Latvian Independent television (LNT) says it will launch two new digital television channels, one for Latvian music, the other for news, to be broadcast exclusively over cable operator Baltkom TV's digital network. TV5, a free to air broadcast channel said to be affiliated with LNT will also be carried by Baltkom, which distributes its digital signal by optical cable and MMDS in a 50 kilometer radius around the main television broadcast tower in Riga. TV5, which carries local talk programs and reality shows, is also planning to launch a digital 24 hour reality show channel.
LNT, founded in the mid 1990s as a private company, is presently a terrestrial broadcast channel offering entertainment, news and some reality shows in a mixture of locally produced and dubbed foreign programming.
Baltkom TV says it is the first digital terrestrial TV broadcaster in Latvia, a claim which is technically true considering that the signal broadcast over the MMDS network is encoded by the DVB-T standard. However, reception of the MMDS broadcast requires specialized antennas and decoders, while DVB-T as broadcast in other countries can be received with conventional TV antennas and a decoder.
For Baltkom, the start of digital broadcasting, however one defines it, was also the launch of its "triple play" strategy offering a package of digital cable, voice and internet at different prices and configurations. Next year, Baltkom says it will offer video on demand, pay per view, and a greater variety of channel packages for various prices and tastes.
Baltkom claims that its optical cable footprint reaches around 180 000 households in metropolitan Riga, while the MMDS signal reaches up to 360 000 households or more than 1 million potential individual viewers.
Currently, around 2 000 households subscribe to the 49 channel digital service, a number expected to rise to 5 000 by the end of the year and 15 000 next year, or a little more than 10 % of the 120 000 customers Baltkom now has across Latvia. The service costs LVL 10.50 per month, a sum Baltkom director general Peteris Smidre says is less than is charged for comparable services in other countries. Latvia, however, has significantly lower purchasing power than Sweden, where cable and digital cable cost upward of SEK 300 or LVL 20 per month.
LNT didn't give details of its planned news channel, but sources told this blogger much content will be provided by the Latvian news agency LETA. Even though LETA has been technologically innovative (it uses the web extensively), moving into what amounts to a joint venture in TV (especially with a hitherto very small audience) is a major risk for the wire service. Unlike rival Baltic News Service (BNS), LETA does not operate regionally as an alliance of five language services (Latvian, Lithuanian, Estonian, English and Russian) as does BNS.
The news channel will tilt heavily toward business news, LNT director-general Andrejs Ekis hinted at a September 29 press conference. This could heat up competition with print media, such as the Latvian-language Dienas bizness (where this blogger works) as well as Russian-language business publications (most younger business decision makers are tri-lingual in Latvian, Russian and English).
And so this blog has drifted from telecoms into electronic media.
After all, why not?
Wednesday, September 29, 2004
Tuesday, September 28, 2004
Latvian PM jumps the gun on 3G licence auction
Latvian Prime Minister Indulis Emsis said there will be an auction for a licence for Latvia's third GSM/UMTS licence, which will clear the way for entry by a defacto fourth mobile operator. Emsis said the auction was needed to spur competition and lower telecommunications costs to the consumer and that revenues from the sale were of secondary importance.
Emsis made the announcement several days ahead of the planned report by a consulting firm commissioned to study the practicanility of holding a license auction once the moratorium set after a failed 2002 auction ends this fall.
He was commenting on an item in the 2005 draft budget that forecast income of LVL 1.136 million from a UMTS licence.
Strangely, none of the government agencies connected with telecommunications could give a clear explanation as to what this item meant. Raimonds Bergmanis, head of the Communications Department of the Ministry of Transport said it looked like the deferred payments being made by both incumbents for their 2002 UMTS licences.
An advisor to Transport Minister Ainars Slesers said no such amount had been included by the Ministry, and the Ministry of Finance said the source of the figures was the Public Utilities Regulation Commission.
However, Mats Tilly, director of Swedish owned Tele2, Latvia's second incumbent mobile operator which, like Latvian Mobile Telephone (LMT), paid LVL 5.8 million for its UMTS licence, said his company would consider legal action if the conditions of the new licence were substantially different from those imposed on the incumbents, both in terms of payment and execution.
Under their licences, LMT and Tele2 must start commercial UMTS operations by the end of this year, but none have done any marketing, unlike CDMA 450 operator Triatel, which paid around LVL 200 for its telecommunucations operator licences and which has been advertising its coming 3G services in the press. The company expects to start offering voice (with interconnects to LMT, Tele2, Lattelekom's and other networks) and high speed data services (initially around 153kbps, but possibly 1 Mb quite soon) by the end of October.
The 2002 GSM/UMTS licence auction was a failure, even though Radiolinja (Finland/Estonia) and Lithuania's Bite showed some initial interest in the Latvian licence. Analysts here say the real value in the licence, if any, is a shot at the GSM market, which, even with 1.2 million users on both networks, is not seen as saturated. Latvia's population is 2.4 million.
Emsis made the announcement several days ahead of the planned report by a consulting firm commissioned to study the practicanility of holding a license auction once the moratorium set after a failed 2002 auction ends this fall.
He was commenting on an item in the 2005 draft budget that forecast income of LVL 1.136 million from a UMTS licence.
Strangely, none of the government agencies connected with telecommunications could give a clear explanation as to what this item meant. Raimonds Bergmanis, head of the Communications Department of the Ministry of Transport said it looked like the deferred payments being made by both incumbents for their 2002 UMTS licences.
An advisor to Transport Minister Ainars Slesers said no such amount had been included by the Ministry, and the Ministry of Finance said the source of the figures was the Public Utilities Regulation Commission.
However, Mats Tilly, director of Swedish owned Tele2, Latvia's second incumbent mobile operator which, like Latvian Mobile Telephone (LMT), paid LVL 5.8 million for its UMTS licence, said his company would consider legal action if the conditions of the new licence were substantially different from those imposed on the incumbents, both in terms of payment and execution.
Under their licences, LMT and Tele2 must start commercial UMTS operations by the end of this year, but none have done any marketing, unlike CDMA 450 operator Triatel, which paid around LVL 200 for its telecommunucations operator licences and which has been advertising its coming 3G services in the press. The company expects to start offering voice (with interconnects to LMT, Tele2, Lattelekom's and other networks) and high speed data services (initially around 153kbps, but possibly 1 Mb quite soon) by the end of October.
The 2002 GSM/UMTS licence auction was a failure, even though Radiolinja (Finland/Estonia) and Lithuania's Bite showed some initial interest in the Latvian licence. Analysts here say the real value in the licence, if any, is a shot at the GSM market, which, even with 1.2 million users on both networks, is not seen as saturated. Latvia's population is 2.4 million.
Monday, September 27, 2004
Chickens in the budget, eggs to be laid :) ??
My kind colleague Madara, who covers the government, pointed out a line in next year's budget showing planned income of LVL 1.136 million from a UMTS licence. Looks like the elusive # 3 UMTS licence that the government last tried to sell in 2002, at the same time, it is rumored, pressuring Latvian Mobile Telephone and Tele2 to buy their UMTS licences for LVL 5.8 million apiece.
I have already pointed out that the "sneak attack" by CDMA-450 operator Triatel has probably killed any chance of holding another auction for the UMTS licence once the moratorium runs out in a few weeks. The government is optimistic. I 'm gonna ask some folks about this tommorrow. Love them dreamers at the Communications Department of the Ministry of Transport.
I have already pointed out that the "sneak attack" by CDMA-450 operator Triatel has probably killed any chance of holding another auction for the UMTS licence once the moratorium runs out in a few weeks. The government is optimistic. I 'm gonna ask some folks about this tommorrow. Love them dreamers at the Communications Department of the Ministry of Transport.
Flippers, masks and cybersquatters
There's going to be a slightly weird press conference in Riga on Tuesday by a Russian-owned distributor of diving equipment which apparently had its name cybersquatted by a Latvian company in the same business. Trouble is, the court case, based on trademark infringement, was decided almost a year ago, evicting the Latvian company from the www.aquatex.lv domain address.
It appears this is the first cybersquatting case in Latvia, but the reason for the one-year delay is that a) no one noticed it at the time, including this blogger and b) it gives an interesting twist to a presentation that otherwise would be all about aqualungs, flippers and spear fishing. Not exactly what the business/IT press jumps on. It is, apparently, one of the first visits to Latvia by Aquatex Group president Oleg Chebikin, whose company name, he says, was cybersquatted in 2002 by rival Juras vejs (Sea Breeze) in Latvia, another diving equipment and instruction company.
Under Latvian law, at least as Aquatex's lawyer explains it, domain registration creates no property rights, but registering a company and a trademark does. Apparently both irritated and inspired by the appearence his company's cybersquatted domain name, Mr. Chebikin decided to start a Latvian subsidiary, register a trademark and sue the SOBs. He won. Last year...
