Highlights of day one at IBM's IOD2009

I am in Las Vegas on assignment from my day job at IBM's Information on Demand (IOD2009) and recorded some highlights of the opening day's presentations by Ambuj Goyal and Frank Kern.

No one first to name a price in Latvian telecoms deal?

NOTE: I got tweeted by an executive at Lattelecom, see below.

The Latvian government seems to have re-opened the seemingly dormant issue of selling its holdings in fixed network operator Lattelecom and mobile operator Latvian Mobile Telephone (LMT). During an October 16 television talk show, where this blogger was one of the journalist participants, Minister of Economics Artis Kampars said the government was ready to consider selling its telecom assets, but added that the most eager (and probably only) potential buyer, Sweden's TeliaSonera, had not named a price in talks with the Latvians in early September. By Kampars' account, that meeting was one where the sides got nowhere by saying: "What do you want for the companies?" "No, you tell us what you are ready to pay." "No, you please tell us what you want..." and so on.

Kampars also repeated what he had said publically a few days earlier, that state assets, including Lattelecom and LMT, would not be sold "on the cheap." TeliaSonera recently completed acquisition of all remaining shares in Eesti Telecom (which, unlike Lattelecom and LMT, is a traded company and already had a majority holding by the Swedes). Telia Sonera was less successfully with Lithuania's TEO, failing to get the necessary percentage of shares to delist the company and force the sale of any remaining minority shares.

I haven't been in touch with my Swedish sources about the latest chapter of the neverending story of trying to buy Lattelecom and LMT, but will try to do so before I leave for the States on Wednesday to attend an IBM conference in Las Vegas (October 25 -28).

Latvia is in dire need of any revenues to patch its budget deficit and, considering that telecoms have not suffered too badly in the crisis and against a background of rising stock markets in Europe and the US, the two unlisted companies could probably be sold for a decent price. Of course, Kampars and the Latvian government will never see another LVL 500 million bid by the Swedes, as was made a couple of years back in one of the "fat years" of real-estate bubble and lending frenzy. Interestingly, the sum is exactly as much as international lenders want Latvia to cut from its spending in 2010 and 2011 (for a total of LVL 1 billion). But that chance was blown. Maybe they could try for, say, LVL 400 million and settle for LVL 375 million -- these are just my wild guesses. Even without the deep recession, which I think will last at least until 2014 in Latvia, the value of any fixed-line network will decline as everything goes mobile and 4G networks appear. So the best bid has already been lost -- maybe it is time to seize the opportunity.

From Twitter: A Lattelecom executive tweeted me that he believes the company will gain in value because of broadband, IP TV and content distribution (IP TV, video on demand and the like). Welcome to the new web order :).

Bite honcho talks about mobile broadband, free call business model

Fred Hrenchuk, the CEO and board chairman of mobile operator Bite Group, talks about mobile broadband (a forthcoming jump to 14.4 Mbps), the effects of the economic downturn and the BiFri free calling business model.

