Mikke on the sickly halfmother of Lattelekom

One of the blog's (possible) readers, Mikael Törnwall (Swedish nickname Mikke), a journalist with the business daily Dagens industri has written an interesting analysis of what's happening at TeliaSonera, the parent (or as Swedes and Germans would say, mother) of Lattelekom and the other Baltic telecoms and mobile companies (for Lattelekom, Telia Sonera is actually a half-mother, a bizarre term I used before on this blog).
Since not many of the readers of this blog read Swedish, here's the gist of what Mikke said:
TeliaSonera's efforts to grow outside its Nordic/Baltic "home market" have been less than a success and this has tarnished the company's image, not the least as expressed by its share price. Two hoped-for deals to take over Megafon, the Russian mobile operator, and Turkcell, the Turkish mobile, have, as Latvians would say, "gone to the Devil's mother. On the domestic market, TeliaSonera's daily bread and butter (telephony and broadband) is being eaten by competitors. In a great turn of phrase, Mikke says "Customers stubbornly want to call and surf more cheaply, and competitors stubbornly meet this demand." TeliaSonera's efforts to expand in the Nordic region by courting Norway's Telenor and Danish TDC have also failed (the merger attempt between Telia and Telenor was a black comedy, this blogger recalls, with Norwegian executives throwing punches at Norwegian radio journalists. Sonera was picked after that fiasco).
The most interesting thing Mikke says, sort of between the lines, is that the only hope left for TeliaSonera is some kind of pan-European affair. Now I may have mentioned this on the blog before (I think there was a rumor of France Telecom looking at TeliaSonera), but my standard answer to all the moaning and groaning in Latvia about the "Nordic supermonopoly" is that "you ain't seen Jack Shit yet" because TeliaSonera is a small fish compared to Deutsche Telecom, the French, Vodafone and others who could, if they wanted to, have TeliaSonera for lunch.
Speaking of lunch, the share price Mikke mentions in his May 25 is SEK 37.20. This a very nostalgic price for me, because it is what the standard lunch cost when I started working in Sweden in the 1980s. Today -- God knows... But lunch at that price, I'll take it. So let us see what happens to Lattelekom's half mother. Will she be married off as the poor Nordic orphan girl whose income from the domestic farmstead (Sweden) dried up? Or will she make money humming "I feel best in open landscapes..." millions and millions of times? (Mikke notes that entertainment is a possible new source of revenue, and that phrase is a bad translation of a very popular Swedish tune by Ulf Lundell, the sort of thing you want for a ring tone if you are a true Swede :)).

Bite's and Triatel's plans

Back from Cannes, time to blog again:

Bite bids to bite a bit of the Latvian market

Bite Mobile, the recently founded new (third, if you buy that) mobile operator will kick off on the Latvian market by selling prepaid cards and by pushing hard to get national roaming while its network coverage is built out.
The cards will probably be modeled on the Lithuanian Labas (meaning Hi or Hello) card sold by parent company Bite GSM. These come with a started kit loaded with 3 litas of calling time, and can be recharged in amounts ranging from 20 to 99 litas. Calls with Labas start at 0.24 litas per minute within the Bite GSM network.
For business travelers, Bite Mobile hopes to offer more or less the same deal with Vodafone and its partners as Bite GSM in Lithuania. Lithuanian customers can automatically roam with the Vodafone International or Vodafone Eurocall tariff plans, which offer unified tariffs by calling regions.
This may be a relief for travelers from the appearance of an unknown operator when switching on their phones at a foreign airport, then making a few calls only to get a SMS from the home operating showing that the particular roaming operator is the most expensive for calling home. Lithuanian customers also enjoy all their domestic services – mobile internet, calls with short numbers, etc., while roaming abroad.
Bite Mobile sees national roaming – using the networks of Latvian Mobile Telephone (LMT) and Tele2 until its own network is built out – as essential to a quick start. However, the Public Utilities Regulation Commission has not yet received a request for a ruling in this regard.
If a cursory look at some matters that Britain's OFCOM is handling regarding national roaming for 3 is any indication, then the Latvian regulator could be walking into a minefield, even if the decision to promote competition by this means is correct. There appear to be constant disputes over whether 3 is building out its network or continuing to get a partly free ride on investments (in GSM networks) made by others.
As far as competition on international roaming, Tele2 seems better poised to offer a "one Europe" package than LMT, since the Swedish owned group has mobile operations in several European countries, though perhaps not as extensive a network as Vodafone.
LMT has a whole zoo of roaming partners around the world, but some kind of unified scheme only with its Baltic partners (Omnitel and EMT) and, perhaps, with TeliaSonera's mobile units in Scandinavia. It is, however, rightly pointed out that roaming is of concern mainly to business customers.
(Most of this will be published in a certain business newspaper on May 26 :) )
Now as for what didn't make the paper, namely, that Bite Mobile will roll out, at some point, all of the services it has at its Lithuanian parent (with Danish "grandparent" TDC), including GPRS and EDGE. UMTS and 3G services are somewhat on the back burned - the company wants to get a solid customer base in GSM and to see some more takeup of UMTS handsets and services before moving ahead with this technology, although, ultimately, it is supposed to be the most cost efficient for carrying voice.

Triatel your watchman and PBX?

Triatel's video experiment, described earlier here, is actually a clever hack by some of the company's own customers. They found that by attaching a web-cam to a Triatel (probably fixed wireless) phone on the wireless internet, you could have a video-surveillance system. The idea is to put this up in bars and restaurants, where drinking (i.e.pilferage in kind) by the staff seems to be widespread. There are still problems with resolution (is that vodka or water the bartender is sipping?), but the experiments show the possibility for a "plug and play" videosurveillance system using off-the shelf webcams and out of the box Triatel phones.
Another product being developed by the company itself is a software based virtual PBX for small businesses. This will allow the function keys of the desktop phones to be used to reroute calls internally. The system will also allow free "intraoffice" calls (even across town, but not between domestic calling regions).
Look for this to be launched in July. Also, there will probably be a formal announcement that some kind of deal has been reached with China's HuaWei for the further buildout of Triatel's network.
Also look for the company getting more stylish video/photo camera equipped handsets that are more suitable for entertainment and information services. One of the first could be news agency LETA's webcast style Latvian-language news service (also carried on cable TV, it rolls news headlines and sometimes the talking head of a newsreader)
Maybe more on Triatel later.

The Prophet Speaks!!!!

This was posted on November 10, 2004:

"Then there are the loonie rumors (although not entirely). The one I heard today from some top folks in the Latvian IT business is that Lattelekom is buying MicroLink. Sorta fits with the Estos mid-range vision of their baby growing up to marry a mid-sized IT & T company. It also fits with the idea that Lattelekom may split into a) a network operator (getting some pan-Baltic assets in the data networks area from MicroLink), b) a service provider (consumer, broadband, cable TV, all that sh**t) and c) a business service provider (heavy into outsourcing your entire IT&T needs, putting in all from the network to the PCs to the rent-an-applications services, just sign here on the SLA...). The latter is going to take a lot of IT competance and weigh. MicroLink has some of it. Rumor also has it that Verdi, the unborn fetus of an IT subsidiary that Lattelekom has been carrying for years is losing folks to international biggies like Accenture. Buying MicroLink might make Lattelekom a more exciting place to work (well, with other excitements like "who's getting reorganized this month?")"

A quickie on MicroLink and the Telekom sisters

What a time to be in f**king Cannes instead of Riga. My quick take on the Telekom Sisters (Lietuvos Telekomas, Lattelekom and Elion) buying MicroLink is this:

Most telekoms is going to look and feel like an IT application (VOIP, video on demand, etc), so why not?
The Hansabanka data network account comes with the territory (I think).
Telekoms is merging with IT services, so that the three sisters (and daughters of TeliaSonera, more or less), have got a major regional IT services company.
Outgoing MicroLink founder and chairman Alan Martinsson was saying years ago this would happen (I quoted him in some article somewhere, I think both in that pink newspaper and a defunct publication called Northern Enterprise).
I think this blog may even have touched on the idea of Lattelekom getting MicroLink but then dismissed it as far fetched...he, he...
My only question is are we too far ahead of the game here on telecoms and IT convergence.

My final thought -- are we possibly seeing the seeds of Balttelekom -- a pan Baltic IT/Telekoms organization that will be a subsidiary of TeliaSonera. I think we will see this by 2007, on the eve of the euro. There is no problem registering pan-European corporations now.