It appears this is the first cybersquatting case in Latvia, but the reason for the one-year delay is that a) no one noticed it at the time, including this blogger and b) it gives an interesting twist to a presentation that otherwise would be all about aqualungs, flippers and spear fishing. Not exactly what the business/IT press jumps on. It is, apparently, one of the first visits to Latvia by Aquatex Group president Oleg Chebikin, whose company name, he says, was cybersquatted in 2002 by rival Juras vejs (Sea Breeze) in Latvia, another diving equipment and instruction company.
Under Latvian law, at least as Aquatex's lawyer explains it, domain registration creates no property rights, but registering a company and a trademark does. Apparently both irritated and inspired by the appearence his company's cybersquatted domain name, Mr. Chebikin decided to start a Latvian subsidiary, register a trademark and sue the SOBs. He won. Last year...
A nice read from A Week in Wireless
Sometimes I get stuff from other sources that is just fun to read. Hope to be as entertaining myself when the opportunity arises:
A Week in Wireless 154
24th September 2004
Is it just the Informer or has Nokia started to resemble Gollum, from the Lord of the Rings movies?
“Ringtoneses? Nooooo, preciousssss. we doesn’t want to do ringtoneses. Massssster Carrier does ringtoneses, Nokia loves kind Masssssster Carrier.”
Having joined the GSMA and bent to the will of the operators in terms of handsets, Nokia has now taken a step towards dismantling its Club Nokia effort by exiting the ringtones business. Of course the decision is partly motivated by the fact that its ringtones business wasn’t making much money but Nokia’s suggestion that it only started offering them in the first place as a way of showcasing the capabilities of its hardware seems a trifle rich.
(some stuff snipped)
On the subject of children, the BBC ran a wonderful story this week about some comments made by one David Butler, head of the UK’s National Confederation of Parent Teacher Associations. Mr Butler claimed recently that radio waves from mobile phones are good for children because they heat up their heads, allowing them to think more clearly. He said: “That heating effect actually improves the neuron transfers between neural pathways, and therefore your thinking ability goes up.”
Time for your medication, Mr Butler.
_____
A Week in Wireless 154
24th September 2004
Is it just the Informer or has Nokia started to resemble Gollum, from the Lord of the Rings movies?
“Ringtoneses? Nooooo, preciousssss. we doesn’t want to do ringtoneses. Massssster Carrier does ringtoneses, Nokia loves kind Masssssster Carrier.”
Having joined the GSMA and bent to the will of the operators in terms of handsets, Nokia has now taken a step towards dismantling its Club Nokia effort by exiting the ringtones business. Of course the decision is partly motivated by the fact that its ringtones business wasn’t making much money but Nokia’s suggestion that it only started offering them in the first place as a way of showcasing the capabilities of its hardware seems a trifle rich.
(some stuff snipped)
On the subject of children, the BBC ran a wonderful story this week about some comments made by one David Butler, head of the UK’s National Confederation of Parent Teacher Associations. Mr Butler claimed recently that radio waves from mobile phones are good for children because they heat up their heads, allowing them to think more clearly. He said: “That heating effect actually improves the neuron transfers between neural pathways, and therefore your thinking ability goes up.”
Time for your medication, Mr Butler.
_____
TV on possible alternative telecom alliance
Latvian independent television (LNT) had a report on its weekly magazine Nedeļa (The Week) which discussed plans to form an alliance of all state-owned telecommunications and data transmission networks. This blogger reported the same in Dienas bizness (before he was blogging) on September 1.
Basically, the idea involves forming a loose alliance of the energy utility Latvenergo, the Latvian Railway, the Latvian State Radio and Television Center (LVRTC), and the State Information Network Agency (VITA) to create a data and voice network that would have around 350 000 users by the fifth year of operations and generate around LVL 23 million in revenues. Currently Lattelekom has somewhat more than 600 000 line subscribers, while the mobile networks have 1.2 million users.
Putting the networks together would require investments of around LVL 15 million from the partners and an unspecified amount of public/private partnership funds.
The whole idea for the alternative network, to be called "Alianse" (The Alliance) is set forth in a 100 page document prepared by VITA.
In the LNT show, an official of the Ministry of Transport said that he wanted the plans for implementing the Alliance to be 60 -70 % ready by early 2005. That was a clears signal that the Ministry is still interested in setting up a carrier level alternative to Lattelekom (the idea first appeared in the draft concept for telecommunications earlier this year and was dismissed (in informal talks) as "crackpot" by some of the intended participants.
If the Ministry of Transport is really serious about the project, it will have to start soon to push for the necessary changes in the Law on Energy (to allow seperating the telecommunications unit of the presently indivisible Latvenergo), as well as to make a for-profit state corporation of the hitherto non-profit LVTRC, as well as to change VITA from an agency to a state company (something already being done). It will also have to work hard to convince Latvenergo and Latvian Railways to abandon their present, somewhat competing data transmission services marketing activities, as well as to justify why the government would invest LVL 15 million in competing with Lattelekom, which is 51 % state owned.
One reason could be that regardless of majority state ownership, Lattelekom is seen as somehow not acting in the state's interests. But if Prime Minister Indulis Emsis succeeds in gaining "control" (whatever he means by that) over Lattelekom, then that problem would be solved and there would, perhaps, be no need to invest in yet another carrier network to compete with Lattelekom.
Besides, no one knows what technology will bring in five years, even if The Alliance kicks off in 2005.
Basically, the idea involves forming a loose alliance of the energy utility Latvenergo, the Latvian Railway, the Latvian State Radio and Television Center (LVRTC), and the State Information Network Agency (VITA) to create a data and voice network that would have around 350 000 users by the fifth year of operations and generate around LVL 23 million in revenues. Currently Lattelekom has somewhat more than 600 000 line subscribers, while the mobile networks have 1.2 million users.
Putting the networks together would require investments of around LVL 15 million from the partners and an unspecified amount of public/private partnership funds.
The whole idea for the alternative network, to be called "Alianse" (The Alliance) is set forth in a 100 page document prepared by VITA.
In the LNT show, an official of the Ministry of Transport said that he wanted the plans for implementing the Alliance to be 60 -70 % ready by early 2005. That was a clears signal that the Ministry is still interested in setting up a carrier level alternative to Lattelekom (the idea first appeared in the draft concept for telecommunications earlier this year and was dismissed (in informal talks) as "crackpot" by some of the intended participants.
If the Ministry of Transport is really serious about the project, it will have to start soon to push for the necessary changes in the Law on Energy (to allow seperating the telecommunications unit of the presently indivisible Latvenergo), as well as to make a for-profit state corporation of the hitherto non-profit LVTRC, as well as to change VITA from an agency to a state company (something already being done). It will also have to work hard to convince Latvenergo and Latvian Railways to abandon their present, somewhat competing data transmission services marketing activities, as well as to justify why the government would invest LVL 15 million in competing with Lattelekom, which is 51 % state owned.
One reason could be that regardless of majority state ownership, Lattelekom is seen as somehow not acting in the state's interests. But if Prime Minister Indulis Emsis succeeds in gaining "control" (whatever he means by that) over Lattelekom, then that problem would be solved and there would, perhaps, be no need to invest in yet another carrier network to compete with Lattelekom.
Besides, no one knows what technology will bring in five years, even if The Alliance kicks off in 2005.
Saturday, September 25, 2004
Tele2, the next Song please?
The board of directors of Song Networks, the Nordic broadband services network with a link to Tallinn, has recommended accepting a higher cash bid for its shares from Tele2, which has been bidding against Denmark's TDC to take over the company.
If that happens, will Tele2 in the Baltics also consider jumping into the already hot corporate date services market, where Lattelekom, Latvenergo, Latvian Railways, and Baltcom Fiber (owned by a Latvian telecoms and cable TV entrepreneur and a Dutch investor) are active to a greater or lesser extent? I don't know what Linx is up to, but they also have ambitions (and, I believe, fiber) in the region.
An interesting thought. We shall see what happens. However, these musings are sobered by remarks recently heard by this blogger from Latvenergo and Lattelekom that the haven't been building up much of a corporate network client base quite yet. One reason is - there simply aren't that many regional large companies to begin with, and most of the multinationals are hooked up with the global operators.
If that happens, will Tele2 in the Baltics also consider jumping into the already hot corporate date services market, where Lattelekom, Latvenergo, Latvian Railways, and Baltcom Fiber (owned by a Latvian telecoms and cable TV entrepreneur and a Dutch investor) are active to a greater or lesser extent? I don't know what Linx is up to, but they also have ambitions (and, I believe, fiber) in the region.
An interesting thought. We shall see what happens. However, these musings are sobered by remarks recently heard by this blogger from Latvenergo and Lattelekom that the haven't been building up much of a corporate network client base quite yet. One reason is - there simply aren't that many regional large companies to begin with, and most of the multinationals are hooked up with the global operators.
Friday, September 24, 2004
Whispers about WISPs
One of the advantages of a blog with around seven readers :) is that you can stretch the rules of journalistic confidentiality a little and report stuff that is not quite ready to be reported.
