July 1999

Latvia Master Report

1. The interaction between business and regulatory constraints

1.1 The regulatory background

According to the General Agreement between Government of Latvia, Tilts Communications and Lattelekom as well as the Telecommunications Law, Lattelekom is the exclusive provider of all basic fixed (wire) public telecommunications services in Latvia until 2013. This comprises international calls, within the state and local calls, in cities and in the countryside as well (including leasing of lines). There is a contradiction with one of the basic principles of evolution of common information infrastructure.

1.2 Business constraints and entry barriers

Several service providers would be ready to provide various types of public services (e.g. telecommunications services, leasing of lines etc.). Lattelekom's monopoly right hinders these potential activities at present.

1.3 Attitude of the incumbent operator towards alternative network providers

Extremely negative. According to such attitude potential service providers avoid to present publicly available data on their plans to take part into the public telecommunications services business.

1.4 On-going regulatory developments concerning alternative networks

To liberalise telecommunications networks and services in Latvia governmental commission has been established for discussions with TILTS Communications. Its objective - to revise the mentioned clauses and to co-ordinate competition policy in nearer future. Negotiations are going on (Privatisation Agency with Lattelekom's strategic investor Sonera) about shortening monopoly status (until 2002-2003).

2. Inventory of the major "public" utilities with a potential for use in IS applications

2.1 Types of companies offering networks

• Lattelekom only has the right to offer its network for public services. Nevertheless there are several institutions in the country, that potentially can become the public telecommunication network owners and offer their services after cancelling the Lattelekom's monopoly.

• Latvenergo concluded the agreement with Lattelekom about placing optical cables on 110 kilovolt power lines in 1994. Latvenergo received a portion of the networks capacity for creation of its own telecommunications network for the permission of placing cables. The terms were included that the network must be exploited only for needs of Latvenergo. Latvenergo is the full owner of the access network to the optical backbone. Optical communications network will be spread to 182 transformer substations, high-capacity exchanges could be installed at the substations. Latvenergo is planning to use the overcapacities of the exchanges for public telecommunications services too. Latvenergo will invest more than EURO 6 Million in modernisation of the network, a half of these means has been assimilated. Latvenergo plans to complete the creation of digital network in 2002.

• Latvian Railways (Latvijas Dzelzcelš) are plans to use its optical communications network for receiving maximum benefit from the investments. Since Soviet time Latvijas Dzelzcelš is providing telecommunications services to hundreds of subscribers of analog network, they are little by little connected to the Lattelekom network. There is planned to install at every railway station an exchange for 100 subscribers as minimum, the digital network will be completed in the year 2000. Thus Latvijas Dzelzcelš would provide qualitative telecommunications services for 50-60 subscribers in the surroundings of each station. Latvijas Dzelzcelš plans to invest for the creation of the optical cable network EURO 19 Million.

• State Radio and TC Center has an infrastructure for radio and TV broadcasting covering whole territory of Latvia. Mobile communications and cable TV operators also have their own infrastructure. Publicly available information on the plans of usage of these networks for provision of basic telecommunications services is not presented nowadays.

• State Information Network Agency has telecommunications networks in Riga and Jurmala, but they are placed in the cable canals that are the property of Lattelekom. Therefore it is not really to speak about usage of these networks for competition with Lattelekom.

2.2 Type of operators using the networks

All data transmission service providers (23 providers) and mobile service providers use the Lattelekom's infrastructure. In reality only LATNET has its own infrastructure.

2.3 Type of services offered by the operators on the networks.

Full set of data transmission services (TCP/IP and X.25).