July 2000

Latvia Update Memo

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

1. Introduction and Summary

The present government of Latvia was elected in May 2000. Its most significant achievement certainly was the closure of negotiations on five accession topics of the European Union. Latvia declared its readiness to open negotiations on 20 (out of 31) accession topics, including IT&T policy. In May 2000 the new Prime Minister Andris Berzins provided a declaration of the Work of the Cabinet of Ministers. An extract from the declaration is to be found below. There are expectations that the role of government in the IS issues will increase. The declaration includes a range of essential actions in the chapters "Communications" and "Informatics". WebPage: http://www.mk.gov.lv/eng/primeminister/.

However it is impossible to predict, only a short time after the delivery of the declaration, how the implementation of the political statements will actually affect the development of IS in Latvia.

1.1 Extract from the Declaration (unofficial translation)

• The government supports the development of market economy, not market society, one of the targets being the establishment of information society in Latvia.
• Implementation of arranged and ambitious foreign activities is a priority
• Create conjunctions for rapid economical growth in Latvia
• Governmental affections to different economical and social questions will be based on vision of strategic development.
• The government will join society in discussions of important questions and will model a wider and more temporally, open and constructive dialog.
• The government will further fight against a negative attitude in the society and in the state
• The government will work, in order to increase the state governing systems’ administrative capacity.

1.2. Extract from the sections about Communications and Information

1.2.1. Communications

• Shall adopt new and modern draft laws on telecommunication service, that protect consumers’ rights;
• by the year 2003 shall achieve decrease of the monopoly status of Lattelekom and emerging of competitiveness in the sector of telecommunications;
• shall immediately liberalise the market of mobile communications, determining distinct criteria for issuing of licenses and starting issuing of licenses for new operators.
• by the year 2003, shall ensure access to free emergency aid telephone services for every resident;
• shall ensure qualitative detection of public television and radio programmes in the whole country.

1.2.2. Information

• prior trends for investments in information for the years 2000-2001 shall be education, introduction of integrated information system of state importance and its components, as well as elaboration of normative acts in the sphere of information:
• by the year 2001 shall elaborate and within the period of one year introduce an integrated transport information system for co-ordination and optimisation of all kinds of traffic and loading processing.
• shall promote the development of the Internet, combating unfair competitiveness among the Internet service providers.

2. Information Society Policy

2.1. Historical overview and general legislation

First legislative initiatives, regarding development and operation of state-significant information systems and major intellectual property rights, started soon after regaining independence in the beginning of 1990-ies. The initiatives resulted in the laws on author’s rights and neighbouring rights, patent rights, trademarks, industrial designs, in 1993. It also resulted in the government regulations on state-significant information systems in 1994, and Latvia joined the Bern Convention, also in 1993. The European Agreement between Latvia and the EU, which was signed in 1997, was the next step.

It must be said that work in the area of IT&T legislation in Latvia has largely been uncoordinated, and it has been based mostly on the government’s political desire to react to the European Union’s various directives. Nevertheless some of the common basic principles were kept:

• Each member of society has the right to be informed. Therefore, information from the state’s institutions of authority and governance must be generally available. Only law can limit the accessibility.
• Information about individuals may not be disclosed if the information would cause any type of harm to the respective individual. Regulations for information allowed to be revealed and the order for disclosure is set out in the law.
• Intellectual work must be facilitated, ensuring people who are active in this area with sufficient and stimulating compensation.

2.1.1. Present general legislation

The Latvian government has joined the Bern Convention, World Trade Organisation and signed the TRIPS Agreement (in 1998), and is planning to join a number of other international institutions. Latvia has joined some important agreements, for instance, Law on "Worldwide Intelectual Property Organisation (WIPO) agreement of Author Rights" and Law on "Worldwide intelectual property organisation (WIPO) agreement of performance and phonograms" both adopted on February 2000. However, there are still some agreements waiting for adoption (e.g. the WIPO Treaty, and the Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data). All these agreements will have a serious impact on the IT&T sector and Latvia need to establish new laws and regulations in concert with the aforementioned agreements and to make the necessary amendments to existing laws.

