Monday, November 14, 2005

100 000 fixed line switchers after December 1??

At least 100 000 fixed-line users would leave Lattelekom and switch, mainly, to Baltkom's voice services, so says a very high Baltkom official speaking off-the-cuff to this blogger.
Baltkom and the Latvian Telecommunications Association (LTA) held a press conference today, November 14, to deplore Lattelekom's alleged foot-dragging on number portability. Lattelekom has been instrumental in setting up an alternative number data base to the one run by the state agency the Electronic Communications Office. It has also circulated a proposed set of rules for porting the numbers of its customers. This would cost the recipient company LVL 7.20 for re-registering the number plus LVL 4.07 a month for upholding the portability service thereafter.
The alternative operators say this amounts to charging a second subscription fee on top of what they would charge their customers for use of their lines and network (fixed line number portability only works when there is an alternative network, otherwise it is operator pre-selection and you pay the subscription fee to Lattelekom but get the bill for all services automatically from the alternative operator.) Baltkom, the Latvian Railways, Latvenergo and some smaller operators have their own networks and/or numbering ranges.
Lattelekom says it has signed an agreement on its own terms with Telenet, with the alternative operator also entitled to get LVL 7.20 and LVL 4.07 per month for any of its customers who jump to Lattelekom.
The claim that Lattelekom would loose 100 000 subscribers is impressive at first, but some questions must be answered. If these people are looking for "bottom santim" costs, then they will bring little revenue to anyone to whom they are ported to. Lattelekom would only say good riddance to its low revenue customers and perhaps even be happy that Baltkom and Peteris Smidre was now stuck with them.
The migration of these customers only makes business sense if you are attracting medium to high level spenders who jump to Baltkom's triple-play services, buying voice (with prepaid free minutes), internet and digital cable for one two-digit price per month (which is about three or four times more than they would generate in revenues as a mere line subscriber), Baltkom probably has a couple of thousand of these bigger spenders already, but I doubt that it will extract any more value from its approximately 180 000 cable subscribers by getting them signed on for telecoms as well.
The real battle of the near future is when it becomes clear that broadband is the default fixed network service and when one or more of the alternative providers ask to set up their own DSLAMs at Lattelekom switch locations and to buy/lease the local loop to carry the signal to end-users along copper.
This may not be of great interest to Baltkom, which is developing its own Ethernet and fiberoptic based solutions for its cable customers and also on some new housing projects, where it is going in with a complete multimedia platform solution. But there may be a business case for other operators to sell cheaper and, above all, faster DSL lines (Lattelekom will get you 128 kps for LVL 6.99, but LVL 25 in Sweden will get you from 24 to 100 Mbps)
and cut a deal for buying capacity in bulk from the incumbent.


Anonymous said...

Such a good business is fixed voice in small country Latvia that Smidres company will certainly become instantly rich - if only incumbent will cancel any charges for portability :) I would suggest him to stick to CaTV, not make publicity on declining fixed voice business.

Anonymous said...

>>sweden will get you from 24 to 100 Mbps)

Disadvantages: small country (only one city) + network built in soviet time. You should check prices starting from north to south (sweden or finland). It will always be cheaper in a city.