A Latvian race for user-generated mobile content?

Just a short note before I fly off to the States: Amigo, the virtual operator using Latvian Mobite Telephone's (LMT) network, has launched a feature that pays users for their multimedia content (MMS images, video, ringtones, etc.) Payment is up to LVL 0.20 per item downloaded (presumably as Amigo pre-paid credit for use when calling). Launched amid some fanfare, the Amigo service pays more than a similar user-generated deal on Bite (which pays only up to LVL 0.04 per download). Apparently, both services believe that a critical mass of multimedia capable phones has appeared among Latvia's nearly 2 million mobile phone users (including large numbers of pre-paids). The Bite offer has not been widely publicized.

Things to watch for while I am gone

I'm off to the US via Sweden. After stopping off in Stockholm overnight, I will be flying to Boston on May 19 and back again on May 27 (I'll be in Riga again May 29). In the meantime, there are some things to look for in Latvia. The half-mother (TeliaSonera) was due to officially respond to the management/staff buy-out proposal from Lattelecom. Unofficially, they have said OK some weeks ago. Nobody else is seriously looking to buy the half-mother's 49 %.
The only stumbling block is, to my mind, a bizarre demand by TeliaSonera that Lattelecom refrain from entering the mobile services market for two years (this, according to unofficial sources). The strange thing is, that if this is intended to protect TeliaSonera's forthcoming 100 % holding in Latvian Mobile Telephone (LMT), it is aimed at the wrong threat. Tele2 and, to a lesser extent, Bite (as well as Triatel with its "out of the box" wireless services) are more of a challenge to LMT than a hypothetical and, most likely, virtual Bite-based mobile service launched by Lattelecom at some point in the future. Tele2, especially, is aggressively pursuing business customers. To ban Lattelecom from going mobile is sort of like getting a chastity pledge from wolves so that their unborn cub won't come hunting while at the same time, a crocodile (Tele2) is chewing on one of your legs. End this craziness, TeliaSonera, and let's get on with the deal...L

Bite talks about mobile entertainment

I recently did an e-mail interview with Šarunas Čomentauskas, marketinga manager of the BITĖ Group regarding their plans for mobile entertainment. This was research for an article I did for Kapitāls, the Latvian language business magazine that is part of the LETA group of information services companies that I work for. It is interesting enough to publish here (also easy, since our correspondence was in English).

Meanwhile, Zetcom, the company behind virtual operator Amigo (phone cards of the same name, use Latvian Mobile Telephone/LMT's network) announced a scheme to pay up to LVL 0.20 for downloads of user-generated content for mobile phones. This tops what Bite offers for its Foto Bazaar -- LVL 0.04. The Amigo platform is called Multivide.

Due to a copy-past from a Windows Word file, this could look a little strange...

What are the user statistics for Bite Plus, your mobile entertainment portal?

We have about 25 thousand unique users per month. Each of them opens up on average 59 pages per month.

What is the most frequently purchased service?

We have our own content and provided content. In total draugiem.lv and one.lv services (social networks for Latvian and Russian speakers, respectively) are absolute leaders. Concerning BITE content – games and polyphonic melodies are the most popular products, and they are 3 times more popular then true tone melodies.

Is it true that ringtones and games sales are not doing well (across the industry in Latvia/Baltics) because of piracy?

One.lv has largely left this kind of business and is using mobile for transactions and access related to its social network.

Popularity of games is growing significantly. Since the start of the year the usage of games has grown by more then 3 times. Certainly it is partly connected to BITE customers’ base growth, but people still like games on their phones.

What is the future trend -- mobile TV, mobile/online communities. a shift to user rather than commercially generated content?

Certainly there is a recent trend for user generated content. We have just recently introduced Foto Bazaar service – gallery with user’s generated pictures, where users can upload their pictures and share them publicly. New service is a unique possibility for TOXIC users which can even earn money 0.04 Ls for each picture downloaded by other Foto Bazaar user.

However we think commercial content will not disappear at all, it might become more localized. We also observe a new trend in the market - free content, which is supported by advertisement.

What will be the impact of eventual flat rate or near flat rate service?

BITE already offers flat rate services and we see that the customers like this approach. Flat rate allows to users have easier control on their expenses and they feel more secure when paying a certain fee monthly.

When most phones are HSDPA capable, will there be any boundaries between mobile entertainment and commercialized internet entertainment generally? That is, if I have paid a subscription (maybe by mobile banking) to "Sports TV" does it matter if I watch it over flat rate DSL on my PC, flat rate HSDPA on my laptop or the same HSDPA on my mobile (OK, maybe the system detects the device and adjusts the stream and/or download format to the screen).

We think that there is a big opportunity for services specially designed for mobile usage. Not just internet copy-paste services, but specially designed services for mobile phones. Certainly, mobile and internet integration will continue to grow, but in mobiles can gain more by providing unique mobile based services.