Presently (second quarter of 2000), the situation with IT&T legislation is the following:

• Major intellectual property protection legislation is in effect since 1993.
• The law On Publicity of Information (Information Freedom Act) is in effect. The law On National Secret, which limits overall accessibility, is already in force.
• The Criminal Code of Latvia contains several articles related to violation of information technology acts. Nevertheless, it is not easy to detect these violations of law and it is even more difficult to prove them. Amendments to the Criminal Code have been drafted envisaging considerable punishment for computer-related criminal acts; The Criminal Code already currently contains rather serious sanctions for infringement of copyright; corresponding additions should still be made to the Administrative Offence Code;
• New draft Telecommunications Law was submitted to the Cabinet of Ministers in December 1999.
• The Law on Authors Rights and Neighbouring Rights (harmonised with EU directives) has been cancelled and replaced by the new Law on Authors Rights adopted in April 2000.
• The Law on Personal Data Protection was adopted in March 2000.
• Law on National Information Systems (responsibilities and competence of government bodies regarding collection and processing public information as well as provision of general access to public information) was been submitted to the Cabinet of Ministers in August 1999. In December 1999 it was still under reconciliation by ministerial experts and officers.
• Draft Government regulation regarding protection of health of employees using computerised workplaces (implemented EU directives 89/391 EEC and 90/270 EEC) has been submitted to the Cabinet of Ministers but is not yet adopted. The draft regulation is expected to be in effect from January 2001.
• Government regulation regarding procedure of output of information from government and municipal institutions has been adopted in August 1999. This regulation aims at implementation of the Information Freedom Law.
• Government regulation regarding output of data from the Population Register was been adopted in March 1999.
• Statements On Electronic Data Base Protection are included in the new Law on Author Rights.
• Government regulations regarding information systems security were adopted on March 2000.
• Government regulations regarding provision of making national integrated information system (megasystem) are adopted on March 2000.

2.1.2. Key legislative measures

Key legislative measures to be implemented are the following:

2.1.3. Issues

Liberalisation

2.1.4. New laws/measures under preparation

• Telecommunications Law
• Law On National Information Systems—responsibilities and competence of government bodies regarding collection and processing public information as well as provision of general access to public information.

Several concepts have been developed and submitted to the Government:

• unified registration of judicial persons;
• registration of punishments;
• declaration of residence address by natural persons.
• digital signature and electronic document.

2.2. Umbrella Policies and national IS strategy

The National program "Informatics" is a complex target program for the time period 1999 - 2005, consisting of 13 subprograms.

The programme is more carefully described in the IS promotional activities report.

Several concepts have been elaborated that details separate sections and subprograms of the National Programme "Informatics":

• Conceptual and methodological basis of the integrated national information megasystem;
• Concept of the Government Voice/Data Communications Network;
• Conceptual and methodological basis of the Baltics Government Data Communications Network.

2.3.IS Application Areas

See 2.4.

2.4. Government and administration (national, regional, local)

Qualitative reorganisation and integration of the National Information Systems has started in the framework of the National Program Informatics for radical enhancement of information quality and formation of a user-friendly access.

With this conception, it is emphasised that the priority for the country is to organise its main objects registration. This will come before other systems elaboration: private persons (population), legal persons (enterprises, establishments, organisations), real estate (land, buildings, owners) and movable property (transport vehicles, owners), as well as state finances (taxes).

The following registers follow these principles:

• Population Register;
• Enterprise Register;
• Real Property Register
• State Vehicles Register;
• State Revenue Service information system.

Presently, 30 branch information systems are in operation, e.g. Forest Inventory database, Legal Acts IS, Integrated Data Processing System of Residential Buildings, Environment Data IS, etc.).

Because of the necessity of close interoperability between different information systems, a mega system will soon be established, using common data fields as well as unified user’s interface, access principles and authorisation procedures. The use of this mega system will avoid duplication of records and coincidence of records in documents and databases as well as it will provide united and user-friendly access to information.

The unified megasystem will be spread to all regional and rural administrative centres and to number of cities, border checkpoints, ports, etc, to all interested institutions. It will allow moving basic data entry and usage procedures to places where information is originated or used and to provide direct on-line access to information for everyone who has the proper authorisation. All end-systems irrespective of their functions or ownership – various IS, users of information, remote data entry and access points will be joined by means of the high speed Government Data Communications Network.