So here is a little look into the near and mid-term future:
A big WISP (that's wireless internet service provider) and, as a matter of fact, the only multi-site WISP in Latvia, may be reshuffling its equipment and software suppliers. A small (in relation to Cisco) local company will be contributing to the Big Guy's WiFi solution, since Big Guy's own routing arrangements aren't working as well as they might.
Meanwhile, a hotel chain (two links is enougjh :)) has Big Guy at one of its Riga places, but the WiFi at its other site is being set up by the small local company.
Finally, look for some others to attempt to offer local WiFi roaming, maybe among academic institutions to start with. Now that Lattelekom (see Dienas bizness on Monday, September 27) has confirmed it will offer international roaming, the idea of domestic roaming becomes interesting. If you have a substantial domestic network, you can attract foreigners in competition with Lattelekom, This blogger has been told that setting up a server and the necessary software to authorize users of the shared hotspot network is neither very expensive nor "rocket science." Let's see who makes some kind of moves in coming months.
Another possibility – why go WiFi when bigger footprint technologies are available now, ahead of the real-life debut of WiMax. Or maybe with WiMax?
So here is a little look into the near and mid-term future:
A big WISP (that's wireless internet service provider) and, as a matter of fact, the only multi-site WISP in Latvia, may be reshuffling its equipment and software suppliers. A small (in relation to Cisco) local company will be contributing to the Big Guy's WiFi solution, since Big Guy's own routing arrangements aren't working as well as they might.
Meanwhile, a hotel chain (two links is enougjh :)) has Big Guy at one of its Riga places, but the WiFi at its other site is being set up by the small local company.
Finally, look for some others to attempt to offer local WiFi roaming, maybe among academic institutions to start with. Now that Lattelekom (see Dienas bizness on Monday, September 27) has confirmed it will offer international roaming, the idea of domestic roaming becomes interesting. If you have a substantial domestic network, you can attract foreigners in competition with Lattelekom, This blogger has been told that setting up a server and the necessary software to authorize users of the shared hotspot network is neither very expensive nor "rocket science." Let's see who makes some kind of moves in coming months.
Another possibility – why go WiFi when bigger footprint technologies are available now, ahead of the real-life debut of WiMax. Or maybe with WiMax?
Thursday, September 23, 2004
"GMISPs" in Latvia and other remarks
No one really knows how many broadband connections there are in Latvia. Lattelekom's internet service provider (ISP) Apollo estimates there will be 40 000 DSL subsribers by year end, perhaps 100 000 in a few years. However, Ingmars Pūķis, the director of Apollo, told my newspaper that no one really knows, since some high speed connections (DSL at 2Mbps) can be divided and resold to other users that Apollo is unaware of. TeliaMultiCom has a couple of thousand cable internet users, and there are a growing number of "triple play" customers at Baltcom, who subscribe to cable TV, cable internet and telephony services. But even a fat cable internet subscription or a corporate grade "radiolink" to Telia Latvija (no longer connected to MultiCom in any way) can be resold. Since the resellers sometimes operate "informally", call them Grey Market ISPs (hence the acronym in the title -GMISPs)
One of my colleagues, call her Inguna, might be a typical "unaccounted for" broadband user. She and her partner share a connection (two PCs, an extra charge for the second computer) for about LVL 16 a month, which is about what HomeDSL from Lattelekom/Apollo costs. She says their neighbor, who has DSL, says their connection is faster. There is limited customer service, but there have also been only a few breakdowns. It seems that only a few people set up and run what may be a GMISP in a Riga suburb. If this is typical, there can be hundreds of GMISPs in Riga alone.
While this may mean less revenue (directly) for the "majors" -- Lattelekom and TeliaMultiCom– it also means that the potential broadband content audience is bigger than any official figures.
Watch for Lattelekom to make some strong strategic moves into content in the coming six months. Also consider that the company may start migrating all of its voice, eventually all services, to a next-generation IP network. This is what British Telecom is doing and Lattelekom MD Nils Melngailis is an admirer of BT's strategy.
One of my colleagues, call her Inguna, might be a typical "unaccounted for" broadband user. She and her partner share a connection (two PCs, an extra charge for the second computer) for about LVL 16 a month, which is about what HomeDSL from Lattelekom/Apollo costs. She says their neighbor, who has DSL, says their connection is faster. There is limited customer service, but there have also been only a few breakdowns. It seems that only a few people set up and run what may be a GMISP in a Riga suburb. If this is typical, there can be hundreds of GMISPs in Riga alone.
While this may mean less revenue (directly) for the "majors" -- Lattelekom and TeliaMultiCom– it also means that the potential broadband content audience is bigger than any official figures.
Watch for Lattelekom to make some strong strategic moves into content in the coming six months. Also consider that the company may start migrating all of its voice, eventually all services, to a next-generation IP network. This is what British Telecom is doing and Lattelekom MD Nils Melngailis is an admirer of BT's strategy.
State Audit rejects Lattelekom's appeal
The State Audit office rejected Lattelekom's appeal of its decision to audit aspects of the 51 % state owned company on the grounds that the appeal concerned an action of the State Audit board that was not subject to appeal.
In other words, while the decisions or conclusions of auditors are appealable, the decision by the board to do an audit and to assign it to a particular unit of the State Audit Office is not subject to review by the board itself under Latvian law.
The State Audit office also said that Lattelekom had not raised any objections to the substance of the audit findings (which have not been officially disclosed). Instead, Lattelekom challenged the standing of the State Audit to subject the company to an audit and to select a particular auditing subunit that audits privatization. Since that was a decision of the State Audit board (or council, however you translate "padome" in haste), it was not subject to appeal.
So there we are, more or less where this blog predicted things would be.
The actual auditors' report cannot be published until the next appellate procedure, going to the court known as the Senats (Senate) is exhausted. Lattelekom has 30 days to appeal and has not made any comment so far.
The legitimate question of how far a state audit can go in overseeing and, indirectly, approving or disapproving of business decisions in a specialized commercial enterprise remains unresolved. As I wrote before, Lattelekom's international auditors have found no fault with the company applying international audit standards. The State Audit, using different criteria, seems to be poking around in operational business decisions, examining the "utility" of some of them.
Will try to see if State Auditor Raits Chernajs remarks to Radio SWH are on the web, I was tipped off he may say something about the substance of the still confidential audit report.
In other words, while the decisions or conclusions of auditors are appealable, the decision by the board to do an audit and to assign it to a particular unit of the State Audit Office is not subject to review by the board itself under Latvian law.
The State Audit office also said that Lattelekom had not raised any objections to the substance of the audit findings (which have not been officially disclosed). Instead, Lattelekom challenged the standing of the State Audit to subject the company to an audit and to select a particular auditing subunit that audits privatization. Since that was a decision of the State Audit board (or council, however you translate "padome" in haste), it was not subject to appeal.
So there we are, more or less where this blog predicted things would be.
The actual auditors' report cannot be published until the next appellate procedure, going to the court known as the Senats (Senate) is exhausted. Lattelekom has 30 days to appeal and has not made any comment so far.
The legitimate question of how far a state audit can go in overseeing and, indirectly, approving or disapproving of business decisions in a specialized commercial enterprise remains unresolved. As I wrote before, Lattelekom's international auditors have found no fault with the company applying international audit standards. The State Audit, using different criteria, seems to be poking around in operational business decisions, examining the "utility" of some of them.
Will try to see if State Auditor Raits Chernajs remarks to Radio SWH are on the web, I was tipped off he may say something about the substance of the still confidential audit report.
Wednesday, September 22, 2004
Lattelekom likely to lose State Audit appeal
The Latvian State Auditor looks poised to reject an appeal by Lattelekom of an apparently critical audit performed earlier this year. Some parts of the audit were leaked to a Latvian daily newspaper, Neatkariga Rita Avize, which made claims that former Lattelekom managing director Leena Suhonen and other managers had wasted funds and acted in favor of one owner, TeliaSonera, rather than the interests of the company. Lattelekom is owned 49 % by TeliaSonera and 51 % by the Latvian state.
Lattelekom has been audited by international auditors who gave the company a clean audit.
Lattelekom did not comment on these claims, nor did it disclose the content of the state audit, but appealed it earlier in the summer. The appeal was apparently based mainly on objections to the "jurisdiction" of the State Auditor, since Lattelekom says it is a commercial enterprise and not a ministry, agency or other entity spending public budget funds.
The State Auditor, sitting in an internal appeals proceeding, is expected to rule against Lattelekom in a ruling to be announced on Thursday, September 23. The Auditor will argue that Lattelekom comes under its mandate and that the company can be audited according to the principles applicable to government entity audits.
According to information availabe to this blogger, Lattelekom did not challenge any of the assertions in the audit report itself, assuming, instead, that they should be dismissed as invalid because the State Auditor had no mandate to make them.