Cannes, to my Latvian readers, is one huge balagāns. Watch the pink paper for more.

F**k You! Amigo

One of the most intrusive and offensive popups on the Latvian web is the thing that the mobile phone card company Amigo has put up on www.one.lv. It blocks you from signing into you e-mail account with some flashing picture of Amigo's evil little mutant dwarf. The little m**therf**ker has shown up every time I try to access a one.lv account here in Cannes (where I am on "vacation" with my filmmaker wife, hence almost no posts until after May 20). I have a regular LMT subscription, but this piece of shit has totally put me off from buying an Amigo card should one of my grown sons come to Latvia and need a local phone card. I'll get them a Golden Fish (Tele 2) or an Okarte instead.

Seeing Bill, flogging Ericsson, decisions, decisions..

Aigars to meet Bill
It can now be said that a visit to the US West Coast by Latvian Prime Minister Aigars Kalvitis, specifically to Microsoft and Bill Gates, is being planned for August. This may be the long awaited, often postponed visit of high Latvian government officials and probably an IT business delegation to Silicon Valley and Silcon Grundge, Raincloud, Fogbank or whatever they call the Seattle area :).

Ericsson comes to town

Ericsson is meeting customers and presenting its 3G platform to Latvian operators and the government (who own a good slice of Latvian Mobile Telephone). There is a bit of nervousness in the air, since China's HuaWei has been here, too, and is looking hungrily for both 3G wireless (Triatel, Ericsson customer Bite GSM on WCDMA) and wireless local loop (cdma 450 for Lattelekom) action in the region.

Lattelekom's decision matrix

These are the times when Lattelekom's top management earn their keep on behalf of the company and their vision of how it should develop. CEO Nils Melngailis is forging ahead with his vision of how the company should look in the future and he has to make it look credible to the stakeholders.
The issues are how independently can Lattelekom pursue revenue and profit in the Nordic region without stepping on one of it's half-mother's toes. A sub-issue is whether the other, slightly bigger half-mother is still on the same wavelength, same planet. Considering it's the government of Latvia, such a reality check is always in order. Under former Prime Minister Indulis Emsis, things were looking a bit extraterrestrial (though the pre-former Martian had fixed the big row with the smaller half-mother) again.
Now, the bigger half mother has a Minister of Economics indirectly responsible for Lattelekom's future who passes the Mad Magazine Alfred E. Neumann test (the funny little character whose picture was always captioned Not Insane). Krisjanis definitely passes the Alfred test and is better looking. So with at least part of the Government being on Alfred's side of the fence, there is hope..
Another issue is the relationship with Exigen, where the American-based Latvian company (in terms of who does 90 % of the brainwork, the Russian Americans in San Francisco run and sell the brand) has some differences about how the partnership signed late last year should go ahead. Lattelekom has to draw some lines here (it probably has) to fend off an "indecent" proposal by Exigen to take custody of many young ladies (and some men) in the manner in which it is accustomed. Hint: these people give the most chaste and decent phone.
Even bringing up the subject will make that part of the big half mother who isn't sure whether they can handle the Alfred test go totally batshit. This is not good for anyone. The Alfred-test borderliners are also probably not too keen on the restructuring of Lattelekom, making it a sort of holding company with small and nimble affiliates doing network operations, giving phone and BPO, delivering TV and broadband and maybe installing a phone or two.
This also threatens the smaller half-mother because this kind of Lattelekom could run off with some of her suitors. Tough times, tough decisions for the Black Rooster.

Lots of things happening!!

After a spell in which I was reduced to making bizarro guesses about why Siemens is wildly rumored to be after MicroLink or barely disguised stories of visits planned to some rich nerd with glasses in Redmond, things have started happening. In fact, a shitload of stuff. That's American slang for "a lot" (for my Latvian readers, well, sūdukrava has a different flavor of meaning, but it may apply to what has been made of the Electronic Communications Law).
So let's start with the exclusive, deep-background stuff I picked up while in London at a seminar partly sponsored by TeliaSonera. Mostly it was academic leaning stuff, like whether entrepreneurship was happening according to the whatshisname model or the Schumpeterian model (the latter is dead, is he?). Anyway fucktozin as I would say in my amalgam of English and Latvian at this late hour (background earphone music, Quicksilver Messanger Service «Who Do You Love» live 1960-something concert cut).

The Baltic IP TV master plan
So this is the deal -- IP TV is coming to the Baltics on some kind of an extension of TeliaSonera's platform being used in Sweden. It makes sense, why invent the wheel again? As I understand, the core network runs on its own Unix-based whatever, the delivery to households will be with ADSL2+, something that is one fast m***f***ker (24 Mbps if done right and you live on the same block as the switch) except that 2 Mbps was the fast m-f of yesteryear, wasn't it?
This might be a hint that the IBM-Ericsson-Cisco package being fronted by IBM here some weeks ago isn't the front runner, although Ericsson is already putting in the fast m-f DSLAMs and other stuff, at least for Lattelekom in Latvia. Since Swedish momma already controls the Estonian operations and Lietuvos Telekomas, it should be no problem to do the deal. Then there would be one core network, one core set of content alternatives – and here is what would be a very good thing – the need to subtitle the non-local content in whatever language the viewer chose. No more mutterers attempting to mumble the dialog over the English or Swedish or German soundtrack (although the Latvian dubbed softpornos one accidently channelcruises across on TV5 should get the bizarro shows of the year award, the perfect combo of the strange and inadvertently funny).
Having said that, content and getting the audience to come watch is going to be the really hard part. There has be some way to get the folks who watch Russian language free to satellite channels (well, free to the distributor, you pay Mr. Sharashkin LVL 1.25 a month for the wire from his dish on the roof), as well as to get a good value for money package of news, entertainment, movies, video on demand, etc. Plus all of that has to be packaged as triple play, because there aren't many other ways of doing it. That means the price is going to be significantly higher than your cheapo cable connection and it will have to compete with and draw customers away from both Baltcom TV and TeliaMulticom. Between them, these companies have close to 200 000 subscribers, probably most of the audience that is willing to pay LVL 5 and upwards for a cable TV selection that is, to be honest, mediocre. So there's the challenge...

Lattelekom links up with T-Systeme
Lattelekom signed a memorandum of understanding (some kind of German Verständnis -thing) with T-Systeme, the IT and systems integrator of Deutsche Telekom, one of the mothers-of-all telecoms giants with turnover of EUR 50 billion in 2003, or around six times the GDP of Latvia.
The idea is that Lattelekom will be T-Systeme's partner for their customers seeking business process outsourcing, telecoms and other related services here in the Baltic/Nordic region. Initially it will be a lot of public sector stuff, EU funded e-government, e-health, e-brainsurgery and e-dogcatching, you get the picture.
While I can't be serious at this time of the night while listening to Iron Butterfly, believe me, this is a serious connection for Lattelekom. Just hope that a certain paper doesn't shitcan this story simply because it is about Lattelekom. Well, one can always find some f**kwit to comment that this is somehow bad or that they don't see whatever...

Sūdukrava?
That means a load of shit. Various sources are saying this is what has been made of the Electronic Communications Law, where some 70 revisions were slipped in under the guise of amending it to ensure that all electronic communication service providers can be subject to eavesdropping by the security services. Now apparently this can be done with GSM operators, since there is a kind of rotten Easter egg in most switches (Easter eggs being cute features or animations that programmers hide in applications just for fun) that can be turned on when the spooks ask for it. What it then does is tap whatever conversations are of interest. With internet service providers, it gets harder. Basically, you have to tap and analyze the whole datastream and pluck out the suspect packets. This, I am told, requires gigantic storage and fantastic datamining resources, especially if one is doing some kind of near-realtime analysis. That's what it is all about unless you want to end up as a nasty footnote in some future 9/11 report, indicating that Security Agency X actually detected the how-to-make nukes e-mail two days after the bomb went off (because of a backlog).
Not too many neighborhood ISPs, nor even the spooks in Latvia can afford a cluster of Crays or Deep Blues to do what is needed. Plus there are seven flavors of encryption, proxies, etc. Only a moron would send criminal messages in the clear.
However, this extra cost is not what is upsetting the local organizations. It is also the fact that the amendments (so I am told) give a lot of clout to VITA, the State Information Network Agency, which will given a tighter grip on state and municipal data services, apparently in contravention of EU directives, etc. The Saeima passed the revisions with a two-thirds majority, so apparently not even the president can stop them from coming into force.
I have to look at this revised law more closely. I actually printed the whole f**ker off the Saeima homepage. I'll try to get back to this, but I am going to Cannes all of next week, where my wife is showing her film at the Film Market.