In order to implement all plans and to achieve the aforementioned goals on both state and municipal levels, elaboration and implementation of information systems for local authorities have been started on a qualitative new advanced level and connected to the megasystem in order to

• conduct direct data entry into all National Information Systems;
• use information collected in all components of the megasystem for satisfaction of local needs;
• provide electronic document exchange throughout the country;
• envisage general access to public information and electronic contacts of population with State and local authorities.

2.5.Telecommunications and Internet

2.5.1. General telecom policy

The Government of Latvia is restructuring the telecommunications sector to better meet the needs of national economic and social development in an increasingly information-intensive regional and global economy. The government also strives to harmonise the telecommunications sector and align it with EU requirements, principles and practices. The reform of telecommunications sector and its realisation is declared and determined in the new telecommunications sector policy for Latvia, that was approved by the Cabinet of Ministers in 1998.

The policy envisages:

• opening the telecommunications market to new providers and competition;
• establishing a National Regulatory Authority independent from the government and the operators;
• privatising the state ownership interests in Lattelekom.

In realising the telecommunications sector policy, it is vital that there is a sound climate for investment and business activity. Improving legislation and regulations, and developing an open and stable regulatory environment will fulfil this. Opening the provision of all networks and services to competition progressively will perform liberalisation of the telecommunications sector. The government will define the date when the telecommunications sector will be open to competition.

2.5.2. Public telecommunication operators

In order to improve the telecommunications services radically an international call for tender was organised in 1993. International Consortium TILTS Communications that was established by Cable & Wireless (UK, 73%) and Telecom Finland (Finland, 27%) became the winner of this tender. In 1995 International Finance Corporation (World Bank) purchased a 10% stake in TILTS Communications from Cable & Wireless portion. In 1998 Sonera (formerly Telecom Finland) purchased stake of the Cable & Wireless. Public telecommunications operator Lattelekom was founded in 1994 by TILTS Communications (49%) and government of Latvia (51%); its basic capital is USD 282 M.

2.5.3. Licensing

The Umbrella Agreement gives Lattelecom the exclusive licence right to provide public voice telephony and public network infrastructure to the fixed lines for 20 years (until 2013). A state institution can create a specialised state telecommunications networks without any authorisation but in co-ordination with the Ministry of Transport (see article 15). Telecommunications services can be provided on private telecommunications networks without any authorisation but only for own needs and without any transmission to Lattelekom network or from any foreign telecommunications network (article 13 & 18).

Under article 16 of the Telecommunications Law, an individual licence from the Ministry of Transport is needed for the establishment of a public mobile radio telecommunications network. Two GSM licences are already accorded as of today. However it is most probable that the 3rd GSM licence will not be given in the foreseeable future. As for satellite communications, an individual licence is required.

Legal entities may provide value-added services by using Lattelekom’s basic telecommunications services (see under article 14 of the Telecommunications Law, enhanced telecommunications services). As for the other telecommunications services, they can be offered without a licence from the Ministry of Transport, under a regime of general authorisation.

2.5.4. Universal Service

Under article 7 of the Telecommunications Law, Lattelekom is obliged to develop the public network as to guarantee the provision of quality basic telecommunications services. Lattelekom is also obliged to ensure accessibility of these services to all residents and also the right for users of telecommunications services to connect to the public network on a non-discriminatory basis.

2.5.5. Tariff policies

The Telecommunications Tariff Council is an independent body composed of seven experts appointed by the Government. The Council sets tariffs and rates for basic telecommunications services, review complaints from users and submit recommendations to Lattelekom on the application of tariffs for basis services. As provided by article 11(3) of the Telecommunications Law, tariffs for basic telecommunications services will be rebalanced according to cost-orientation. Expressed in net-costs, with consideration taken to level of income etc, the Latvian telecommunications tariffs are two to three times higher than elsewhere in Europe.

Under article 16, interconnection conditions, including tariffs, have to be the same for all operators of public mobile radio telecommunications network.