The conflict illustrates one reason why Lattelekom might be better off as a 100 % private corporation, or at least with substantially less state ownership, so that it will not be audited by apparently conflicting methods and standards.
Lattelekom has been audited by international auditors who gave the company a clean audit.
Lattelekom did not comment on these claims, nor did it disclose the content of the state audit, but appealed it earlier in the summer. The appeal was apparently based mainly on objections to the "jurisdiction" of the State Auditor, since Lattelekom says it is a commercial enterprise and not a ministry, agency or other entity spending public budget funds.
The State Auditor, sitting in an internal appeals proceeding, is expected to rule against Lattelekom in a ruling to be announced on Thursday, September 23. The Auditor will argue that Lattelekom comes under its mandate and that the company can be audited according to the principles applicable to government entity audits.
According to information availabe to this blogger, Lattelekom did not challenge any of the assertions in the audit report itself, assuming, instead, that they should be dismissed as invalid because the State Auditor had no mandate to make them.
The conflict illustrates one reason why Lattelekom might be better off as a 100 % private corporation, or at least with substantially less state ownership, so that it will not be audited by apparently conflicting methods and standards.
Lattelekom working on WiFi roaming
Lattelekom managing director Nils Melngailis remarks about WiFi roaming at Heathrow Airport reported earlier in this blog are part of an overall roaming strategy the company will be unveiling in coming weeks.
Starting on October 1, Lattelekom will offer WiFi roaming in Germany, Finland and Portugal, and starting in November in Sweden, the Czech Republic, Spain, France and Lichtenstein. More European countries will be added in December, including Great Britain (hence Heathrow).
Lattelekom will be launching a new product for the roaming market, most likely a prepaid card of the kind already sold in Latvia and giving access to some 70 + domestic sites with the Lattelekom WiFi logo, including Statoil filling stations. (Just the place to open your laptop and surf while you fill your tank, radio waves, sparks? I never quite got that one :) ).
T-Systems, the Deutsche Telekom subsidiary is the only roaming partner that has been named, but a not-so-wild guess is that TeliaSonera with their "Go" program, and British Telecom (BT) may be involved.
Selling pre-paid roaming cards is generally a good idea for the customer, says Mikrotikls director John Tully, who deals with WiFi providers and WISPs around the world. But he also pointed out that there are two competing business models: the paid service and the amenity/magnet. The latter means that you install free WiFi at your coffee shop, restaurant, hotel, airport waiting room, etc. in order to draw more customers. Free WiFi is more of a trend in the US, especially after the FCC ruled that you cannot restrict the building of WiFi sites (so your coffee shop can offer free access in the same airport where T-Mobile might be charging 9.99 an hour/pick your currency as long as it is not any of the Scandinavian krona).
The advantage of prepaid is that you have a known network awaiting you when you travel and you don't have to search the web for free WiFi sites that may or may not be updated (i.e. webmaster "Zeke" was having second year university exams and didn't update the site for two weeks). The disadavantage is going to Milwaukee (if Lattelekom ever roams there) and seeing your business rival surfing for free at the local coffee joint while you burn lats... But yet another advantage is that there may be some QoS guarantees with reliable partners. We shall see.
It looks like this story is going to be buried in a certain medium that I am familiar with :), so I am publishing this so-far exclusive information here. You saw it first on this site :)!
Starting on October 1, Lattelekom will offer WiFi roaming in Germany, Finland and Portugal, and starting in November in Sweden, the Czech Republic, Spain, France and Lichtenstein. More European countries will be added in December, including Great Britain (hence Heathrow).
Lattelekom will be launching a new product for the roaming market, most likely a prepaid card of the kind already sold in Latvia and giving access to some 70 + domestic sites with the Lattelekom WiFi logo, including Statoil filling stations. (Just the place to open your laptop and surf while you fill your tank, radio waves, sparks? I never quite got that one :) ).
T-Systems, the Deutsche Telekom subsidiary is the only roaming partner that has been named, but a not-so-wild guess is that TeliaSonera with their "Go" program, and British Telecom (BT) may be involved.
Selling pre-paid roaming cards is generally a good idea for the customer, says Mikrotikls director John Tully, who deals with WiFi providers and WISPs around the world. But he also pointed out that there are two competing business models: the paid service and the amenity/magnet. The latter means that you install free WiFi at your coffee shop, restaurant, hotel, airport waiting room, etc. in order to draw more customers. Free WiFi is more of a trend in the US, especially after the FCC ruled that you cannot restrict the building of WiFi sites (so your coffee shop can offer free access in the same airport where T-Mobile might be charging 9.99 an hour/pick your currency as long as it is not any of the Scandinavian krona).
The advantage of prepaid is that you have a known network awaiting you when you travel and you don't have to search the web for free WiFi sites that may or may not be updated (i.e. webmaster "Zeke" was having second year university exams and didn't update the site for two weeks). The disadavantage is going to Milwaukee (if Lattelekom ever roams there) and seeing your business rival surfing for free at the local coffee joint while you burn lats... But yet another advantage is that there may be some QoS guarantees with reliable partners. We shall see.
It looks like this story is going to be buried in a certain medium that I am familiar with :), so I am publishing this so-far exclusive information here. You saw it first on this site :)!
Latvia's Mikrotiks challenges WiMax
Mikrotiks (Mikrotikls on the Latvian market), has developed a new high-speed point to multi-point data transmission standard called N-STREME that it believes can achieve the same throughput as WiMax on existing Atheros radio equipment.
John Tully, a director and co-owner of the Riga based company told this blogger that wireless internet equipment using N-STREME could achieve speeds of up to 45 Mbps over a radius of several tens of kilometers, thereby beating WiMax to market. Some test versions of the high speed protocol are in use in Bulgaria and Hungary. Mikrotiks provides WiFi and wireless internet equipment to several hundred small and medium sized WISPs around the world in Africa, Asia, Central America, the US and Latvia. N-STREME is being offered as a free upgrade to existing customers and its final version, due shortly, will be packaged with Mikrotiks systems that include routerboards (made in Ogre, Latvia), radio chipsets and switching software.
John Tully, a director and co-owner of the Riga based company told this blogger that wireless internet equipment using N-STREME could achieve speeds of up to 45 Mbps over a radius of several tens of kilometers, thereby beating WiMax to market. Some test versions of the high speed protocol are in use in Bulgaria and Hungary. Mikrotiks provides WiFi and wireless internet equipment to several hundred small and medium sized WISPs around the world in Africa, Asia, Central America, the US and Latvia. N-STREME is being offered as a free upgrade to existing customers and its final version, due shortly, will be packaged with Mikrotiks systems that include routerboards (made in Ogre, Latvia), radio chipsets and switching software.
The meaning of "bardaks" and the Telia brand
When Telia MultiCom, the cable TV and internet service provider with around 75 000 customers in Latvia was recently sold to a private investor, no one made him change the brand name immediately. Apparently Telia thought they could give the new team a little time to find a new name. No harm done.
Wrong!
This blogger has gotten several reports of an apparently misfired attempt by Telia MultiCom to raise its monthly analog cable TV package price. This, customers claim, was done without warning and even customers who used an option to pay in advance have been sent bills for the full, new higher monthly charge.
Needless to say, the customers have stormed the cable provider's customer service line, which is reportedly busy or never answers. One of my sources, citing an insider, said the company was swamped with complaints and that the calls were generating a situation of complete disorder and disarray, or "bardaks" in Latvian (derived from a Slavic word for a house of ill repute).
This will be checked out in detail, probably for my Latvian employer.
What do we learn from this in telecoms terms? If you are a fairly respectable Swedish telecoms company (TeliaSonera is the big parent, it's still Telia, I believe, who provides the services), don't leave your brand behind! When Kelloggs, the US-based cereal maker closed its Latvian plant in Ādaži, I don't think they left any empty Kellogg's Corn Flakes boxes behind, on the assumption that no one would fill them with mildewed oatmeal or sand.
But now, people who are upset with a poor decision by the new managing team are able to blame the Great Satan Telia Sonera, and the Satan (who's not really that at all) grows longer horns for something he didn't do.
Which brings me back to some of the screwball aspects of the whole sale. I mean, Lattelekom would have been the right buyer given the new MD Nils Melngailis interest in TV. An arms length deal could have been arranged and the brand would have, at least, been 49 % TeliaSonera owned. So now a strategic bad choice goes to worse... :).
On the positive side, Telia MultiCom has made some nice broadband offerings and it remains to be seen whether it, like Baltcom TV, its biggest rival, will go for interactive digital cable TV. A earlier decision to test digital was rescinded, apparently just as the talks on selling the company started. It would be nice if they tried.
Wrong!
This blogger has gotten several reports of an apparently misfired attempt by Telia MultiCom to raise its monthly analog cable TV package price. This, customers claim, was done without warning and even customers who used an option to pay in advance have been sent bills for the full, new higher monthly charge.