Lattelecom announces jump to 500 Mbps fiber to the home

Lattelecom will start offering upgrades to 500 Mbps of its fiber-to-the-home (office)or FTTH service in the second half of November, Raivis Mackevics, the head of Lattelecom's optical technologies unit told this blogger. The current top speed to its around 2 600 FTTH subscribers is 100 Mbps. Another 700 connections are on order.
Lattelecom says just under 25 % of Riga's households (more that 77 500 housing units) will have access to FTTH by year end, with an FTTH build-out to start in the cities of Jelgava and Daugavpils by year end as well.
The slow uptake of FTTH, which in some package deals is priced under Lattelecom's existing DSL services, may reflect the operator's slow and cautious approach with the new technology. Rival cable TV, telecoms and internet service provider IZZI suffered from a Twitter-driven public uproar earlier this year when its 100 Mbps DOCSIS-based high speed internet suffered glitches.
Also, Lattelecom may see FTTH as the last great hope for its IPTV service, which recently chalked up 30 000 subscribers, compared to well over 100 000 subscribers each at Baltcom TV and IZZI, who offer conventional and digital cable TV. FTTH at 500 Mbps is more than adequate to feed several TV sets watching high-definition programming and Lattelecom says multiple watching of different channels will be enabled with its optical internet.
However, viewing habits may be hard to change -- cable has been around since the 1990s, and Latvian viewers will be reluctant to switch, rip out old cables and set-top boxes and adjust to a new assortment of channels. Also, in times of economic crisis, the number of HD flatscreens owned by households is unlikely to rise rapidly, never mind multi-screen households.
As I put it in my Latvian-language blog, Lattelecom's FTTH "beast" isn't loved by very many people yet. Given the chance, of course, I will get the service as soon as it is offered in my downtown (Center) Rīga building. Lattelecom, however, is prioritizing the so-called bedroom areas of Riga with their large, Soviet-era multi-unit high-rises (9 stories is "high"), which makes sense.

Latvian Railways offers WiFi on Moscow trains

Latvian Railways (Latvijas Dzelzceļš) in cooperation with the wireless telecommunications company Triatel will start offering free wireless internet access from October 1 on its daily trains from Riga to Moscow. The service will be available along the entire route from Riga to the Latvian-Russian border at Zilupe, allowing passengers to surf the internet for just over four hours. WiFi internet is not available once the train crosses into Russia. It is understood the service will also be available on Latvian-operated trains on the return leg of the trip on Latvian territory.

The internet on the train service is apparently provided through Triatel's EV-DO wireless internet network, which offers users speeds of up to 3.1 Mbps on direct connections. Evidently the WiFi on the train will re-route signals from Triatel towers and base stations along the railway right of way allocating adequate bandwidth to each train passanger using the service, rather than sharing a single 3.1 Mbps link to the whole train.

Latvian Railways will be holding a press conference on October 1 at Riga's main train station to explain details of the new service.

The internet-on-a-train is the latest project in which Triatel has teamed up with a major Latvian or international enterprise to co-sell or resell its wireless internet services. Triatel has been cooperating with Lattelecom to provide fixed wireless voice telephony and internet in remote rural locations, it has used the cable television and telecommunications services company IZZI as a reseller of its fixed wireless internet and just teamed up with the satellite TV company Viasat (part of the Swedish Modern Times Group)to offer a combined TV and internet packages (the television by satellite, the internet by EV DO) called Viasat Connect. Triatel is also behind a mobile internet service under development by Lattelecom (with USB plug modems), which are already being sold or leased to direct customers of Triatel and, apparently, as part of the ViaSat Connect package (the internet service is called " mobile").

With HSDPA networks run by the mobile operators in Latvia and offering speeds of up to 7.2 Mbps and possibly 14.4 Mbps in the near future, it may be time for Triatel to move to the next higher-speed generation of EV DO in order to keep up. LTE (promising an unlikely 100 Mbps, but probably a decent two-figure speed) is just around the corner, too, some say. Tele2 is building out in Sweden in 2010 and local sources say the Latvian "little brother" wants the same toys as the Swedes and soon!

A non-reportage (?) from Sweden's Silicon Valley

I spend a long weekend -- Saturday to Monday -- in Stockholm and got a hold of one of my best sources, Tomas Bennich of the Kista Mobile & Broadband Showcase (soon to be called something else). He was too busy to talk on camera, in fact, the whole scene around Kista Science City, the umbrella (not roof, as I say on camera) organization for various high-tech and telecoms related activities seems to be jumping. So here is my take on what is happening:

John Strand skeptical on mobile TV

I met John Strand, the somewhat iconoclastic mobile telecoms analyst, at the Dream on Demand digital broadcasting conference in Tallinn, Estonia about a week ago. I asked him to comment on mobile TV (which is available in Latvia through LMT, though not on their network, but on air) in the Baltics.
Right now, however, Strand is debunking the iPhone in a more that 100 page report, as well as on YouTube, where he expounds on the findings. Don't get me wrong -- Strand doesn't diss the iPhone as a device. His argument is that from a mobile operator's point of view, the iPhone is no miracle from heaven (in terms of revenue generation, etc.) and probably with negative effects. But watch that stuff seperately. Here he is from Tallinn on August 27, 2009.