2.5.6. Quality of Service

Network operators have the duty to ensure that telecommunications users’ rights are protected in accordance with the 1992 law On the Protection of Consumer Rights. They are responsible for ensuring the quality of services in accordance with the standards, technical regulations and stipulations in the contracts for the provision of services.

2.5.7. Interconnection

Under article 16 of the Telecommunications Law, the conditions that shall be observed by a public mobile radio telecommunications network when interconnecting to the public telecommunications network shall be set by Lattelekom. Under article 15 (2) it is stated that Lattelecom is also responsible for observation of the requirements for the implementation between the specialised state telecommunications networks and the public telecommunications network. Interconnection prices are not made publicly available. The Department of Communications of the Ministry of Transport should supervise the interconnection process.

2.5.8. On going developments in telecommunications liberalisation

The Government’s working group is dealing with the privatisation of the state segment of shares in Lattelekom. The group was set up through a decision taken by the Cabinet of Ministers. The Minister of Finance is nominated as a chairman. The working group’s terms of reference cover:

• negotiations between Privatisation Agency and the "Lattelekom" foreign investor "Sonera Ltd" on the alteration of Umbrella Agreement;
• compensation for the reduction in the term during which "Lattelekom" enjoys monopoly rights;
• terms for privatisation of the state share in "Lattelekom";
• transformation of "Lattelekom" into a public stock company, floating for public purchase the state segment of shares.

2.6. Electronic commerce

The Prime Minister’s decision of 5th of May 2000 decides that an extra group on making conception of electronic commerce shall be organised. The state secretary of Ministry of economics is in charge and the group shall analyse and motivate a need of planning electronic commerce legislation until May 2001.

2.7. Education and research

A certain progress has been achieved in solving various issues of implementation of information technologies in the field of education by the project Latvian Education Information System. The project was, on a tender basis, assigned to the University of Latvia.

Priority within the implementation of the project is given to the methodological tasks, development of study materials and teacher training programmes. This supports efficient use of hardware and software and the invested financial resources. Development of infrastructure should not be treated as an end in itself; it should be provided an immediate return - modernisation of the process of education, possibilities for all members of society to receive a sufficient computer literacy.

Implementation of information technologies in the educational system is performed consistently. First stage of implementation of the administration information software is already accomplished. Main databases administration and scientific and methodological structures for the information system have been developed. In 1998, the developed products were gradually being introduced in other institutions. New products were being developed depending on the available funding including those being developed for distribution via CD-ROM technology: CD-ROM library, CD-ROM study books, CD-ROM Plus-1 (information technology), Plus-2 (Internet), Plus-3 (Physics & History) which are educational tools with courses and tests. Finally, one could mention the CD-ROM for teaching history at schools developed by the private company Tilde. It uses the multimedia opportunities presenting historical facts and events.

Latvian Information Technology and Telecommunications Association, a professional non-government non-profit organisation, together with major software production companies DATI and SWH-Technology has developed a 20 year long vision for Latvia (as well as Estonia and Lithuania) to become a world-known centre of software service competence. The vision is becoming a fundament for state-wide project comprising major changes in IT&T education and training, and other government-supported actions.

A concerted action started November 1999 to establish a system of higher vocational IT&T education in Latvia aiming to increase annual output of IT engineers up to 6 times.

2.8. Transport

Several projects have recently been launched, the most successful one is the creation of the vessel traffic information system realised by the Maritime Administration of Latvia. Security of navigation, sailing directions, movement the vessels in ports, documentation of the vessels, hazardous freight are the basic data objects of the IS.

The concept on development of the integrated transport information system has been elaborated. The action plan to the concept contains in addition to the development of separate projects:

• implementation of the electronic data interchange standards in transport information systems;
• creation of integrated information system for Latvian Railways;
• creation of information system for insurance of transport means.

Creation of the integrated transport information system will develop various transport services; multi-modal and international approach will promote development of transit freight operations that are vital for the national economy of Latvia.