Needless to say, the customers have stormed the cable provider's customer service line, which is reportedly busy or never answers. One of my sources, citing an insider, said the company was swamped with complaints and that the calls were generating a situation of complete disorder and disarray, or "bardaks" in Latvian (derived from a Slavic word for a house of ill repute).
This will be checked out in detail, probably for my Latvian employer.
What do we learn from this in telecoms terms? If you are a fairly respectable Swedish telecoms company (TeliaSonera is the big parent, it's still Telia, I believe, who provides the services), don't leave your brand behind! When Kelloggs, the US-based cereal maker closed its Latvian plant in Ādaži, I don't think they left any empty Kellogg's Corn Flakes boxes behind, on the assumption that no one would fill them with mildewed oatmeal or sand.
But now, people who are upset with a poor decision by the new managing team are able to blame the Great Satan Telia Sonera, and the Satan (who's not really that at all) grows longer horns for something he didn't do.
Which brings me back to some of the screwball aspects of the whole sale. I mean, Lattelekom would have been the right buyer given the new MD Nils Melngailis interest in TV. An arms length deal could have been arranged and the brand would have, at least, been 49 % TeliaSonera owned. So now a strategic bad choice goes to worse... :).
On the positive side, Telia MultiCom has made some nice broadband offerings and it remains to be seen whether it, like Baltcom TV, its biggest rival, will go for interactive digital cable TV. A earlier decision to test digital was rescinded, apparently just as the talks on selling the company started. It would be nice if they tried.
Tuesday, September 21, 2004
Emsis eases on telecoms privatization?
Today's Diena reports that Latvian Prime Minister Indulis Emsis seems to have softened his stance on privatizing the majority state holding in Lattelekom (51%) and mobile operator LMT (where the state holds 23 % indirectly and 5 % through the Ministry of Finance). This could be done after careful study of the issue by experts, writes my rival Jara Sizova, citing the PM. I think it is just a different way of saying "no".
Even the Minister of Transport, Ainars Slesers, said to be less of a hardliner than the PM appeared on TV and rejected the idea of privatization. I would be interested in hearing how they see the companies gaining value as semi-independent, small national operators. Telecoms is rapidly becoming a global business and is even having a hard time competing on a regional level. The real question isn't whether any Latvian government will ever sell its telecom holdings, but rather who will own TeliaSonera in five years. The really, really big fish are out there (the Vodafone sized ones) and they are hungry.
If the Latvian government wants to get value or dividends from LMT and Lattelekom, it could do a share-swap with TeliaSonera, trading its shares (after converting the companies to joint stock corporations) for shares in TeliaSonera. That would deprive the state of a quick cash payment, but it could get a chance at that sometime in the future, if and when TS itself ends up on the selling block in the 2010s.
Even the Minister of Transport, Ainars Slesers, said to be less of a hardliner than the PM appeared on TV and rejected the idea of privatization. I would be interested in hearing how they see the companies gaining value as semi-independent, small national operators. Telecoms is rapidly becoming a global business and is even having a hard time competing on a regional level. The real question isn't whether any Latvian government will ever sell its telecom holdings, but rather who will own TeliaSonera in five years. The really, really big fish are out there (the Vodafone sized ones) and they are hungry.
If the Latvian government wants to get value or dividends from LMT and Lattelekom, it could do a share-swap with TeliaSonera, trading its shares (after converting the companies to joint stock corporations) for shares in TeliaSonera. That would deprive the state of a quick cash payment, but it could get a chance at that sometime in the future, if and when TS itself ends up on the selling block in the 2010s.
Don't tell the Hotel Latvia
When I turned on my laptop and logged on to the Lattelekom WiFi hotspot in the Hotel Reval Latvija with a WiFi card I bought with a credit card from hotel staff, I was sure there had been a mistake. I was told I had a zillion (more like 1440) minutes remaining on the net. Sūdiralla, I thought (I won't use English profanity here, yet), now they've hit me for LVL 9.95, but WTF, I can use it up by hanging around former IT person Nick Ustinov's coffee joints (Double Coffee) or something like that. Well, tonight I found the check, and it was for LVL 0.94. Whoops, card sellers! Don't tell them.
Triatel feelers to Lattelekom
Triatel's chief Mihail Zotov told this blogger in an informal conversation that CDMA 450 would be an excellent, relatively low cost technology for Lattelekom to bring both voice and high-speed internet to remote rural areas. In the Czech Republic, mobile operator Eurotel sold the technology as a kind of wireless DSL. CDMA has relatively wide signal propagation and, if old LMT NMT towers were used, the cost of bringing digital services to the rural dweller would be limited to the cost of the base station. Not a likely solution yet, but better than Lattelekom's ironic suggestion that it would be cheaper to buy apartments at LVL 10 000 in the nearest village for some rural dwellers than to run copper wires to their remote homes.
It looks like Triatel and Lattelekom may have had some contacts on this issue. Zotov says he was politely rebuffed, but perhaps he should persist.
I remember there was a discussion several years back about devoting some part of the GSM spectrum to fixed wireless solutions for Lattelekom, but nothing much came of it. Anyone remember?
I also wonder how RadioDSL is doing? It was a SDSL solution, pretty radical, giving the business user a uplink just as fast as the downlink.
One of my two readers might know :)
It looks like Triatel and Lattelekom may have had some contacts on this issue. Zotov says he was politely rebuffed, but perhaps he should persist.
I remember there was a discussion several years back about devoting some part of the GSM spectrum to fixed wireless solutions for Lattelekom, but nothing much came of it. Anyone remember?
I also wonder how RadioDSL is doing? It was a SDSL solution, pretty radical, giving the business user a uplink just as fast as the downlink.
One of my two readers might know :)
Some odd classification of content consumers
The Informer, writing in The Week in Wireless (an e-newsletter back after the summer) writes : "Finally, content billing specialist Bango has published a report into content consumption, expressing its results in terms that we can all understand. People that buy a lot of content are called ‘Porkers’ and those who buy the least are called ‘Nibblers’. When he first saw the title of the release – ‘Porkers spend the most on mobile ringtones’ – the Informer honestly thought it was a study into the worrying correlation between obesity and content usage, something that has been woefully absent from the mobile community's work into social responsibility. It could have been full of statistics about how more than half of Americans download unhealthy amounts of ringtones.
But it wasn’t. Bango reckons there is a growing number of Grazers; consumers who spend between $9 and $36 per month on content. For every twenty Grazers there is a Porker, says Bango, who can consume up to $90 a month, the greedy buggers. Some of them have even binged on $700 of content in a single month. Comfort downloading, presumably. Nibblers are like those annoying people who say: “Oh, I’ll just have a green salad, no dressing.” They only buy a ringtone every few months.
The rest of the world, who don’t buy any content, must, by Bango’s reckoning, all be suffering from eating disorders.
But it wasn’t. Bango reckons there is a growing number of Grazers; consumers who spend between $9 and $36 per month on content. For every twenty Grazers there is a Porker, says Bango, who can consume up to $90 a month, the greedy buggers. Some of them have even binged on $700 of content in a single month. Comfort downloading, presumably. Nibblers are like those annoying people who say: “Oh, I’ll just have a green salad, no dressing.” They only buy a ringtone every few months.
The rest of the world, who don’t buy any content, must, by Bango’s reckoning, all be suffering from eating disorders.
Monday, September 20, 2004
Lattelekom at Heathrow and TV in 2005
Lattelekom will soon offer WiFi roaming at Heathrow Airport (that's London for some who may not know) and will move into cable TV in 2005. That was the main news in Lattelekom managing director Nils Melngailis presentation at the Baltic Sea Region Communication Forum. This may come as part of a "triple play" offer which combines fast internet, cable TV and voice (although that voice may be a feature of the broadband link). The only operator offering triple play to some of its customers at present is Baltcom. TeliaMulticom (more about them later) – no longer owned by TeliaSonera but keeping the name while it thinks of a new one– is still waiting for the third shoe to drop– they offer cable TV and internet. People who put Skype or something like that on their Multicom internet connection are adding their own "third play".
Some remarks: Lattelekom has the fast fiber optic network in Riga necessary for triple play, including digital cable TV, but one wonders why they weren't given a chance to buy TeliaMulticom and its ready-made customer base. Instead, the company was bought by its own attorney. Lattelekom was very interested in this, but TeliaSonera apparently made the choice of who to sell to. In Sweden, the EU authorities ordered the newly-formed TeliaSonera to divest Telia's cable TV operator Com.hem. Maybe T-S was afraid of getting entangled with cable TV in Latvia. I haven't heard that the EU authorities are against triple-play per se. In fact, the day will come when every fast connection will be triple play in fact. In Sweden, there are broadband offerings at 26 Mbps to the households. That leaves plenty of room for hi-res internet TV, voice ("hogging" 64 kbps for a chat with Singapore for free) and downloading the warez version of everything Microsoft ever made in about two hours (maybe less).