Stockholm School of Economic in Riga to videocast lectures

The Stockholm School of Economics in Riga (SSE Riga) will start videopodcasting and podcasting its lectures by the end of September, this blogger has learned. According to my sources, this will make SSE Riga the first institution of higher education in the Nordic-Baltic region to offer its lectures to a global audience on the internet.

Lectures will be videocast live and stored for download or viewing later on demand. Viewers will be able to post written questions and comments to the lecturer during live videocasts, with commenting likely to be restricted to students and registered users (to prevent abuse).

Teaching at SSE Riga is in English, making the lectures accessible to a broad global audience.

SSE Riga has reportedly bought Apple servers and other equipment as a platform for the videocasts/podcasts and archive.

Estonian president Toomas Ilves on digital media

Estonian president Toomas Hendrik Ilves talked about digital media at the Dream on Demand conference at the Estonian TV tower in Pirita, a Tallinn suburb on August 27. The video is a fragment of his speech, in which he also wondered whether the huge tower could become a "gravestone" for conventional broadcast TV (I did not record this :( ). Latvian viewers, please excuse the typographical error in the Latvian title, I am correcting it for inclusion in my nozare.lv blog next week

TeliaSonera offers complete buyouts of Estonian and Lithuanian subsidiaries

TeliaSonera has offered to buy the remaining shares in its Estonian and Lithuanian subsidiaries for just under SEK 5 billion cash. The Swedish telecoms group is offering SEK 3.3 billion for the remaining shares in Eesti Telecom, a holding company that owns 100 % of mobile operator Estonian Mobile Telephone (EMT) and fixed network operator Elion. It is offering just under SEK 1.6 billion for the remaining shares in TEO LT, the Lithuanian fixed network, internet TV, call center and data center services company. Telia Sonera currently holds around 60 % of both companies,
The offer has been criticized as somewhat low and taking advantage of the economic crisis by a Danske Bank analyst. However, this appears to be bottom feeding on the part of the Swedes, not real vulture capitalism (which presumes that the buy-out subject is near financial death).
All of which is fine and dandy, because Eesti Telecom shareholders can get more than 24 % above the last market price for their shares, while TEO LT shareholders are offered a premium of nearly 31 %. The offer also bounced up both the Tallinn (13.3 % at one point) and Vilnius (9.7 % in mid-session) bourses, and even got a 2.7 % rise out of Riga. Which is not to say that it takes much in any of these places.
However, in terms of the Latvian telecoms market, TeliaSonera has ignored its two other (as some European languages put it) daughters or semi-daughters -- Lattelecom (where it holds 49 %) and Latvian Mobile Telephone (LMT) (where it holds around 60%). The reason is that all the rest of the shares are held by the Latvian government --which, to use a term of management disfunction assessment often spoken but seldom written-- cannot unfuck itself to make any kind of decision.
So, while the Estonian government will get a considerable sum for its 24 % in Eesti Telecom, and many private Lithuanian shareholders will at least smile, if not laugh all the way to the bank (the state owns less than 1 % of TEO), the Latvian government will continue to hold its shares (which it could have unloaded for USD 1 billion a couple of years back) like a turkey guarding a shitpile (tītars uz sūdu kaudzes -- is that a Latvian expression?). Or am I wrong??