2.9. Health-care

The Latvian Centre of Health Statistics, Informatics and Medical Technology has developed healthcare information systems. Medical statistics, hospitals, registers of physicians, patients and diseases, health insurance are the components of the integrated system. Introduction of International Statistical Classification of Diseases and Related Health Problems (version ICD-10) will provide achievement of full compatibility with World Health Organisation IS (WHOSIS).

Drugs and drug addiction are the subjects of the Drug Information System developed by the Drug Abuse Prevention and Healthcare Centre. The next activities to come are connected with further development of the Drug Information System, preparation of full future connection with the European Monitoring Centre on Drug and Drug Addiction (EMCDDA) and convergence to European drug monitoring system REITOX.

2.10. Competition

State order for procurement, that value is over LVL 5000 (approximately EUR 8000), is based only on open competition.

2.11. Copyright, intellectual property rights

• The old Law On Author’s Rights and Neighbouring Rights is cancelled and replaced with the new Law on Author Rights adopted on April 2000.
• The Patent Law is in effect as of March 1993.
• The law On Trademarks is in effect as in March 1993.
• The law On Industrial Design Protection is in effect as of May 1993.
• Statements On Electronic Data Base Protection are included in new Law on Author’s Rights.

2.12. Public access to data

The Law on Publicity of Information is in effect as of October 1998. The Law requires information of Government bodies and local governments to be freely accessible unless it is forbidden by some other law, e.g. the law On National Secret that is limiting the general access to confidential information.

• Government regulation regarding procedure of output of information from government and municipal institutions was adopted in August 1999. This regulation is needed to implement the Information Freedom Law.
• Government regulation regarding output of data from the Population Register was adopted in March 1999.

2.13. Privacy, data protection, consumer protection

• The law On Consumer Protection is in effect as of March 1999.
• The draft Law on Personal Data Protection is adopted on March 2000.

2.14. Security

Government regulations regarding information systems security were adopted in March 2000.

2.15. Freedom of expression and information as far as the distribution via electronic networks is concerned

Freedom of expression is granted by the Satversme (Constitution of Latvia).

3. Institutions and organisations in charge of IS regulation

3.1. Ministries

Ministry of Transport - Department of Communications – responsible for development of all telecommunications services including management of certification of telecommunications means, management of the numbering, issuing operators licences, supervision of interconnection process.

Department of Informatics – organises creation of the information infrastructure and implementation of the National Programme "Informatics".

Ministry of Economy - Latvian Privatisation Agency – holder of the State’s capital share (51%) in Lattelekom, responsible for privatisation of Lattelekom.

Ministry of Culture - responsible for laws regarding intellectual property rights. Monitors operations among copyright agencies and the Patent Board.

3.2. National regulatory authorities

3.2.1. Telecommunication tariffs

General tariff policy is fixed in the General Agreement between Government of Latvia, Tilts Communications and Lattelekom. At present, the independent Telecommunications Tariff Council of Latvia fixes customer’s payments for services. Tariffs are changed regularly in accordance with current inflation in Latvia; today’s tariffs are valid from 1st June 1999. Several imbalances in tariff system still exist. Examples of such imbalances are regular subscription charge vs. time charge, local tariffs vs. international and long-distance tariffs and tariffs for analogue customers vs. digital lines.

3.2.2. Mobile communication

Tariffs for mobile communications (including paging) and data transmission services are determined by the market, i.e. they are fixed by providers.

3.2.3. Quality of communication

The Telecommunications Tariffs Council controls the quality of telecommunications services. Criterions of quality and methods of estimation of services are worked out on the basis of recommendations of the ITU-T.

3.2.4. State Telecommunications Inspectorate

State Telecommunications Inspectorate (in the framework of Department of Communications) is responsible for management of the radiofrequency spectrum. The current Latvian national frequency table is drawn up in compliance with international ITU-R Radio Regulation for frequencies from 9 kHz up to 400 GHz. Currently there are over 500 000 radio stations in Latvia - in the terrestrial fixed and mobile radio service, radiophony and television, satellite, amateurs.

3.2.5. On going changes in the institutional structures

• Creation of the National Regulator is envisaged in 2000.
• Independent Data Inspection (to be in charge of Personal Data Protection) regarding New Law on Personal Protection is going to be established in the year of 2001 when the Law will be in effect.

