Tele2, the Swedish-owned Latvian mobile operator, has been fined LVL 10 000 by the Latvian Public Utilities Regulatory Commission for failing to eliminate discriminatory interconnection tariffs that favor incumbent Lattelekom.
Tele2 says it will appeal the fine ruling, handed down on July 1, to the Administrative Court. The company will argue that it was not given enough time by the regulator to work out a solution. In the three months ending in February of this year, Tele2 failed (hardly to anyone's surprise) to get Lattelekom to back out of a 1999 interconnect agreement that was drafted and signed when market liberalization was still a pipe dream. The other seven agreements with smaller operators were signed in 2004 and 2005.
Tele2 press secretary Evita Matisone said the company had asked for an extension to find a solution but was not granted one by the regulator "who seemed set on some kind of punishment."
Liga Rimsevica, the Public Utilities Regulatory Commission press secretary said that Tele2 could have solved its problems by adjusting the interconnect rates downwards for all operators to the levels it agreed to charge Lattelekom.
Gundars Ruza, a telecoms analyst with Ernst & Young in Riga said that Tele2 has probably made an economic calculation that the revenue loss from cutting all tariffs to the Lattelekom contract level is the worst outcome, whereas an appeal to the courts opens up the possibility of delaying payment of the fine and freezing the status quo until the matter is resolved, possibily with a compromise (a slight cut for the "seven" and a raise for Lattelekom) that is more or less revenue-neutral for Tele2.