***
Other music behind the rant -- Lou Reed, Peter Tosh, Jefferson Airplane.

"Standin' on the corner, suitcase in my hand..." headin' for Cannes...
P.S. This post was slightly edited for spelling and obscene (though hopefully appropriately funny) expressions at 0830 Friday -- the 13th!

Heading for the West Coast?

Plans are afoot for a high level official Latvian delegation to meet with the top executives of a major US software company on the US West Coast, probably in August. The visitors will probably land somewhere north of San Francisco. This blogger may get details later this week. It's anybody's easy guess what we are talking about :).
This, hopefully, will be, at least in part, the long heralded visit to the US IT industry that the higher circles in Latvia have been planning for a long time (since the Skele administrations of the late 1990s). The government jaunts to Silicon Valley didn't come off because the falling apart horizon of these various governments was closer than the planning horizon for the visits :). Now, there may have been some event I missed, commentators correct me if I am wrong...

Siemens: Fattening the bride?

In some cultures, Rubenesque ladies are more appreciated than those who are thin. I can't say whether this is true in Latvia, but after reading a recent Business Week, I wonder whether rumors of Siemens Business Systems in Latvia wanting to acquire pan-Baltic MicroLink might not have to do with putting some attractive curves on at least one unit of the German-based megacorporation.
Business Week names Siemens Business Systems as one of the IT services companies that could be up for merger or aquisition as the business consolidates globally. The idea behind buying MicroLink would be to get at its SAP competence with the hope of building it into a European-wide, moderate-cost SAP center for Siemens. Getting at least part of that strategy in place might make Siemens Business Systems a slightly more attactive partner in any coming merger with some other giant of the IT services industry.
This is just an interesting thought that occured to me and a reminder to look into that Siemens-MicroLink thing again.

Unsecure WiFi widespread in Riga

The Latvian-language weblog www.hackers.lv reports on a wardrive through the center of Riga that revealed around 200 WiFi networks, many of them open and unsecure. The drive was conducted on the afternoon of Sunday, May 1. The bloggers note that there are probably many more office WLANs that are shut down after office hours. Some appear to be in private residences. The blog links to a uploaded file generated by the wardrivers' software that gives the names and various technical parameters of the WLANs they encountered (those who don't read Latvian can click on the amusingly named green/on my browser/ links that say shiten – meaning "here", nothing else). Several seem to be named Lattelekom, others after companies or people (perhaps systemadmins' nicknames). The "hacker" blog also links to a map showing the route of the wardrive. I suspect that this blogger's wireless link, with the name default, (there are several on the list with this imaginative name) may have appeared, since the Sunday afternoon drive passed my place on Caka Street. Now I wonder how they managed to detect the signal on the street when I sometimes have trouble connecting from my G4 Powerbook in the living room to the wireless router in a cubby-hole behind the kitchen.

"The peasants will suffer"

Laucinieki cietīs or "The peasants will suffer" (as one bizarre but valid translation) is the headline my paper put on a story about the numbering reform proposed by the Communications Department of the Latvian Ministry of Transport. It was one of the few cute things the old pink sheet has done for me recently after a pile of minor headaches.
Anyway, the gist of the story is a proposal to reduce the number of area codes in Latvia from 26 to 9 (a variation on Lattelekom's proposal of a few weeks ago, thereby preserving the seven digit system for a few more years and freeing up around 2.7 million numbers, which should do for the de-facto fourth mobile operator and any other comers.
The changes would exclusively affect areas outside of Riga, the Riga rajon and Jurmala, where around half of Lattelekom's more than 600 000 customers live and where most businesses are concentrated. In the rest of the country, the holders of some familiar numbers will have to settle for having them changed. So the peasants will suffer.

The blog speaks to Ericsson CFO Karl-Henrik Sundström

Karl-Henrik Sundström is Executive Vice President and Chief Financial Officer of the Swedish telecoms systems company Ericsson.
From May 2002 to April 2003, Karl-Henrik Sundström held the position of Vice President and General Manager of Business Unit Global Services.
From 1999 to 2002, Mr. Sundström was Managing Director of Ericsson Australia.
He joined Ericsson in 1985 as a trainee in financial management.
(the above is excerpted and adapted from Ericsson's homepage www.ericsson.com)

NOTE THIS HAS BEEN EDITED MONDAY MORNING at 0800 TO ELIMINATE SOME GARBLED TEXT

This blogger talked to Sundström in Stockholm recently. The following is an excerpt of approximate transcript of the interview, as conducted and recorded in English. I have selected the parts where he talks specifically about the telecoms industry, changing technologies and some thoughts about Ericsson and the Baltics. A longer Latvian version of this interview may appear you-know-where, but knowing them it will be published when, or shortly before, as the Latvians say "the owl's tail blossoms" /kad pūcei aste ziedēs.)

You’ve been with Ericsson for 20 years. 20 years ago, you were selling advanced circuit switched networks, now it is all moving toward IP based systems. Companies such as IBM are facing the customer in the same manner as the traditional telecoms suppliers and saying to the operators that we and our partners can give you the same services as traditional telecoms…

Karl-Henrik Sundström: The thing is, they are coming from the enterprise area, where you can control the environment. The fact is, the for over 100 years, Ericsson (and its competitors) has been able to deliver, regardless of the technology, what we call real time communication. That is what we call telecom grade, you lift the phone, get a dial tone, and there is somebody on the other side. That is regardless of whether the technology was crossbar, mechanical, digital circuit-switched or voice over IP. The IBMs of the world are coming from another world, they are coming with internet technology and they are coming from the batch world. Which is no quality of service. They are coming from datacoms,where if there is a byte that is lost, you resend it. Telecom grade, telecom service, the five 9s is our core competence. Ericsson and our competitors have changed underlying bearer technology all the time, and we did not invent the silicon chip but are using for certain things in our switches and other things. So they (the IBMs) will be there, but they are not the ones controlling the real time service and the quality of service. That is our core competence.

That’s on the fixed side. On the mobile side, VOIP on the radio interface is coming, but the (packet) header is bigger than the voice carried, so it is uneconomical at present. But it is coming. We haven’t been able to compress it, even though we have advanced algorithms, The header remains bigger than the content (the packet) carries.

I may be out of my depth technologically here, but I recall circuit-switched establishes a point to point connection…


KHS: hat’s where IMS (IP Multimedia Subsystem) comes in. It came from the 3G world, but the first ones using it are wire line operators, because they have to guarantee the quality of service. So if you want to have guaranteed 8 megabits, not best effort, you go up here (the IMS level) and you simulate signaling. IMS allows you to dedicate. Then you can charge for it. You need that for applications, voice, and high quality video. You can do it within an enterprise, but when you go outside into the uncontrolled public network, you need to.

But isn’t it a software solution?

KHS: It is. It is the traditional signaling capability, which you use in the new IP world with IP version six, where you can have the header that allows you to dedicate.

But won’t the IBMs be able to hack or reproduce it. They’ll say just give us the standards, and we will write something that performs…

KHS: It is the same in the AXE, the circuit switch. The software opens the circuit. In an AXE, say for the Latvian network, its one million man-years to fix all those variances of a call set up. They would have to reinvent those million man-years and start from scratch. We have this knowledge; it is part of our spine. It is the same as if I wanted to be a baker. I can make cakes at home, but I don’t have the knowledge to run a bakery.

So you are saying you have a legacy, translated to state-of-the art, of setting up circuits, that the IBMs and HPs cannot match?

KHS: They are coming from the batch-oriented world, which is not real time. The equipment is from different vendors, I am not sure they have their own IMS, so the brain has to come from some telecoms vendor. So you cannot earn big margins.

They are competing with us on the services side but may be a partner. When it comes to the technology behind it, they are not in there.

Niklas Zennstrom, the inventor of Skype, will scoff at all this quality of service stuff and say that look, this works, almost all of the time… So you can call anybody in the world for free.

KHS: There are issues of regulation and fairness of competition. This is basically an arbitrage. When I lived in Australia, my family used to call me using IP telephony. The circuit was good enough. Bit it is a little unfair competition. On the fixed side, you have to have, often by regulation, the emergency numbers (911 in the US), if the electric current fails, the phone must work. We did a study that if you build all these features into VOIP, the price difference is not that big. But if the authorities allowed an arbitrage, a service that doesn’t run on mainstream rules and regulations, then it cheap. It was good enough. My parents couldn’t afford to call Australia once a week.