It looks like Lattelekom will be starting cable TV from scratch or cutting some unlikely deal, like feeding Baltcom's programs to areas where they don't have optical fiber and the necessary infrastructure for interactivity.
The other presentations in the early afternoon were, alas, people reading their Powerpoint slides, which brings us to the language issue, namely, that even people whose companies make money that can be moved by bulldozers (LMT) don't feel confident when not speaking their native language. Sorry, Juris Binde. The same is true for Mihail Zotov, although I must congratulate him for a good effort. This was the first time he spoke in public in his rather good and careful English. He usually speaks to Latvian audiences in Russian, leaving me wondering or whispering to the journalist next to me. Everyone has their faults :).
Tommorrow, the session on digital TV – a disaster in Latvia as far as the broadcast part goes – will probably be held in Latvian. That should get the interpreters earning their keep -- today (Sept 20) there were around three people with earphones, although it was entirely in English. Actually, a sign of progress, to my mind.
Some remarks: Lattelekom has the fast fiber optic network in Riga necessary for triple play, including digital cable TV, but one wonders why they weren't given a chance to buy TeliaMulticom and its ready-made customer base. Instead, the company was bought by its own attorney. Lattelekom was very interested in this, but TeliaSonera apparently made the choice of who to sell to. In Sweden, the EU authorities ordered the newly-formed TeliaSonera to divest Telia's cable TV operator Com.hem. Maybe T-S was afraid of getting entangled with cable TV in Latvia. I haven't heard that the EU authorities are against triple-play per se. In fact, the day will come when every fast connection will be triple play in fact. In Sweden, there are broadband offerings at 26 Mbps to the households. That leaves plenty of room for hi-res internet TV, voice ("hogging" 64 kbps for a chat with Singapore for free) and downloading the warez version of everything Microsoft ever made in about two hours (maybe less).
It looks like Lattelekom will be starting cable TV from scratch or cutting some unlikely deal, like feeding Baltcom's programs to areas where they don't have optical fiber and the necessary infrastructure for interactivity.
The other presentations in the early afternoon were, alas, people reading their Powerpoint slides, which brings us to the language issue, namely, that even people whose companies make money that can be moved by bulldozers (LMT) don't feel confident when not speaking their native language. Sorry, Juris Binde. The same is true for Mihail Zotov, although I must congratulate him for a good effort. This was the first time he spoke in public in his rather good and careful English. He usually speaks to Latvian audiences in Russian, leaving me wondering or whispering to the journalist next to me. Everyone has their faults :).
Tommorrow, the session on digital TV – a disaster in Latvia as far as the broadcast part goes – will probably be held in Latvian. That should get the interpreters earning their keep -- today (Sept 20) there were around three people with earphones, although it was entirely in English. Actually, a sign of progress, to my mind.
Language issues
The fans of this blog (I think there are two, more than some blogs get describing the eating habits of pet canaries) have expressed some regret that I don't post in Latvian. My newspaper, Dienas bizness, doesn't object to my writing for others in languages other than Latvian (I am fluent in English and can manage to write in Swedish getting only a few giggles from my oldest son). But if I write in Latvian, even if it is in a medium that may well be beyond the comprehension of responsible persons (blog, what is a blog?), there could be problems. There have been problems. So for now, I will stick to English and try to avoid too much jargon and American slang so that both my Latvian readers understand. Perhaps someone can re-blog me in Latvian?
TeliaSonera makes its pitch
TeliaSonera's Kenneth Karlberg made his keynote pitch to the Baltic Sea Region Communications Forum, mostly (in my case) preaching to the converted about fixed to mobile migration, broadband as the basis of fixed network connections, etc ( I think I was telling this to Lena Suhonen, Lattelekom MD at the time, in 2001 or something, but bloggers shouldn't brag) . Karlberg did make an interesting point to try to coax the Latvian government into considering his appeal to sell the remainder of LMT and Lattelekom to TeliaSonera.
He said it was an issue for TeliaSonera as an owner to see that Lattelekom can develop and full ownership is the best way. Full ownership integrates the Latvian companies into a group where investments in new products and infrastructure can be attributed to the entire group's customer base, so that when one LVL per customer is spend, the total expenditure (and, I suppose, the expected return) is higher. One euro per TS subscriber in R&D gets substantial resources, no one company in one market can do the same, that is why we underline inmportance of inc. ownership. Important for us but crucial for partly owned companie, said Karlberg.
Developing smarter flexible technical platforms that are cost efficient, benefits both customers and the company. There is competition here and TeliaSonera owned companies must focus and simplfy their business, esp. for incumbents with monopoly legacy. TeliaSonera has a new agenda of simplicity, easy to use services on best tech solutions at competitive prices.
There is a transition on all markets to convergent technologies, we must further integrate fixed and mobile into multimedia service platform and as contribution from each TeliaSonera company.
Karlberg also said that in Estonia, the board of Elion had accepted this argument but didn't agree on price, which is why the TeliaSonera bid to get more failed. In Latvia, there still seems to be a conceptual, not an economic disagreement with the government. Indulis Emsis thinks the future is in "asserting control and stewardship" over telecommunications and then hoping the dividends will roll in. Will Emsis settle for a minority share and good dividends, or let Lattelekom drift without whole-hearted support from TeliaSonera, which could mean earnings could drop.
Another thing that is forgotten is the crackpot- to my mind– government audit office audit of Lattelekom, including the usefulness of its marketing expenditures, etc. The State Auditor doesn't think like a risk-taking business, where there is considerable spending without obvious returns (business is an intelligent gamble in any event, which is not the way one should spend taxpayer money, so a different paradigm is applicable for the expenditures, say, of the Animal Control Authority than a telecoms operator). This shows the kinds of constraints that will be in the background for Lattelekom as long as it is not predominantly or completely private. Nothing, to my mind, could be worse than having the company treated as a state agency,
Interesting presentation now going on by Jerome Duvat, a CapGemini analyst, on the rise of DSPs (DSL service providers), these seem to be the wave of the future in France, lots of price cutting, bundled services such as voice and TV.
More on today's presentations later, I hope. Latvenergo talking now.
This is being blogged from the conference via WiFi.
He said it was an issue for TeliaSonera as an owner to see that Lattelekom can develop and full ownership is the best way. Full ownership integrates the Latvian companies into a group where investments in new products and infrastructure can be attributed to the entire group's customer base, so that when one LVL per customer is spend, the total expenditure (and, I suppose, the expected return) is higher. One euro per TS subscriber in R&D gets substantial resources, no one company in one market can do the same, that is why we underline inmportance of inc. ownership. Important for us but crucial for partly owned companie, said Karlberg.
Developing smarter flexible technical platforms that are cost efficient, benefits both customers and the company. There is competition here and TeliaSonera owned companies must focus and simplfy their business, esp. for incumbents with monopoly legacy. TeliaSonera has a new agenda of simplicity, easy to use services on best tech solutions at competitive prices.
There is a transition on all markets to convergent technologies, we must further integrate fixed and mobile into multimedia service platform and as contribution from each TeliaSonera company.
Karlberg also said that in Estonia, the board of Elion had accepted this argument but didn't agree on price, which is why the TeliaSonera bid to get more failed. In Latvia, there still seems to be a conceptual, not an economic disagreement with the government. Indulis Emsis thinks the future is in "asserting control and stewardship" over telecommunications and then hoping the dividends will roll in. Will Emsis settle for a minority share and good dividends, or let Lattelekom drift without whole-hearted support from TeliaSonera, which could mean earnings could drop.
Another thing that is forgotten is the crackpot- to my mind– government audit office audit of Lattelekom, including the usefulness of its marketing expenditures, etc. The State Auditor doesn't think like a risk-taking business, where there is considerable spending without obvious returns (business is an intelligent gamble in any event, which is not the way one should spend taxpayer money, so a different paradigm is applicable for the expenditures, say, of the Animal Control Authority than a telecoms operator). This shows the kinds of constraints that will be in the background for Lattelekom as long as it is not predominantly or completely private. Nothing, to my mind, could be worse than having the company treated as a state agency,
Interesting presentation now going on by Jerome Duvat, a CapGemini analyst, on the rise of DSPs (DSL service providers), these seem to be the wave of the future in France, lots of price cutting, bundled services such as voice and TV.
More on today's presentations later, I hope. Latvenergo talking now.
This is being blogged from the conference via WiFi.
The death knell for Latvia's 3rd UMTS licence?
One of the more interesting participants in the Baltic Sea Region Communications Forum is Mihail Zotov, the managing director of Triatel, the upcoming CDMA 450 operator. Triatel was formed by Zotov's Telekom Baltija, an international calling discounter, and SIA Radiokoms, an operator of private radio networks. Together, the companies moved into the 450 Mhz turf abandoned by Latvian Mobile Telephone (LMT) when it shut down its analog NMT network. The total cost of getting operator licences and the empty frequency was a few hundred LVL.