IZZI hires a "twitterista"

IZZI, the Latvian cable TV, telco and internet services provider who faced a storm of criticism for poor service on Twitter, has hired a full-time employee to look after its interests on Twitter and other social networks.
This, of course, happened while I was on vacation in the US, which is why I am reporting it only now. However, the Twitter firestorm was well under way before I left. There were both anti-IZZI and pro-IZZI (though this was apparently a spoof) Twitter accounts launched.
The problem apparently started when a customer, dissatisfied with IZZI's internet service (claiming up to 100 Mbps speeds for some customers) and frustrated in attempts to get the problem solved, started to badtweet the company. See my earlier post.
The issue also got attention on Latvian TV, causing more bad publicity for IZZI in the "mainstream" media. The company quickly reacted by seeking someone to manage its reputation on Twitter and other social networks. It asked that the letter of application be sent in tweet format, 140 characters. There were quite a few applicants.
This is a good development, early adoption of awareness that company reputation can be made or broken on social networks, also that valuable information about customer attitude and problems can be found on these networks.

IZZI easily gets its corporate a** Twittered

IZZI, the Latvian cable TV, internet and wireless internet company, whose name is intended to suggest the word "easy" was just shown how easy it is to get your reputation badly ....twittered (as in tattered). The company announced in the spring that it would be first to deliver up to 100 Mbps internet to most of its cable network customers (and, apparently, some on a newer fiber-to-the-home network). It seems that for some customers, this didn't work out. While there are glitches in all new systems, what apparently also didn't work was customer service response and explanations of the problem. Customers were left baffled and without any internet service (or only a slow sporadic connection). Maybe there were not so many customers, but they were the wrong ones for IZZI, inadvertently or otherwise, to screw over.

Riding on a Twitter boom in Latvia, the angry internet users started bad-tweeting IZZI and soon, the uproar (which may well have been a tempest in a teacup involving some equipment on one delivery chain)spilled over into the blogosphere and finally ended up on the evening TV news. It took only a few days, or a couple of weeks at most.

What this proves is that internet service providers can get chewed by the very applications, social and blogging networks that their connections support. The best defense is seeing the early warnings and moving fast to correct the problem, or at least explain it to the customers, so they don't tweet all over the place what a bunch of intellectually challenged persons of apparently light hair color seem to be running customer service and parroting some kind of generic call-center script. I can put that in a politically correct way, but when you are angry and tweeting in 140 characters, it boils down to saying you have been bullshitted by some dumb blonde on the phone.

The problem is being resolved after some mea-culpas from IZZI. Interestingly, Balkom's new/old NGN (next generation network) service promising equally high internet speeds has so far not attracted the angry tweetmob. Perhaps they are using the tried and proven MPLS and other stuff that has been around for some years to load balance and prioritize so that customers get what they paid for almost all of the time.

Ericsson sees 50 billion mobile broadband gadgets in 2020

Ericsson sees some 50 billion mobile broadband devices on the net by 2020. That's what Mikael Bäcksträm, President of Nordic & Baltics, said at a June 22 event in Stockholm when I wasn't filming him. In my videoblog, he talks about some other issues, plus we see some shots of the ocean yacht races in the confines of Stockholm harbor. It is to me, a non-sailor, a wonder that there were no collisions between the yachts and all kinds of watercraft following them around.
On my Latvian-language blog, some commentators expressed skepticism about the 50 billion figure, but I suppose that will include very large numbers of security, monitoring and surveillance devices embedded or attached to anything you can imagine. Ericsson didn't say this, but I could even see individual trees in a stand of several thousand "talking" to the nearest LTE base station and updating their individual status to a database. Never mind all the electricity and water meters...

Here is the video;

Controversial former PM quits Lattelecom advisory board

Aigars Kalvitis (People's Party/TP), a controversial former Prime Minister of Latvia, has resigned as chairman of the advisory board of Lattelecom, a high-paying post he got in political horse-trading when the current government of Valdis Dombrovskis (New Era/JL) was formed earlier in the spring. The deal at the time was "either Kalvitis gets the Lattelecom job, or Dombrovskis doesn't get to head the new government". This was reported by Latvian media and confirmed as recently as just hours before Kalvitis resigned (in a radio interview with Finance Minister Einārs Repše where I took part on June 15). Kalvitis said the reason he resigned was to encourage austerity and the abolition of unnecessary advisory board for companies jointly owned by the government and private investors. The Latvian state owns 51 % of Lattelecom, 49 % is owned by TeliaSonera.