So if you want to be something like a full service telecommunications service provider, then maybe it is best to have your systems delivered by someone like Ericsson?

KHS: We were the first one actually delivering voice over IP for RSL, six years ago. But the thing is, that if everything was voice over IP, you can’t guarantee emergency services to people out in the forest in Sweden. In Australia, there was a case against Telstra because a child died when its parents were unable to get an ambulance over the mobile phone, which is subject to different regulation. So there are these national interest and security factors. In a marginal arbitration, Skype is cheap and good.

So Skype is a toy and you have to build a serious telecommunications network if you are worried about these safety and national security issues…

KHS: Another thing to remember is that tariffs are set in a reverse way from costs. The biggest investment is in the local network, second biggest in the transit layer and the international switch is cheapest. But the tariffs are set so that the international calls pay for the local. For around USD 5 million I could route all the international traffic in Sweden through one switch, but one is not allowed to without agreements, etc.

Another thing we see these big companies doing is outsourcing. How does Ericsson see this? You are running the network you just sold in Italy. Are operators happy to have you offer to run most or all of what is their core business? What are the risks and rewards for the operator?

KHS: First of all, investment in most GSM operations is around 40 % of cash outlay. Of which, we can sell about 20 %. Opex (operating expenses) are by far the largest outlay. That is running the network and guaranteeing the quality service. Operators are moving down the value chain closer to the customers. So we follow them behind. We are now managing 38 million subscribers around the world. We have economies of scale and coordinate on a regional scale. We run three networks from one place in Australia, several in Poland, now the Hi3G network in Italy with some 750 people. We can eliminate functional overlaps; you can reduce costs 15 to 25 %.
The other thing is competence in how to manage advanced systems, networks, how to tune 3G networks and manage hybrid networks with an advanced service layer. This competence is scarce.
So while the operator moves forward to manager the customer and the market, we move forward to manage an area where he doesn’t have competence. . Plus the staff has to be constantly retrained for new things
The challenge for many operators is that they are delivering a channel to customers with new services that will have to be billed several times per week.
In the US, for example, we have hosted services, such as MMS, that we run for a number of 3G players. They sign a subscription with Ericsson and we run it for them.

So for Latvian alternative operators, as certain issues are resolved, such as interconnect, and when the new third mobile operator settles in, there may be a time to build out and one option would be to let Ericsson both build and run the operation…

KHS: Yes, if it is in their strategy to move toward the customer. Earlier I was in charge of Services at Ericsson, and in the US, someone said to me “Son how can we be called a mobile operator if we don’t operate or own network?” But a few months later, they were buying hosted services from us. That means in all new areas, we are doing it for them. It is a matter of strategy, do you want to focus on the market and let someone else run your network for you.
In some markets, in the early days, coverage is important and is an early competitive tool, so you might want to control that.

Lattelekom is going into this, they hope to set up network operations centers for customers. So what happens when they start competing with Ericsson?

KHS: That would be a bit of a threat, but also an opportunity. We already run Telia International’s network out of an operations center in Holland, where it was cheaper to add on another customer rather than build a center just for them. If TeliaSonera wanted to do certain things, it could put certain things, like inside engineering and data transcripts (IADT) in Latvia, where the engineering costs are lower.

But Lattelekom is looking to Scandinavia as a business process outsourcing market, and the hell with whose turf we are on…

KHS:The only thing Lattelekom has to think about is what do they want to be. Do they want to focus on telecommunications or on network operations. I have been in big companies, mostly Ericsson, for my whole life, and I know that the only time we got into trouble was when we didn’t know what we wanted to do.

But Ericsson isn’t an operator?

KHS: Oh no. In the 1920s and 1930s, setting up a telephone company was the only way to get customers for our equipment. After World War II, we decided we wanted to be an equipment maker and we got out of our last operator (in Argentina) in 1992. Now we have a strict rule not to compete with our customers.

Getting back to some global questions, aren’t we seeing the defacto disintegration of the company? I mean, you see a telecoms operator and Ericsson runs their network, the billing is done in Bangalore, someone else helps with sales. Where’s the company?

KHS: I think that is natural progress. Ericsson used to do all its plastic itself, We had the biggest plastics factory in the Nordic area. We did our own nuts and bolts. That is how it is when you start early and there is no supplier, but as we moved up the value chain, we manufacture 70 % of our products outside Ericsson. We control the software, the final assembly and guarantee that the system works. We design but don’t manufacture.

We do the blueprint, we do the software to make it work, design the printed circuit board, have it manufactured.

We started this a long time ago, this virtualization of the company, 10 years ago with AXE. You work with a limited number of specialized partners and put it all together.

What opportunity does this open for us in the Baltics?

KHS: We do much work with Elkoteq in Estonia, but nothing in Latvia. If I were to hypothetically look at what other things one could in the Baltic, it would be in software engineering. You have good education and knowledge and are close to our R &D centers. Also we would look at installation work, bringing temporary installers to work with customers.

Triatel moves toward video services?

Triatel, the cdma-450 operator, may be moving toward offering video services. That would represent an expansion of the brand's strategy from a rather narrow focus on the corporate and government sector.
This blogger has been told by the company that some sort of videophone broadcast will be demonstrated the week of May 2. While it is hard to imagine a corporate video conference with executives balancing their Triatel phones on the their knees, there are plenty of recreational and entertainments services that can use video in a 3G environment. Indeed, most premium services on both GSM and 3G networks around the world are entertainment related.
My middle son (18) who lives in Sweden told me of the increasing number of 3 phones at his high school. Many of them were being used for such seemingly bizarre purposes as beaming live video of lunch from the school cafeteria to a friend in the classroom. Then it occured to me that for some people this is fun.
What Triatel will probably do is try to launch some mass market services ahead of the similar 3G services of incumbents Latvian Mobile Telephone (LMT) and Tele2, as well as beat Bite GSM to the punch. Having been the first to introduce de-facto 3G data services on a limited scale, it might as well be the first to launch commercial, mass-market services. The way things look now, Triatel either does this or risks being cornered in a relatively low-revenue niche (compared to say, a customer-base of 100 000 sending MMS and downloading video clips for fun) by the other two and (later three) operators.

The wacko story spiked?

Looks like the paper won't be putting out the somewhat crackpot story about a forecast that Lattelekom could loose 60 % of its SME customers once number portability (not necessary in order to take revenue away from the incumbent, carrier pre-selection will do fine..) is introduced. Somebody came to their senses, just a shame that I had to work with a number of people at Lattelekom, analysts in London and a PR company doing a corporate reputation survey to get refutations of this rather far-out-on-a-limb theory.
Maybe it is time to start blogging Latvian journalism in addition to telecoms and bizarre near-traffic accidents. But who has time...?

More wacko coming?

The main rant...
A certain publication wants me to make a big deal of the fact that Latvia's Ministry of Health, in moving to new premises, installed 125 phone lines from Triatel rather than Lattelekom. 125 lines is around 0.00019 % of all Lattelekom lines and about LVL 45000 in total revenues. according to a guesstimate by the Ministry. The Ministry was previously located in two different premises and used Lattelekom.
As news, it is worth a small item, nothing more. However, under some pressure "to prove that I am not taking Lattelekom's side" (as if there were sides in this matter), I've decided to build another story around a piece of information from an otherwise very respectable source, Janis Lelis of the Latvian Telecommunications Association (LTA).
Lelis told me that the LTA had spoken to several "marketing experts" who expressed the belief that, given the chance, 60 % of Lattelekom's small and medium business customers would leave the company for another operator. This is not what Lattelekom's own customer surveys, conducted by a professional market survey organization, have indicated.
I also have to emphasize that Lelis didn't say he believed or agreed with the assessment by the so-called marketing experts, it was one piece of opinion among many that he hears in his position. So to retell this is not to assail the credibility of the LTA, only of the source it is quoting.
Anyway, staying "barely" clear of a borderline hatchet job (in my own mind) I will file an item claiming "the collapse of Lattelekom is forecast" and pointing to the forecast cited (but not endorsed by the LTA).

For those who don't know American expressions:
hatchet job
n. Slang

A crude or ruthless effort usually ending in destruction: did a hatchet job on the mayor's reputation.

As defined by an internet dictionary.