The incumbents, LMT and Tele2, had grudgingly shelled out LVL 5.8 million apiece for their UMTS licences in 2002. Neither seems eager to deploy anything. LMT showed it could do video calls on test equipment. It also announced something unmemorable about EDGE, but that's 2.5 G at best.
Telekom Baltija and Radiokoms announced they were going to build a CDMA 450 network and serve a niche business clientele, essentially providing the same bells and whistles as UMTS but on a different frequency. If anyone doesn't think that is a tossed gauntlet, just look at what happened at Česky Telekom, where the management of the mobile subsidiary got booted for setting up a CDMA 450 network that was seen as directly cannibalizing the fixed parent's DSL services.
Triatel, the brand the partners invented for all of their services, but which has stuck to the upcoming 3G mobiles, was subject to a number of suspicious hassles which I won't go into for the purposes of this blog, but it now looks like they will be starting commercial operations by late October. The company is already offering about four brands of CDMA 450 handsets and says these will plug into most laptops with a USB cable. I haven't seen that as part of any of the specs for these gadgets (by manufacturers that are obscure to me), but I trust what the Triatel people say. It makes sense. It makes these handsets high speed plug and play (or so one would hope) modems. The speeds promised are around 153 kbps initially. Triatel may offer higher speeds and QOS guarantees for a premium later, but there you have it – Latvia's de facto third 3G operator and the first to actually offer 3G services and handsets.
The next question is, does it make any sense at all to hold another auction for a third 3G/GSM licence? GSM might make sense, since people simply using handsets will be happy with the speeds of GPRS, maybe EDGE. I use a laptop at my summer house and the Bluetooth to Nokia 6600 via LMT's GPRS works a lot faster than the 14.4 kbps I get with my 56kbps laptop (Powerbook G4) modem on the so-called digital fixed line at the cottage.
Road warriors are another story. But there ain't that much down the road in Latvia, it is almost all in Riga. The city is now crawling with WiFi hotspots, and I once watched a Swedish guy do full screen streaming on his laptop of Swedish television's archived news from the night before at a Double Coffee. So this is FAST. Faster than I imagine 3G. I have a son in Sweden who is in the last year of high school, about five or six of his classmates have "3" phones that are practically tossed at passersby in Swedish malls. They send each other free or low cost video streams of lunch from the cafeteria to the classroom. Yeah, the 3G business model of the future - jerky spaghetti videos?
I don't think anyone is coming to UMTS round Two in Latvia. Declare it dead and avoid the repeat embarrassment of an auction to which nobody comes.
The incumbents, LMT and Tele2, had grudgingly shelled out LVL 5.8 million apiece for their UMTS licences in 2002. Neither seems eager to deploy anything. LMT showed it could do video calls on test equipment. It also announced something unmemorable about EDGE, but that's 2.5 G at best.
Telekom Baltija and Radiokoms announced they were going to build a CDMA 450 network and serve a niche business clientele, essentially providing the same bells and whistles as UMTS but on a different frequency. If anyone doesn't think that is a tossed gauntlet, just look at what happened at Česky Telekom, where the management of the mobile subsidiary got booted for setting up a CDMA 450 network that was seen as directly cannibalizing the fixed parent's DSL services.
Triatel, the brand the partners invented for all of their services, but which has stuck to the upcoming 3G mobiles, was subject to a number of suspicious hassles which I won't go into for the purposes of this blog, but it now looks like they will be starting commercial operations by late October. The company is already offering about four brands of CDMA 450 handsets and says these will plug into most laptops with a USB cable. I haven't seen that as part of any of the specs for these gadgets (by manufacturers that are obscure to me), but I trust what the Triatel people say. It makes sense. It makes these handsets high speed plug and play (or so one would hope) modems. The speeds promised are around 153 kbps initially. Triatel may offer higher speeds and QOS guarantees for a premium later, but there you have it – Latvia's de facto third 3G operator and the first to actually offer 3G services and handsets.
The next question is, does it make any sense at all to hold another auction for a third 3G/GSM licence? GSM might make sense, since people simply using handsets will be happy with the speeds of GPRS, maybe EDGE. I use a laptop at my summer house and the Bluetooth to Nokia 6600 via LMT's GPRS works a lot faster than the 14.4 kbps I get with my 56kbps laptop (Powerbook G4) modem on the so-called digital fixed line at the cottage.
Road warriors are another story. But there ain't that much down the road in Latvia, it is almost all in Riga. The city is now crawling with WiFi hotspots, and I once watched a Swedish guy do full screen streaming on his laptop of Swedish television's archived news from the night before at a Double Coffee. So this is FAST. Faster than I imagine 3G. I have a son in Sweden who is in the last year of high school, about five or six of his classmates have "3" phones that are practically tossed at passersby in Swedish malls. They send each other free or low cost video streams of lunch from the cafeteria to the classroom. Yeah, the 3G business model of the future - jerky spaghetti videos?
I don't think anyone is coming to UMTS round Two in Latvia. Declare it dead and avoid the repeat embarrassment of an auction to which nobody comes.
Saturday, September 18, 2004
Shaking up Lattelekom
Latvian-American Nils Melngailis, a former executive with IBM's business intelligence unit and before that, a manager at Coopers & Lybrand in Latvia (I may have skipped some parts of his CV) looks like he will be moving and shaking things as the new managing director at Lattelekom, Latvia's fixed network operator.
The company showed a 37 % jump in first half earnings to just over LVL 17 million despite a 3 % drop in revenues and a continuing decline in the number of line subscriptions (though these results were partly attained before Melngailis came on deck in the spring). The higher earnings only partly reflected Lattelekom's 23 % share of "cousin" Latvian Mobile Telephones record dividends. Lattelekom has been slashing costs and reducing staff.
Melngailis has already declared to this blogger (in my capacity as a reporter with the Latvian language business daily Dienas bizness) that he wants to steer Lattelekom into such new waters as digital cable television, WiMax and content provision over the internet and for mobile phones.
Regarding mobiles, look for faster movement toward real cooperation with LMT, which in the past has been aloof from its fixed line cousin. TeliaSonera's Kenneth Karlberg has said to this blogger that cooperation between fixed and mobile operators within the same corporate group is a given. Look for Lattelekom/LMT to start offering integrated solutions to business, including broadband, corporate networks, and mobile phones and WiFi cards for all the road warriors. Interestingly, in Sweden, TeliaSonera has switched entirely to mobile for voice, with workers answering their "land line" numbers as part of a "home cell" to which their calls are directed when they are in the office.
In the consumer market, look for a slow but deliberate move to broadband as being the basic fixed line service in the home, with voice as one of its many functions. Presently, Lattelekom's "City Internet", though offering a slow 128 kbps line, costs around LVL 9.95 per month, or only a small premium above the LVL 5.00 or that Lattelekom regards as a fair price for a cost-based monthly line subscription (the actual price paid is lower due to regulatory issues). A 256 kbps HomeDSL service runs just over LVL 15 per month.
Internally, look for Melngailis to streamline the decision making process within the company, significantly reducing the "lines" reporting to him from a number in the teens to around five. More non-core functions may be spun off in addition to the publically announced plans to set up a network maintenance subsidiary (selling this service to Scandinavia, Vattenfall has been mentioned as a potential customer) and to spin off the call-center business. Incidentally, Baiba Paegle, a key executive at Lattelekom recently returned from helping set up a call center operation in (South?) Africa. This is a signal that Lattelekom is going global in selling its know-how, experience and the services of its knowledge workers.
The company showed a 37 % jump in first half earnings to just over LVL 17 million despite a 3 % drop in revenues and a continuing decline in the number of line subscriptions (though these results were partly attained before Melngailis came on deck in the spring). The higher earnings only partly reflected Lattelekom's 23 % share of "cousin" Latvian Mobile Telephones record dividends. Lattelekom has been slashing costs and reducing staff.
Melngailis has already declared to this blogger (in my capacity as a reporter with the Latvian language business daily Dienas bizness) that he wants to steer Lattelekom into such new waters as digital cable television, WiMax and content provision over the internet and for mobile phones.
Regarding mobiles, look for faster movement toward real cooperation with LMT, which in the past has been aloof from its fixed line cousin. TeliaSonera's Kenneth Karlberg has said to this blogger that cooperation between fixed and mobile operators within the same corporate group is a given. Look for Lattelekom/LMT to start offering integrated solutions to business, including broadband, corporate networks, and mobile phones and WiFi cards for all the road warriors. Interestingly, in Sweden, TeliaSonera has switched entirely to mobile for voice, with workers answering their "land line" numbers as part of a "home cell" to which their calls are directed when they are in the office.
In the consumer market, look for a slow but deliberate move to broadband as being the basic fixed line service in the home, with voice as one of its many functions. Presently, Lattelekom's "City Internet", though offering a slow 128 kbps line, costs around LVL 9.95 per month, or only a small premium above the LVL 5.00 or that Lattelekom regards as a fair price for a cost-based monthly line subscription (the actual price paid is lower due to regulatory issues). A 256 kbps HomeDSL service runs just over LVL 15 per month.
