.

Digital TV Forum Finland has been established in August 1998 to promote the construction and standardisation of the digital TV network in Finland.