Anyway, most of the text will be quotes and statistics showing the complete idiocy of a claim that 60 % of Lattelekom's SME customers will flee because, as the unnamed marketing experts claim, the company has a reputation SME's don't want to be associated with. The reason for this is apparently lingering conspiracy theories about the undoubtedly debatable Umbrella Agreement of 1994. Under these theories, Lattelekom is an instrument for foreign monopolization, colonization and failure to run Gigabit Ethernet landlines to every kerosene-lit shack in the Latvian woods.
While the majority wackos of the Latvian parliament or Saeima voted to condemn the settlement agreement with Lattelekom just over a year ago based on this kind of bizzaro thinking, I don't really believe it exists among the ordinary SME customers, even those who have had problems with Lattelekom. After all, the company has been reforged over the past 11 years from what was essentially a Soviet state monopoly to what is a modern corporation making a more than decent profit even under great change-induced stress. So for a best effort, Lattelekom isn't doing so badly. I summed up attitudes toward the (then) monopoly in an article I wrote some years ago for the apparently defunct magazine Northern Enterprise with a headline Surfing with the Great Satan, which summed up how, while providing new services such as DSL, the company was still vilified in some circles.
I'm sorry that this blog has to diverge into what is more of a criticism of how journalism is done in Latvia and the sometimes bizarre compromises that one has to enter into to get certain editors off one's case.
Anyway, my hope is that this story will simply be spiked and never see the (pink) light of day. If it does, those readers of the blog who will hear of it second hand will know why it happened and that it is, if I succeed in writing it to the edge as I intend to, that it will be self-referentially absurd :). Sort of like, Flat Earth Society Convention Comes to Town (with lots of references to the obvious fact that this is all a crock of shit).

Other stuff

While we are on the subject of what does and does not get published, I have an interesting piece based on an interview with the head of the State Information Network Agency (VITA in Latvian), Juris Kanels. Since it has been shitcanned for no apparent reason, I will translate the essentials later on. Basically, it is about how VITA plans to expand into the private sector market and how it needs a clear mandate and definition of mission to avoid problems with being accused of state-subsidized unfair competition.

God, I wish people who are totally HUTA (as in head up the ass) on telecoms matters would at least realize from where they are looking at things....

And while enjoying the freedom of blogging, might as well say fuck once too, as in fuck this shit!
Back to normal again soon..
I'm gonna put on some music now and then go to sleep...

Huawei bags Triatel, IP TV bid confirmed

Since fame and USD 0.17 (so far on google adsense) are all I can hope for from this blog, I want to point out that you are hearing this here first.

Huawei bags the Triatel deal

Triatel has apparently been happy with the trial of Huawei's cdma 450 equipment and is sealing a deal for the Chinese company to build out the rest of the "non-standard" 3G mobile network in Latvia (which will also deliver fixed wireless access and DSL class, 2 Mbps + wireless internet). Triatel's press flack says they will announce very soon. The deal is "multimillion" something – dollars, euro (USD 1.30) or lats (USD 1.85).
While it ain't exactly Portugal, the Netherlands or Algeria (where we have seen Huawei doing things in this hemisphere -- or quadrisphere, since Asia is in the Eastern hemisphere, too), it is yet more evidence that at least the company's same technological bang for a smaller buck approach is working. Not all showcases have to be big. We shall see how they do.

Lattelekom confirms consortium's proposal

Lattelekom's director of market development Gints Kirsteins confirms they are talking to the three partner consortium of Ericsson, Cisco and IBM the blog reported a few days ago. There are also others making their proposals.
That's not the point, though. As Kirsteins notes, the big problem is going to be getting a workeable business model that will attract a substantial migration from existing conventional (Telia MultiCom) and digital (some of Baltcom TV) cable operators. Moreover, Baltcom is already selling a version of the triple-play (internet, TV and voice) package that IBM dog and ponied last week. It has probably more than 1 000 triple-play users (my guess), but there has been no stampede. Baltcom has around 125 000 cable subscribers and Telia MultiCom (soon to rebrand as something else) around 75 000.
With no stampede, Lattelekom is going to be sitting alone at its Cisco boxes, waiting for someone yearning for 100 + channels to come to them (right, always wanted to pay LVL 10 or 15 a month for the Mushroom Channel -watch 'em grow- or whatever). There better be some damn attractive content there. This is the biggest problem - stuff like first run movies is going to cost, unless Lattelekom cuts a deal with its half-mother Telia Sonera, which is selling IP TV for (as I figure it, please someone correct me) about SEK 449 per month for the radically fast ADSL2+ and another minimum of SEK 129 or as much as SEK 339 or something like that for the TV subscription. That brings us close to equivalent USD 100 per month just to be entertained. That will buy one a sh**tload of booze or joints or other entertainment...:) at Latvian prices.

Getting Kolja to switch?

The other problem is - and no ethnic stereotyping is meant in any malicious way here – that basically Lattelekom has to get Kolja the middle-class Riga Russian to buy its offer. Kolja is a little shy of 40, married, one or two teenage kids, and lives in a privatized or newly bought apartment in the Riga suburbs.
During the day, the cable TV serves to entertain the inevitable babushka (granny) who sits at home watching Russian dubbed Mexican soap operas. Kolja comes home in the evening and moves babushka to another TV set, where she watches the 60s Russian oldies movies of her youth on another Russian channel. Meanwhile Kolja turns on the hockey game (Latvian TV or TV 3) and one is as likely to get him away from that as to get the Pope to step back from the altar during mass to take a call on the Papal mobile.
Kolja's kids then show up, and being more or less tri-lingual, they watch some Latvian reality show guaranteed to crank down their otherwise bright IQ by 10 points if they keep it up. Or maybe they watch MTV. Mrs. Kolja, who works for a smart downtown bank, thinks she has to polish her business English, so she catches one of the evening BBC Business News shows. Babushka watches some film about armored division soldiers and a dog for the third time in a week.
Kolja Jr. (15) leaves his 13 year old sister Katja to swoon over a pink-haired character nicknamed Chibriks on the reality show Fabrika Returns from The Grave and boots up a LVL 7.50 a month fast internet connection supplied by their neighbor Sharshkin, who has parcelled out a 4 Mbps Lattelekom DSL line to a couple of other apartments on the fourth floor. Kolja downloads a 200 Mb pirated Doom: Slash Burn & Butcher game, then types his homework. In the bedroom, on her work laptop, Mrs. Kolja Skypes her cousin in St. Petersburg and they talk for a half hour.
This, basically, is the idyllic evening that Lattelekom's IP TV offering will have to totally, awesomely disrupt. Technology alone won't do it.

Triatel tests Huawei, big IT deal coming?

Huawei, the Chinese telecoms equipment maker, is letting Latvian alternative operator Triatel test its cdma-450 solution as a prelude to a possible multi-million dollar deal. If the tests are satisfactory, Huawei has a good chance of getting a contract to build out Triatel's network, which is understood to be limited and based on a Nortel solution.
Sun Gang, a Huawei executive at the company's office in Poland confirmed these facts to this blogger. Gang said the company was in the process of setting up a subsidiary in Latvia, as reported on this blog earlier.
Huawei has at least one earlier cdma-450 project in Europe in Portugal. The company is considered an aggressive newcomer to world and European markets. Competitors such as Ericsson say privately that Huawei has yet to prove it can provide the same level of support and service as established Western suppliers. Competitors are unsurprised that Huawei appeals to operators who look at the list price tag of "the boxes" first. This may or may not be the case with Triatel.
Huawei has also been seeing Lattelekom regarding its plans to use cdma-450 for rural fixed line modernization (using fixed wireless phones).

The big deal?

A major Latvian IT company is close to a big deal IT deal with a large bank from a German-speaking country. This is in addition to a possible deal with a Scandinavian bank that this blog reported earlier. My sources indicate this could be a mega-deal. The financial institution has "an IT budget that is half of Latvia's state budget". It is likely the deal will involve, as one of its elements, the maintenance and modernization of a legacy mainframe-based system.
Watch this blog or my day-job newspaper (for those of you that read Latvian) for news. It could be decided in about a month.