Kalvitis appointment cast an undesirable political shadow on Lattelecom for two reasons. First, many Latvians and the media have blamed the ex-prime minister for ignoring signals that the economy was overheating already in 2006 and 2007, leading to the present economic collapse. The appointment was seen as a sinecure for a failed and despised politician (Kalvitis, who is of portly build, has been compared to the anti-littering character Cūkmens -- Piggyman, an actor dressed as a pig who discourages littering in forests and nature preserves). Secondly, the ex-politician is trained as a dairy farmer and could bring little value added to a post paying around 2800 LVL per month in what is a telecoms and high-tech company. His reputation as a manager can be summed up by the current near-depression in Latvia.

With Kalvitis gone, Lattelecom, a company that should not be associated with partisan politics, can yet again continue its work without the aura of somehow coming under the influence of a political party, the TP, with one of the lowest ratings among established Latvian parties.

Huawei, Latvia's MWTV to build out open access FTTX

MWTV, a Latvian networking company, using Huawei's infrastructure solutions, is starting to build out an open access, fiber to the home ready (FTTX, until end-subscriber connections are ordered) network in residential areas of the capital, Riga. The network presently reaches around 40 000 households, with the aim of reaching 100 000.

As MWTV project manager Otto Šrams explained, the idea is to build a superfast fiber network capable of delivering around 2.5 gigabits per second (Gps) to an apartment building -- more than enough to ensure at least 100 Mbps internet as well as moderately compressed or uncompressed high-definition video to each household. The fiber connections to the building would, upon a resident's choice of services, be extended to the residence and terminate in a optical fiber to Gigabit Ethernet converter, to which any number of end-user devices -- a digital HD TV set-top box, a WiFi router, a PC or Mac, or even a voice telephone, could be attached.

Šrams explained that the MWTV network architecture would also allow content providers outside of Riga or even abroad to offer their services directly to subscribers on the network.  Satellite broadcasters such as Viasat could reach subscribers who cannot mount satellite dishes on their apartment buildings or are blocked from the satellites by other structures. It would allow foreign IP TV providers to reach Latvian subscribers directly.

Although MWTV didn't go into too many details, it is known that the company is negotiating with Lattelecom and other internet and cable TV providers (such as Baltkom and IZZI) who have declared their intention to offer 100 Mbps internet and at least some HD TV channels and/or video on demand. Leasing the MWTV network would save the operators the time and expense of building their own fiber optic networks under Riga. A model cited by MWTV is the solution offered by Stokab in Sweden.

MWTV is understood to be linked to Latvia's Mono Group, a kind of conglomerate involved in alcoholic beverages, logistics, and banking (former owners of Lateko Bank, now Icelandic-owned Norvik and presently involved in setting up a Postal Bank) among other things. MWTV, as its name suggests, was set up to be a cable TV operator, but soon discovered that it was not going to master content aggregation and provision, and focused on the business idea of an open-access fiber optic network instead.

Huawei GPON deal coming in Latvia?

My sources say that a local customer (not Lattelecom) is doing a deal with China's Huawei to build a GPON optical network. More on this Tuesday, June 2.
This is not surprising for two reasons 1) the big internet service providers in Latvia are all promising three-digit megabit speeds and you need optical for that 2) Huawei, having set up, literally, in Ericsson's back yard (the Kista district of Stockholm), is now making an effort to take regional market shares. So far, globally, the Chinese company is not doing badly, if news reports are accurate. More on this in a day or two.