Internally, look for Melngailis to streamline the decision making process within the company, significantly reducing the "lines" reporting to him from a number in the teens to around five. More non-core functions may be spun off in addition to the publically announced plans to set up a network maintenance subsidiary (selling this service to Scandinavia, Vattenfall has been mentioned as a potential customer) and to spin off the call-center business. Incidentally, Baiba Paegle, a key executive at Lattelekom recently returned from helping set up a call center operation in (South?) Africa. This is a signal that Lattelekom is going global in selling its know-how, experience and the services of its knowledge workers.
TeliaSonera keeps proposing
A couple of press conferences will be competing for attention with the keynote speakers at the Baltic Sea Communications Forum starting September 20. One will be Exigen, the US IT solutions company that does most of its "smart work" in Latvia. Exigen will announce its stock for stock acquisition of Dati, one of Latvia's largest IT companies. There will be some news coming out of that, since the only official announcement has been that both companies will be "cooperating" in some sense. Some details of the acquistion will be disclosed and we will see Dati getting the role of doing custom work for its present customer base, while Exigen's solution builders in Latvia will concentrate on research and development and on making commercial software solutions for their customers in insurance, banking and telecommunications.
Right on the heels of Exigen/Dati will come Kenneth Karlberg, TeliaSonera's Vice President in charge of Denmark, Norway and the Baltic. Karlberg's press conference will yet again bring up the subject of TeliaSonera's desire to take a majority, if not 100 % share of Lattelekom, where it currently holds 49 % (the remaining 51 % is owned by the state)and in Latvian Mobile Telephone (LMT), where it also holds 49 % directly, plus a proportionate share of the 23 % owned by Lattelekom. The remaining shares of LMT include 23 % formally held by the Digital Latvian Radio and Television Center (DLRTC), but under dispute in the courts, and 5 % owned by the Ministry of Tranport. TeliaSonera already consolidates LMT in its financial reporting, providing an interesting "back door" to the Latvian company's finances, which does not
Buying out the state's share of Lattelekom and LMT has been an ambition of TeliaSonera since early 2003 when Karlberg first mentioned it in an interview with this blogger. At that time the Swedish-Finnish telecommunications group and the Latvian government were locked in an arbitration dispute started by Sonera in 2000 to demand compensation for the planned ending of Lattelekom's monopoly in 2003. For a considerable time, it was rumored (and later confirmed by documents seen by this blogger) that a privatization deal was part of a possible settlement of the dispute. The dispute was settled in March 2004 without resolving the privatization issue.
Since the government of Indulis Emsis, the Green/Farmer Alliance prime minister, took power shortly after the arbitration settlement was signed, Karlberg has become the snubbed suitor of the Nordic/Baltic telecommunications market. Emsis has declared that neither Lattelekom nor LMT will be privatized as long as his government sits. He has also said he wants to "regain and assert control" over telecommunications in Latvia. How this is to be done is not clear – the government already holds 51 % of Lattelekom, so it appears that "control" of LMT, Latvia's most profitable company, is at issue. The government's claim to 51 % of LMT is a direct challenge to TeliaSonera's consolidation of the company.
It is not clear that the minority coalition government is entirely behind the "nay-saying father of the potential bride(s)" Emsis. While Emsis looks ready to "stonewall the Swedes" at all costs, sources tell this blogger that Minister of Transport Ainars Slesers (who will be speaking at the Forum) is favorably inclined to selling both Lattelekom and LMT to TeliaSonera. Despite harsh criticism and media suspicion directed against him, Slesers has so far proven to be a "can do" minister by bringing two low cost airlines (Ryanair and Easyjet) to Latvia and shaking up the aviation market. Perhaps Slesers can be persuaded to cut the Gordian knot tangled around both telecommunications companies.
Critics charge that letting TeliaSonera take 100 % shares in LMT and Lattelekom will create a "supermonoply". These claims ignore the fact that there are few real alternative international buyers for the Latvian telecommunication companies, and that those few that can be imagined make even the "giant" Swedish/Finnish group look like a midget. Such remotely thinkable buyers as Vodafone and T-Mobile are orders of magnitude larger than TeliaSonera. However, a scenario in which Vodafone buys
Alone or with a minority holding that TeliaSonera grudgingly holds, it is difficult to see how Lattelekom can develop, although it has made a fair try of it by marketing its data transmission services regionally – in Sweden, Finland and neighboring Estonia and Lithuania.Together with TeliaSonera, the company would at least be part of a middle-weight regional operator with considerable synergies and purchasing clout for equipment and transmission capacity. A regional group could also redistribute business functions internally to reduce costs and take advantage of moderately priced, highly-skilled knowledge workers in the Baltics.
This blogger has heard that TeliaSonera may outsource many or all of its accounting functions to a Baltic partner and that it would more readily do so if the partner was "family" – majority or wholly owned. The same has been said of other technical and IT related functions both for fixed network and wireless services.
Watch this space for more sporadic comment, analysis and background rumors/information about the Latvian/Baltic telecommunications scene.
Right on the heels of Exigen/Dati will come Kenneth Karlberg, TeliaSonera's Vice President in charge of Denmark, Norway and the Baltic. Karlberg's press conference will yet again bring up the subject of TeliaSonera's desire to take a majority, if not 100 % share of Lattelekom, where it currently holds 49 % (the remaining 51 % is owned by the state)and in Latvian Mobile Telephone (LMT), where it also holds 49 % directly, plus a proportionate share of the 23 % owned by Lattelekom. The remaining shares of LMT include 23 % formally held by the Digital Latvian Radio and Television Center (DLRTC), but under dispute in the courts, and 5 % owned by the Ministry of Tranport. TeliaSonera already consolidates LMT in its financial reporting, providing an interesting "back door" to the Latvian company's finances, which does not
Buying out the state's share of Lattelekom and LMT has been an ambition of TeliaSonera since early 2003 when Karlberg first mentioned it in an interview with this blogger. At that time the Swedish-Finnish telecommunications group and the Latvian government were locked in an arbitration dispute started by Sonera in 2000 to demand compensation for the planned ending of Lattelekom's monopoly in 2003. For a considerable time, it was rumored (and later confirmed by documents seen by this blogger) that a privatization deal was part of a possible settlement of the dispute. The dispute was settled in March 2004 without resolving the privatization issue.
Since the government of Indulis Emsis, the Green/Farmer Alliance prime minister, took power shortly after the arbitration settlement was signed, Karlberg has become the snubbed suitor of the Nordic/Baltic telecommunications market. Emsis has declared that neither Lattelekom nor LMT will be privatized as long as his government sits. He has also said he wants to "regain and assert control" over telecommunications in Latvia. How this is to be done is not clear – the government already holds 51 % of Lattelekom, so it appears that "control" of LMT, Latvia's most profitable company, is at issue. The government's claim to 51 % of LMT is a direct challenge to TeliaSonera's consolidation of the company.
It is not clear that the minority coalition government is entirely behind the "nay-saying father of the potential bride(s)" Emsis. While Emsis looks ready to "stonewall the Swedes" at all costs, sources tell this blogger that Minister of Transport Ainars Slesers (who will be speaking at the Forum) is favorably inclined to selling both Lattelekom and LMT to TeliaSonera. Despite harsh criticism and media suspicion directed against him, Slesers has so far proven to be a "can do" minister by bringing two low cost airlines (Ryanair and Easyjet) to Latvia and shaking up the aviation market. Perhaps Slesers can be persuaded to cut the Gordian knot tangled around both telecommunications companies.
Critics charge that letting TeliaSonera take 100 % shares in LMT and Lattelekom will create a "supermonoply". These claims ignore the fact that there are few real alternative international buyers for the Latvian telecommunication companies, and that those few that can be imagined make even the "giant" Swedish/Finnish group look like a midget. Such remotely thinkable buyers as Vodafone and T-Mobile are orders of magnitude larger than TeliaSonera. However, a scenario in which Vodafone buys
Alone or with a minority holding that TeliaSonera grudgingly holds, it is difficult to see how Lattelekom can develop, although it has made a fair try of it by marketing its data transmission services regionally – in Sweden, Finland and neighboring Estonia and Lithuania.Together with TeliaSonera, the company would at least be part of a middle-weight regional operator with considerable synergies and purchasing clout for equipment and transmission capacity. A regional group could also redistribute business functions internally to reduce costs and take advantage of moderately priced, highly-skilled knowledge workers in the Baltics.
This blogger has heard that TeliaSonera may outsource many or all of its accounting functions to a Baltic partner and that it would more readily do so if the partner was "family" – majority or wholly owned. The same has been said of other technical and IT related functions both for fixed network and wireless services.
Watch this space for more sporadic comment, analysis and background rumors/information about the Latvian/Baltic telecommunications scene.
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