Ericsson, Cisco & IBM aim for Latvian IP TV

A consortium consisting of Swedish telecoms giant Ericsson, internet infrastructure builder Cisco and IBM is bidding to build an IP TV network for Lattelekom, this blogger has learned. In this case, IP TV means delivering DVD quality image and sound over 100 + channels over a DSL type connection at around 20 Mbps.
The ongoing bid also explains the eagerness of IBM's representatives in Latvia to demo what it said was "its" triple-play product. To be sure, the slides had many other company names and the IBM people said they were only "integrators", which is the role assigned them in the three-member consortium. At the same time, the IBM guys did an excellent job of leaving the general feeling that somehow, it was their "show".
The fact that Lattelekom is set to build out an IP TV network is nothing new for the readers of this blog -- what is interesting is that IBM was packaging it as "triple play". That means there is a very low cost, and, in many cases, practically free internationa and domestic voice element in the solution. Indeed, I would call "triple play" more like 2.5 play, because with the heavy duty internet pipe needed for IP TV, one has the capacity for most high quality do-it-yourself VOIP solutions. So the third element is probably going to be a Cisco VOIP phone handset that makes phone-to-phone calling easier, as well as making it possible to charge extra for the equipment and, possibly, minutes on some kinds of calls.
As things look now, Lattelekom has quietly let the "soon after Easter" goal for some kind of experimental IP TV pass and is apparently looking for a serious, heavy-duty pilot level solution that will almost certainly involve the same partners it will keep for the final, commercial roll-out. I don't think it will be that soon -- maybe a Christmas offering?
If I were Lattelekom, I would hit the market with a "shock and awe" offering - voice, interactivity, games, and a hard-disk based set-top box that would allow recording of programs. I would position it so that the middle to higher income end of the draugiem.lv crowd (275 000 18 to 40 year olds who feel at home on the net) would go after it. In fact, I would make part of the launch on draugiem. This is no partiality to draugiem, just that this is one of the largest and most focused attention platforms available in Latvia after TV itself.
The IBM demo, run off a server in the basement with snippets of real programming (I think this is what they were doing) looked impressive, especially the video-on demand features and the ability to package one's own set of subscriber channels (and skip the half-dozen Russian language channels that seem to come with local cable packages, since I don't speak Russian). Interactive features are also part of the solution, so Baltcom TV, which is going digital with its own MMDS or (limited) optical fiber solution should start watching out. So far, Baltcom is the only player offering triple play, but when Lattelekom gears up and starts, Baltcom will face some very serious competition.
However, a caution to all is that despite its high number of cable TV subscribers, Baltcom has relatively few triple-play users (partly due to geographical constraints of their network).

Wacko stuff on number portability

You take a f**kwit story by the Latvian news agency LETA and you have one of the ingredients for a half-assed news story in a business daily I won't name because I'm not sure what the story is with mildly dissing (as they say in the hood) these folks.
Anyway, LETA triggers a minor newsroom panic by asserting that Latvia's arrangements for number portability means endusers will have to pay for the privilege. Nobody actually says that in the original piece and moreover, nobody actually tells me that either. In fact, they say that as things now stand, people officially know just about f**k all about how things will really look (one of the privileges of blogging is that you can rant, writing the way I might speak to someone about this in an informal manner).
My story started being written that it wasn't so that number portability costs would be passed to customers even if they were incurred by operators. In other words, LETA was writing bullshit. In truth, nobody really knew whether customers might have to pay, but there were strong factors the suggested they probably wouldn't. Putting it so clearly didn't fly on the first try, so the piece was done with a twist that I'm mildly unhappy with. Then again, doesn't mean shit to those who don't read Latvian, and all the better :)...
Unofficially, it looks like the mobiles at least are going for some kind of independent organization to managed the database that knows whose number is where. That means there could be a variety of cost-sharing arrangements. Lattelekom, according to my sources, is pretty close to signing its arrangements with the small number of small fixed line operators that actually have anything going.
One idea that Lattelekom is mulling (and this would apply only to number portability within any of 26 domestic area code zones) is to package the charge for incoming customers (charged by their former operators) as a kind of fee for keeping an old familiar number while at the same time getting better tariffs, higher quality or whatever it was that made the customer want to switch. At the same time, it is also logical that number portability charges, if applied by the operator giving up the customer to the receiving operator, would also be absorbed by the latter simply as a cost of customer aquisition rather than passing it on to the customers.
It is even less likely that the mobiles would pass on charges, as they regularly put up substantial amounts for customer acquisition with such deals as subsidized phones. C'mon, no phone costa LVL 1 or LVL 19 wholesale. The operator is putting up LVL 20 just to get the subscriber signed up for whatever the minimum time is and hoping the revenues will soon make up for the wholesale cost of some mid-range Nokia or Samsung. So why should a number portability charge be passed on to the customer? At best, it will be diluted and hidden. Does anyone buy shoes on sale where the price tag says $75 for the shoes and $4.95 per buyer for the advertising campaign that announced the sale? No, those shoes are "was $ 99.95, now $ 79.95". Basta.
Even if charges were implemented, it doesn't look like people will rush to port their numbers like stampeded lemmings. Lattelekom doesn't see more that 2 % of its subscribers doing so(about 12 000), thought other sources see a double-digit percentage. However, those predicting stampede away from the incumbent (has anyone seen this elsewhere? 50 % was a guesstimate mentioned to me by one source forecasting what could happen to Lattelekom) are logically saying that the unit cost of portability will fall. If Lattelekom spends about LVL 1 million on its number portability platform, "better" to have 60 000 jump ship than 12 000.
One serious issue is whether the Latvian operators will have their act together by the time number portability must be implemented on December 1. That's when the Public Utilities Regulatory Board will start fining operators. The mobiles and Lattelekom say they will be in compliance.
We shall see. Off to Ericsson in the morning.

Blogspamming strikes!:)

I think I just got blogspammed. A creature called lori posted a 20+ lines long comment repeatedly saying that I should be careful buying the drug "Tramadol". Sounds like something from a Kurt Vonnegut novel (Tramadol from Trafalmador). Also "be careful buying penis enlargment pill". Well, thanks for the warning lori, but I deleted your bizarre chant. But now you all know, be careful...etc :).

Were you on Tramadol, lori?

Huawei challenging Ericsson for rural fixed wireless

China's Huawei may be a serious challenger to Sweden's Ericsson for implementing fixed wireless services in remote rural areas of Latvia under Lattelekom's plan for finishing the modernization of the last of its Soviet-era network, this blogger has learned.
Both equipment and solution suppliers have been in touch with Lattelekom about building a cdma 450-based fixed wireless voice and data network to reach the 60 000 or so subcribers still linked to analog rural switches and accessing the network through obsolete wire and cable links.
Cost is apparently an issue, since it appears that Huawei and, possibly, another China-based contender have suggested they can do the job significantly cheaper than Ericsson. If this proves true and Lattelekom – an Ericsson customer for some of its main switches and its DSL network upgrade – chooses the lower cost offer, it would be a repeat in miniature of Ericsson's loss to Huawei on a major contract in Thailand. Huawei is reported to have bid 40 % under some benchmark figure set by the Thais.
The idea is to provide both digital voice and high-speed data (probably wireless SDSL) to these subscribers under a LVL 30 million plan adopted by Lattelekom last year to modernize the last, difficult and potentially expensive subscriber lines. In some cases, the subscribers and potential subscribers in isolated rural homesteads could be given apartments in the nearest town for less than the cost of running or upgrading the wireline to their farms or residences. In other words, there is only a wireless solution
With the Latvian government's adoption of a national frequency plan on April 19, the Public Utilities Regulation Board will be able to decide whether and how to allocate part of the 450 Mhz spectrum for rural fixed telephony. Lattelekom has asked to be given some 450 Mhz spectrum for its rural fixed wireless, but the request has gone unanswered for many months. Now it remains to be seen whether the regulator will wait for new rules on the allocation of "scarce" spectrum that could make it possible to auction or charge a less-than-nominal fee for the rest of the 450 Mhz spectrum. If Lattelekom has to bid against others, this may make cost even more of an issue in the rural modernization project.
Ericsson has the advantage of being a known and established supplier to Lattelekom and probably can offer some cost of ownership advantages with its higher price tag. The support base is just across the Baltic, not in China (unless Huawei has built up a permanent Europe-based support organization, which it might have).
However, but cutting the base price low enough, the Chinese supplier can probably outweigh such factors. In any case, a lot of equipment is probably more or less "generic" and increasingly reliable, so barring new hurricane-strength storms, you will not be flying in technicians from Shenzen very often to deal with a malfunctioning cdma450 base station.
Whatever the choice, cdma 450 is the hot new/old (where NMT used to be) 3G grade technology and Lattelekom has few other currently viable choices for finishing up network modernization. WiMax is another, unproven technology and primarily aimed at data/internet markets (possibly IP TV), not voice. Somehow, I don't see some Latvian rural shack dweller installing Windows Media 10 (or whatever it is now) on his PC so he can get HD TV broadcasts over WiMax.

