ESIS extension / Latvia / Alternative Networks / Update Memo 6

The following report outlines new developments in the past three months and the state of on-going developments.

The development of Latvia’s regulatory regime was started by the 1993 Law on Telecommunications and an Umbrella agreement made in 1994 between the Latvian government, Latvian incumbent telecommunications operator Lattelekom and the international investor. The 1993 Law on Telecommunications gave Lattelekom exclusive rights until 2013 on all basic telecommunication infrastructures and services.

The membership of the WTO and further European integration and full membership of the EU define the main obligations of the Latvian government to liberalised telecommunications markets by January 1, 2003.

The parliamentary approval of a new Telecommunication Law was suspended until the end of the Dispute resolution procedure, between the strategic investor TILTS-Communications and the Latvian Government.

Licences for public voice telephony and public network infrastructure are not issued because exclusive rights on these are reserved to Lattelekom for 20 years (until 2013) under the Law on Telecommunications.

Telecommunications services can be provided without any authorisation on private telecommunication networks, but only for an organisation’s own needs and without any transmission to Lattelekom’s network or from any foreign telecommunications network.

According to article 16 of the Law on Telecommunications, an individual licence from the Ministry of Transport is needed for the establishment of a public mobile radio telecommunications network. Legal entities may provide value-added services by using Lattelekom’s basic telecommunication service (leased lines). Other telecommunication services, again built on Lattelekom’s basic services, can be offered without a licence from the Ministry of Transport, but under a regime of permission.

To day all business constraints and entry barriers exist, because there are no changes and developments in the telecommunication legislation.

1.3 Attitude of the incumbent operator towards alternative network providers

Extremely negative. Potential service providers avoid to present available data on their plans in public and to take part in the public telecommunication service business.

Latvian Government declares that all types of telecommunication activities should be liberalised by the year 2003. The Latvian governmental negotiation team has been established for discussions with TILTS Communications. Its objective is to revise the mentioned clauses and to co-ordinate competition policy in the near future. Negotiations are going on (Privatisation Agency with Lattelekom's strategic investor Sonera) about shortening the monopoly status (until 2003).

The above mentioned negotiations between the strategic investor and the Privatisation Agency is now transferred to a Court dispute resolution.

The development of Telecommunications technologies point out that the existing Latvian Telecommunications Law is out of date to day. The terms and definitions of services under exclusivity rights need to be up-date. There are many challenges for entrants to open their own business.

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

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 services after the cancelling of the Lattelekom's monopoly.

The names of the companies offering the networks are the same: electricity company Latvenergo, rail-way company Latvian Railways, radio and TV broadcasting company State Radio and TV Centre, mobile network operators and cable TV network operators.

But there are new tendencies. As a result of convergence of technologies the existing networks are more transparent for other companies offering new services. It stimulates the development of new market segments and is a good opportunity for new entrants. As an example one can note the WAP services offered by mobile companies.

All data transmission service providers and mobile service providers use the Lattelekom's infrastructure.

But, really the Regulator support the additional important clause. If the dominant operator with exclusivity rights cannot offer the basic services on demand of customers, for example leased lines, the new entrant have the rights to develop their own network, based on wireless technologies. Hence, there are new entrants with significant market power.

One of them is Baltkom Net. Baltkom Net, as an ISP to day, offers dial-up and on-line services with up to 10 Mbps access.

The development and convergence of the Internet content and service activate the market of Content Providers / integrator services. To day there are new and popular content provider/integrator portals with access to radio and TV programs.

In September year 2000 the new portal "Tvnet" starts to offer content services. Today two popular TV news programs are available on the Internet. TV news are also available in all Baltic countries directly or from archive.

In August year 2000, a Internet Service Provider Company with significant market power joint the stock company PARKS LVNET. They established the new economy enterprise-joint stock company DELFI. The new portal www.delfi.lv was opened for information services by JSC DELFI.

Starting from September 18, year 2000 the new pre-paid card service –Baltic Economic Telephone (BET) was available for customers of mobile network Baltkom GSM and Lattelekom. This means there are lower tariffs for international calls and for call from fixed to mobile network Baltkom GSM.

Please note that this report has been prepared under the sole responsibility of the ESIS II contractors.
It does not necessarily reflect the views of the Commission, nor does the Commission accept responsibility for the accuracy or completeness of information contained herein.
The ESIS Team of contractors welcomes any additional information or corrections.