Baltcom's Pēteris tosses a little wrench into the works

Pēteris Šmidre, in his capacity as board chairman of Alīna, the holding company that owns the Baltcom electronic communications group (internet, cable/digital TV and fixed telecoms), has tossed a wrench into the works of plans for a management/staff buyout of Lattelecom.
Alīna has sent a letter to the Latvian government expressing interest in acquiring a piece of Lattelecom. One reason, according to the news agency LETA, is that Lattelecom should be held to its committment to provide services to unprofitable customers. Otherwise, there are few details as to what Alīna would do as an investor in Lattelecom. Certainly, it is doubtful that Šmidre could buy the whole company (at LVL 290 million if its 23 % share in Latvian Mobile Telephone/LMT is discounted, otherwise LVL 450 million) alone, and saying that you are buying a company that you intend to force into unprofitable businesses is not the best way to get co-investors.
But that is not the problem. Pēteris is pounding on an open door on this issue, since the Latvian regulatory authority has always insisted that Lattelecom, as a market dominant operator, has a duty to provide universal service. Currently a government working group is studying how to fund universal service provision and who should be eligible. Raimonds Bergmanis, the head of the Communications Department of the Ministry of Transport, is inclined to favor a system of open regional tenders for utilizing the fund, that is, allowing all service providers to bid for providing subsidized universal service. More likely than not, the fastest and cheapest solution will be wireless. So Lattelecom is unlikely to be deeply involved in any of this.
So why all this? One simple theory is the bad blood between Baltcom and Lattelecom. Šmidre has always maintained that Lattelecom did everything to delay competition on fixed line telephony by dragging out interconnect negotiations and asking for, to his mind, unreasonable fees after the fixed telecoms monopoly was lifted in 2003. Since then, Lattelecom has implemented what amounts to fixed-fee domestic telephony (but feels like unlimited free calling) as part of its Mājas komplekts (Home Package) of DSL internet and phone service (with IPTV tacked on recently).
As Šmidre sees it, Baltcom (now facing cut-throat competition on foreign calls, with Skype looming over everything) was screwed out of a couple of good years building up its fixed telephony business and is now paying back the villain, Lattelecom, by tossing a wrench into the works. The government may well have to treat the Alīna letter as a legitimate request to privatize, complicating any decision on the Lattelecom management/staff buy-out proposal.
On this issue, the Latvian government is officially sending TeliaSonera the proposal and will decide what to do based on the half-mother's response. But as far as I know, that is pretty much a done deal. Lattelecom CEO Nils Melngailis, in Stockholm for a conference a couple of weeks ago, strolled 300 meters to TeliaSonera headquarters where he got an informal, but definite nod of approval from the half-mother. Who else is going to get TeliaSonera out of a 49 % no-future holding in Lattelecom that also holds the whole Latvian company hostage to uncertainty?
The logic of much of this has not deterred my former employer, Dienas bizness, from publishing some bizarro interpretations of what is going on, but that is another story. My Latvian readers know what I am talking about.
I should be writing more on this blog, but my usual evening writing hours have been ruined by the Latvian premier of the TV series Jericho. No, there is not an episode every night. There are informal sources for the original US series, almost all of it, so I am watching several episodes a night :).

Government OKs Lattelecom management/staff buy-out

A Latvian government working group approved the proposed management/staff buyout of Lattelecom for a sum around LVL 290 million (USD 580 million). Since TeliaSonera, which owns 49 % of the Latvian fixed-line operator, has unofficially given the nod to the deal, it appears that Lattelecom management and staff can get serious with international banks that have expressed interest in financing the deal and move ahead to a due diligence.

More on this later.

Some things that should be done by Midsummer

The Latvian version of the Midsummer bachanalia, called Jāņi, is also a marker for when political and major economic activity take a break for the summer, just as in the Nordic countries. So I have made a list of things that should be cleared in the Latvian telecoms "space" up by June 23, just a few weeks off.

1) The government should declare its position on the proposal by Lattelecom for a management and staff buyout of the whole company. TeliaSonera, the half-mother, has already indicated it favors the idea. With the Swedish government proposing an immediate sale of 8 % of TeliaSonera, it would be good for potential buyers to know that the Swedish group was getting out of a potential stranded investment for a reasonable price.

2) I am hoping to hear something about faster wireless internet speeds from Triatel and/or the GSM operators. This is personal -- I want to set up something at my summer house in Carnikava that has a reasonable speed compared to my 10 Mbps Riga DSL connection. Maybe I can get an extra DSL over my fixed phone line? Triatel has hinted at an upgrade of at least some of its EV DO network from the present maximum speed of 1 Mps.
Bite's 3.6 Mbps HSDPA (or a similar speed from Latvian Mobile Telephone) would be interesting, too. My present operator, Tele2 (via LETA) has not announced that it is expanding HSDPA coverage outside Riga (as yet).
A Latvian blogger with the nickname onkulis complains that Triatel has set an unannounced limit of 5 gigabytes (GB) per month download, despite professing to offer "unlimited" internet. Technologically, it may be necessary to ration wireless bandwidth in the face of BitTorrent junkies, but this sould be made explicit. Sorry, Triatel, you can be the first among many operators in Europe to tell it like it is with the fine print (my son, in Sweden, hit a ceiling on a 10 Mps fixed broadband connection).

3) Finally, my pre-Jāņi wish list includes at least one decent (at extra cost, if you please) international film channel on Lattelecom's IPTV service. The Bollywood channel now on the list doesn't count and I have yet to see what the video-on-demand film offerings are like ( I had to return my Ruckus wireless test set up, which worked fine as far as the TV went, but presented problems with using the internet at the same time).