Other background noise

Triatel, Latvia's only cdma 450 wireless, fixed wireless and internet access provider, is moving ahead rather slowly. Uptake of the "non-standard" service is somewhat disappointing. Huawei is said to have seen them as well.
Business customers may be waiting for Latvian Mobile Telephone and Tele2 to move beyond their token UMTS deployments to see what their coverage and pricing look like. Triatel has positioned itself as serving mainly business customers, who will wait to see what the "big two" and possibly Bite GSM have to offer on the UMTS side. Also lacking (except for internet access) are 3G specific content and services. Mobile TV and entertainment (games, tones, video) will lead the way on the consumer side once 3G handsets start selling.

Pushing 100 in Italy, banging in the Middle East

The Latvian networking website www.draugiem.lv has passed the 260 000 registered user mark, while its Italian affiliate (announced on this blog) www.vostriamici.it should hit 100 users any minute now. I assume these 100 folks are the "seeders" and their first catch.
Meanwhile, the 260 000 figure has to be taken with a small grain of salt, since when you have that many, it gets harder to eliminate jokesters and false names. My middle son (18) in Sweden was on the site as a Star Wars character for a couple of weeks (and as my friend) until someone eliminated him/it :). I also doubt that Latvian fashion photographer Valts Kleins has been doing the draugiem.lv photos for some of the 17-year old young ladies from Moss Village (Sūnuciems), who look like they are posing for the next swimsuit calendar or a Cosmo cover. On the other hand, Latvia does have an enormous concentration of very attractive women.
Nonetheless, draugiem.lv remains the second largest attention platform after Latvian TV and exceeds any print media in its potential reach, as well as assembling a huge part of the at least minimally internet-knowledgeable 18 -35 Latvian middle class.

Hariri behind International Telecommunications & Technologies?

One of my sources tells me that the late Lebanese billionare and ex-prime minister Rafik Hariri was a major player behind the mysterious International Telecommunications & Technology (IT&T) consortium, which, at the end of the day, failed to bid for the third Latvian UMTS and GSM license. Alas, some of Hariri sleeps with the fishes, other bits perhaps feed the rooftop birds and most of the entrepreneur has been given a decent burial since he was killed by a carbomb in Beirut a couple of months ago. As a result of a major investor's death, IT&T apparently fell apart. While this information is also to be taken cautiuously (IT&T faded just as mysterious as when it appeared), at least there would have been some serious money behind the unknown company.
On the other hand, perhaps all the better – it is an open question as to whether Lebanon isn't drifting back toward unrest, perhaps another civil war. Better Denmark and Lithuania than a company depending on an unstable and potentially explosive region for its financing.
Meanwhile the winner of the auction, Danish TDC's Lithuanian subsidiary Bite GSM is moving at full speed to recruit a team in Latvia, recently running a full page ad in the Latvian daily Diena looking for various kinds of management, PR and engineering staff.

Latvian friends network goes italiano

The Latvian friends networking website www.draugiem.lv has started an Italian franchise, www.vostriamici.it. The log-in page looks identical to the Latvian site, except I haven't gotten an invito, so I don't know what the inside looks like. Currently, it appears to be populated by a small number of members, basically a seeding crew who will bring in several amici each, who in turn will bring in their contacts and so forth, getting the ball rolling.
Lauris Liberts, the godfather of draugiem, has deliberately kept the launch low-key to make sure that it actually works ("works" means getting past, say, 1000 members). Another factor is that Catholic Italy has been host to the mourning and funeral ceremonies for Pope John Paul II. Once this is over, the potential target audience of amici will be getting back to everyday life and less solemn activities.
An official announcement of vostriamici probably won't be made until toward the end of the month, except that the gatto is out of the sachetto (well, the cat is out of the bag) thanks to this blog and a piece that may appear in the Latvian-language Dienas bizness next week :).
One can assume that the Italian site will be the same insalata mista of features, forums, personal profile pages, uploadable photos, etc., as the Latvian original, now edging toward 260 000 members, or more than 10 % of the population.
What is interesting about this is the hosting solution – initially amici will be hosted on Lattelekom's servers. In the mid-term, the whole site may move to an Italian host, but be administered by Lattelekom remotely. I also wonder how they will solve the problem of SMS micropayments for added services
There has been some buzz on the Latvian blogosphere (yes, there is such a thing) that the relationship between draugiem and Lattelekom may be more than arm's length. This blogger has heard from the mouths of several horses :) that this isn't so and won't be so. In other words, Lattelekom has not bought nor is is about to buy draugiem.
Having said that, there is a lingering suspicion that Lattelekom realizes it is on to something potentially big and something that may not last forever. Presently, it is like the landlord of a very crowded and popular bar. All the bar does is pay the rent, but the landlord would certainly like more of the action.
The cooperation between Lattelekom and draugiem could be like what I suggested for the third mobile operator -- sell a product with a Lattelekom platform and the draugiem brand. Right now, Lattelekom offers a kind of broadband lite, Pilsetas internets (City Internet) that has a download speed of 128 kbps (the other consumer service, HomeDSL, doubled its speed for the same money to 512 kbps).
How to synergize with draugiem? Rebrand Pilsetas internets to Draugu internets, jump the speed to 256 kbps and offer it through draugiem.lv for the same price, maybe even a discount on the DSL modem or the like. From what I have heard, TeliaMultiCom, a direct competitor of Lattelekom in significant parts of Riga (LVL 19.95 for 1 Mb is one of the best deals around if one is near their cable network) was swamped with hits on its server after it put a banner on draugiem.lv. There is a lesson and an opportunity in this.

Sorry, no music behind this one :)

Paying by the number in Latvia

Read what I blog, don't read what I publish.
The Communications Department of the Latvian Ministry of Transport has proposed charging a fee for telephone numbering resources, suggesting an amount of LVL 0.50 per number per year, or LVL 0.0416 per customer line or unused number per month.
Well, the paper I work for wants to emphasize that (quoting Latvian Mobile Telephone president Juris Binde)these charges will put a damper on expected sharp declines in mobile phone rates.
This is an accurate reflection of Binde's views, whereas Tele2 issued a statement saying that the charges would not affect tariffs, but would cause additional costs to all operators.
As a journalist who has to take a critical attitude toward any and all sources, I was reluctant to emphasize the possible "braking effect" on future tariff reductions, as my paper has.
In my educated opinion, these statements are, well, just statements. I believe the effect of a LVL 0.0416 increase in cost per customer per month on future tariffs will be:

JACK SHIT

(a colorful American expression for nothing).

The total cost of numbering resources for LMT will be more than LVL 500 000, about 36 hours of turnover or around three days net earnings. It will be relatively higher for Tele2 with its prepaid dominance and lower ARPU.
However, under the proposed scheme, these costs will be avoidable if mobile and fixed operators give back a substantial part of their inventories of reserved numbers and adopt a "just in time" approach for taking numbering resources from the authorities. Certainly, Lattelekom has some 2.5 million unused numbers it would gladly dump, while the more than LVL 300 000 it would be paying for its active numbers can be recouping in any number of ways short of adding 4 santims to everyone's monthly bill.
In addition, the entry of the new third mobile operator will bring about sharp tariff cuts and no one can fail to match them or at least have a very strong value-for-money proposal as to why anyone should pay even a little more (initially, coverage and quality could be issues for Bite in Latvia). So the effect on tariff cuts will be zilch.
If there is anything to worry about, I would look at the way the EUR 150 million investment requirement will be formulated in Bite GSM's licence. If the government literally meant that all that money had to be spend shopping at Nortel, Nokia, Ericsson or – why not – Huawei in the space of a few years, building a physically independent network (down to the towers?), then someone will have to recover that investment. On the other hand, if it is a loose figure for spending over the life of the licence, it's another story. Then Bite can truly look for an optimal, low cost solution, perhaps buy carrier capacity from others, share towers (especially for UMTS, three on a pole is better than three poles on the same hilltop). This we shall see in the next few weeks.