3.3. Office for the protection of economic competition

The Council of Competition controls the fulfilment of requirements of competition legislation, which is under supervision of the Ministry of Economy.

3.4. Consultative councils

The Co-ordination Board of the national programme "Informatics" is one of the most important actors for the implementation of the IS in Latvia. The task of the board is to ensure implementation of the Programme in accordance with the defined and approved priorities. The priorities includes discussing and approval of branch information technology concepts and strategies, assessment of bills and investment projects, the international co-operation programmes, and co-ordination of individual projects. The "Informatics" programme also includes plans for deregulation and privatisation of the telecom sector.

Boards of Informatics have been organised in all ministries. Their task is to deal with informatics issues, representing the interests of their ministry and branch. These tasks include e.g. co-ordination and supervision of informatics issues in the corresponding ministry, development of informatics concepts for their branch, development of computer networks at the ministries and institutions under their supervision and preparation of the priority project investment programmes of the branch. Performing gradual information of state administration in all levels, it is envisaged to form Informatics Boards also in local governments. Their task is to investigate and solve the informatics problems in their regions.

3.5. Bodies in charge of RTD policy

Independent Latvian Science Council is a body in charge of distributing state budget spending via grants to researchers.

3.6. Organisations in charge of the promotion of the IS

Ministry of Transport is the government body responsible for IS at large. The most respected non-government professional association promoting IS is LITTA – Latvian Information Technology and Telecommunication Association.

4. International relationships and agreements

The Latvian government has joined the Bern Convention, World Trade Organisation and signed the TRIPS Agreement (in 1998), and is still planning to join a number of other international institutions. Latvia has joined some important agreements, for instance, Law on "Worldwide intelectual property organisation (WIPO) agreement of Author Rights" and Law on "Worldwide intelectual property organisation (WIPO) agreement of performance and phonograms" both adopted on February 2000. However, there are still some agreements waiting for adoption (e.g., the WIPO Treaty, and the Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data). All these agreements will have a serious impact on the IT&T sector and Latvia need to establish new laws and regulations in concert with the aforementioned agreements and to make the necessary amendments to existing laws.

5. Market: Privatisation, foreign investment, mergers, acquisitions, call for tenders,

According to the General Agreement between Government of Latvia, Tilts Communications and Lattelekom and the Telecommunications Law, Lattelekom is the exclusive provider of all basic fixed (wire) public telecommunications services in Latvia until the year 2013. This exclusivity includes international calls, within the state and local calls, in cities and in the countryside. To liberalise telecommunications networks and services in Latvia, a governmental commission has been established for discussions with TILTS Communications. Its objective is 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 the monopoly status (until 2002-2003). An update of the Telecommunications Law is currently drafted.

In order to improve the telecommunications services radically an international call for tender was organised in 1993. International Consortium TILTS Communications that was established by Cable & Wireless (UK, 73%) and Telecom Finland (Finland, 27%) became the winner of this tender. In 1995 International Finance Corporation (World Bank) purchased a 10% stake in TILTS Communications from Cable & Wireless portion. In 1998 Sonera (formerly Telecom Finland) purchased stake of the Cable & Wireless. Public telecommunications operator Lattelekom was founded in 1994 by TILTS Communications (49%) and government of Latvia (51%); its basic capital is USD 282 M.

The diagram below provides information of shareholders of all public telecommunications operators and the percentage owned.

6. Standards

6.1. Standardisation bodies dealing with IS issues

ITSTK (Information Technology Standardisation Technical Committee) – a body within state-owned limited liability company "Latvijas Standarts" consisting of 17 IT&T professionals is in charge of IT&T standardisation issues.

6.2. Relevant standards

ITSTK has decided to recommend application of international standards (e.g., ISO, IEC, ITU, IEEE) in Latvia without translation and adoption. In particular cases, cover-page-translation-and-adoption method or, exceptionally, full translation are used. ITSTK is primarily concerned of the development of standards of local importance, e.g, "Latvian code-pages", "Latvian ergonomic keyboard", "Latvian language usage related to computers". The Terminology Commission of Latvian Academy of Sciences is doing the Standardisation of Latvian terminology.