The Blogospheres intersect/Number schemes

The blog explodes

All news is local news. My Google adsense meter indicates an orgy of interest (500 + hits compared to 50 on a normal good day) after I wrote about that increasingly popular Latvian pastime, www.draugiem.lv. For my non-Latvian readers, this is a Friendster-style networking website that exploded from zilch in April 2004 to more that 250 000 registered users a year later. It was started by Lauris Liberts, an enthusiast-entrepreneur and reputedly some kind of child film star back in the waning days of the USSR, when almost everyone using draugiem.lv these days was also a child or unborn or whatever.
I'm glad that the Latvian net users are reading the blog, making comments. I have also discovered that a number of them are blogging themselves, in Latvian, and that there is a considerable Latvian blogosphere. Some pretty awesome people. One guy, while not a rocket scientist is studying the mathematics of rocket science. I must have drawn the short stick in the gene pool, because my dad was, well, studying the same stuff when he was almost this blog comment writer's age (21 back in 1938 vs 22). I have no idea what this man, Pēteris, does, but it has to do with quantum math and other arcane stuff. I have to ask my dad, now 88, what this is all about the next time I call the States. I'm sure he got around to studying some of it before WWII derailed a lot of his plans. But he retired as a systems test engineer from Honeywell in the US, while his son (and one of his grandsons, who now is of student age) are, as Latvians put it, "drillers of the thin table surface" ( plānā galdiņa urbēji).

Who's got your number?
Well, back on topic -- the only news in telecoms is that Lattelekom has proposed rezoning Latvia's 26 area codes into 11, freeing up 2.5 million phone numbers and solving the problem of whether to switch to eight digit numbers (which Lattelekom says would cost the Latvian economy as a whole some LVL 17 million). The seven digit numbers are all parceled out in 100 000 number lots, which means that in some of the 26 area code zones, only Staņislavs the farmer and his cow Malvīne have fixed line numbers, the other 99998 are unused but reserved for the immediate area around Mossville (Sūnuciems) in darkest Čangladesh (Eastern Latvia, known in politically correct terminology as Latgale).
The two existing mobile operators have been burning through numbers and it seemed for a while that none would be left (except for 40 000 set aside for the new operator, now to be Danish-owned Bite GSM). Now the Communication Department of the Ministry of Transport has asked that 300 000 numbers be freed up immediately for the mobile sector, in essence upsetting its own plans for a transition to eight digits (these were to be used as transitional numbers, let Pēteris do the math on that :) ). Officially, the Department says it will propose both options, Lattelekom's save-the-seven digits plan, and a new, as yet to be drafted scheme for transition to eight digits (and abolishing the domestic area codes?). We shall see, but I think that Lattelekom's scheme or some variation on it will fly. By the time any faults in keeping seven digits and different zones turn up, I suspect most urban telecoms users in Latvia will be more worried about their IP addresses than their so-called phone numbers. And hey, who needs number portability if you have a (several?) Skype names?

Music on the earphones while writing this post:
Eddie Grant, Electric Avenue, Bob Dylan, Forever Young, Subterrenean Homesick Blues, Creedance Clearwater Revival, Mustang Sally, Donovan, Season of the Witch, The Doors, Five to One, Peter Tosh, Legalize It !, Boston, More Than a Feeling.

A letter to Lauris and Jesper

Spring has come to Riga, so perhaps it's OK to air some strange ideas. These are addressed to Lauris Liberts, the godfather of draugiem.lv (the Latvian Friendster) and Jesper Eriksen of Bite GSM (the winner of the Latvian third GSM/UMTS licence).
Lauri (now I'm mixing in the Latvian declination to address someone :)), you've basically signed up the entire Latvian young middle class and those who soon will be. Around 255 000 of them, more than 10 % of the whole f**king population of Latvia (2.3 million)! No other quasi-medium has that kind of audience, attention platform, call it what you will. And these people want to communicate with each other. That's the whole draugiem.lv point, it would seem, at least for the young singles and even those in relationships simply widening their networks.
A logical extension of draugiem.lv would be draugiem (draugu karte?), the mobile phone card. It could come with some free SMS and MMS, easy payment from the balance for all the draugiem.lv micropayments (starting your photo album, other stuff).
For Jesper, the draugiem card would be one way to get a fast-track start on selling capacity on the new Bite Latvia or whatever it will be called network. Bite GSM declared that its approach in Latvia would be to sell an open network, so the more virtual operators, the better.
I think, quite frankly, the thing would fly. My sources tell me that when Telia MultiCom -- which has nothing to do with Telia any longer -- advertised in a small banner on draugiem.lv for its new cheaper and faster broadband internet, the response crashed Telia MultiCom's server. With more and more workplaces restricting draugiem (it has become the default desktop for some users :) ), there is an incentive to have access, preferably broadband, at home. Once you have that, it is a short step to all those draugiem friends Skyping each other (unless you, Lauri, come up with a tweak of Skype just for draugiem, maybe an IP push-to-talk thing the way you can now click on a name to send an e-mail. There would have to be consent for getting these calls, though). At the end of the day (literally), you might even crash those Lattelekom servers hosting you and when you have 300 000 mobile pre-paid and IP voice customers on the system, Lattelekom may 1) regret the day they let you in or 2) buy you out :).
Another idea, Jesper, is to sell your entry-level, low-end services through draugiem.lv and see what happens. Not a bad association to have.
I hope nothing happens to dampen the enthusiasm for draugiem.lv over the summer, because the new Bite Latvia or whatever won't be up and running until the fall at the earliest.
In the tradition of Wired magazine when my old college friend Louis Rossetto was still running it, I will list the music I was listening to on my earphones from iTunes while writing this (mind you, I rarely do this).

The Music Behind this Post:
Neil Young, Rocking the Free World, Jimi Hendrix, Machine Gun, The Eagles, Take It Easy, Simon & Garfunkel, America, The Standells, Dirty Water (OK, I grew near Boston :)), The Mamas & Pappas, California Dreamin', Golden Earring, Radar Love, The Grateful Dead, Truckin' and Sugar Magnolia (while revising some errors).

What may soon be news and what is...

One purpose of this blog has been to hint at what may be news in telecoms and IT in Latvia in the near future. Some of the following was gleaned during a recent trip to Sweden accompanying the Latvian business delegation that accompanied Latvia's president Vaira Vike-Freiberga.

A multimillion banking IT deal?

Look for a Latvian IT company landing a contract with a major Swedish bank to do software maintenance on the bank's COBOL-based legacy systems running on mainframes and to eventually oversee the migration of these (sometimes core functions) to modern computing platforms. This will be a multi-million deal, in SEK, at least.

Smoothing the road to privatizing Lattelekom...

The feeling is that Sweden's TeliaSonera is no longer being stone-walled by the Latvian government on the issue of getting a majority in Lattelekom (it currently holds 49 %). The new government of Aigars Kalvitis and Minister of Economics Krisjanis Karins appear to be open to privatizing at least part of the government stake in Lattelekom and TeliaSonera appears to have reduced expectations of getting 100 % as it has publically declared earlier. The Swedish company has obtained just over 50 % of Estonia's fixed telecoms company and seems to be happy with that, having met its minimal goal of seeking a majority holding in all of its Baltic associated companies.

...and to IP TV in Latvia

TeliaSonera is apparently satisfied with the early phase of its IP-TV over broadband offering in Sweden and will be helping Lattelekom launch a similar product in Latvia in the next few months (see this blog earlier).

Ericsson looks to Bite

The "old news" by now is that Bite GSM, a subsidiary of Danish TDC, won the auction for Latvia's third GSM and UMTS licence by offering to pay more than LVL 6 million (the starting price was LVL 1.3 million). TDC and Bite are old Ericsson customers, and the Swedish-based telecoms multinational expects to compete to supply the new operator in Latvia. Under the auction terms, the new operator has to spend at least EUR 150 million on a distinct new network, so that is the smallest cake that Ericsson and other foreign companies (including newcomer Huawei) can hope to divide. Good for them, but what was the Latvian government thinking? Infrastructrure prices are falling and the new operator's cost of build-out is one of the most significant elements of how it will have to calculate its return on investment (and, in turn, set tariffs or position value-added services).
Bite's victory also means that virtual operators will blossom in Latvia, challenging Tele2, whose customer base is largely prepaid, as well as throwing down the gauntlet to Amigo, the virtual operator leasing Latvian Mobile Telephone's (LMT) network.
Who knows, now that Easyjet is flying to Riga, perhaps the airline's mobile phone card affiliate will also turn up here. Indeed, it appears that once Bite in Latvia (or however it will brand itself) will have a number of virtual operators among its first customers. However, this will happen in the late fall at the earliest.

Higher HomeDSL speeds announced
Lattelekom, as this blog anticipated, has also announced it has doubled the speed of its HomeDSL service to 512 kbps from the previous 256 kbps, effective April 1 (no joke I hope). I have not really noticed the difference yet, but there is always a disparity between real throughput (involving all links of the internet) and the "official" speed of a link.