Kenneth Karlberg (TeliaSonera) comments while in Rīga

Here is a short video of TeliaSonera's Kenneth Karlberg making some brief remarks about the telecoms situation in Latvia during a short visit and informal lunch meeting with journalists.

Latvia looks to improve mobile services procurement

Sorry to be a bit late with this, but on May 13, Tele2 organized a round table discussion gathering almost all players in the procurement of mobile services for the public sector in Latvia. Present were representatives of the host, Tele2, LMT, Bite, Baltkom, the State Auditor (Ingūna Sudraba in person), the Procurement Oversight Authority, the State Chancellery, the City of Riga, the Latvian Telecommunications Association and others.

After hearing complaints that procurement was biased toward certain players (implied was LMT), and that the state could save at least LVL 4 million by doing things differently, including regular reviews of tariffs and shorter contract periods (Bite's Fred Hrenchuk pointed out that no private business would ever lock itself into a 60 month or five year contract when mobile services prices were dropping month on month).

Jānis Lelis, managing director of the Latvian Telecommunications Association, said that mobile service consumers (including the public sector) need to be educated about their options, which would help them make considerable savings. He gave an example (naming no names) where the association had advised a customer to go to another operator and get an offer. The offer was for a substantial cut in costs, but the customer then brought the offer to his existing services provider and got an even better deal.

This confirmed my suspicions that Tele2 and perhaps Bite -- while their claims of lower tariffs are quite true -- are often used as bargaining chips by LMT customers to -- at the end of the day -- squeeze better deals from LMT. This doesn't mean that Petras Kirdeika, the managing director of Tele2 in Latvia is wrong in saying (as he has for about a year) that he can cut the public sector mobile bill by 30%.  He probably can. The incumbent, with some grinding of teeth, can probably offer 33 % (or some other package -- like free calls to all users from the same government agency) and keep the customer.

The most interesting outcome of the discussion was general agreement with Ms. Sudraba that public authorities could purchase mobile services according to one basic standard and possibly under one umbrella agreement rather than drafting tender rules and standards for each and every ministry, state agency and municipality. It would also avoid drafting unreasonable standards - such as 95 % national coverage for services to be used largely within a single municipality.  As Bite's Hrenchuk asked rhetorically: " Why do they need coverage near the Russian border?" (referring to a town a couple of hundred kilometers from the border zone.

It now appears that some kind of working group will be formed to work out how umbrella standards and procedures could be drafted for mobile (and telecommunications services in general) procurement. This would move Latvia toward the models used in other countries, such as Sweden's authority for coordinating state purchases. 

Sweden's IQUBE looks to Latvia

IQUBE, the privately-owned Swedish business incubator, is applying for European Union funding to set up a similar incubator in Latvia as a joint venture with a local partner. In the video, new business manager Christian Fricke talks about how IQUBE works in Sweden, then Business Development director Michael Ahlström tells about the project in Latvia.

Kalvītis named to Lattelecom board

Former prime minister Aigars Kalvītis  of the People's Party (TP) was named as one of three new member of Lattelecom's board, as earlier predicted by Latvian media. He is likely to be made chairman of the board.

The ex-politician (whose government is blamed for ignoring warnings of economic overheating) will earn a salary of around 100 000 LVL, around what outgoing chairman Gundars Strautmanis, a telecommunications profession, earned.

Also named to the board were Jānis Bergs, the head of FMS, a Latvian enterprise management software company and an IT professional as well as Uģis Zemturis, a former banker.

Of the three appointments, Kalvītis is a purely political gesture under pressure from the government coalition partner, the TP. The former prime minister has business experience in dairy farming. With the TP enjoying "popularity" of around 1.7 %, the appointment is generating a huge public uproar (nearly 1000 comments on the delf.lv portal). In times of austerity, the granting of what appears to be a huge "political pension" to 43-year-old Kalvitis is seen as a example of the complete political insensitivity and "friendship corruption" (looking after our folks/savējie) by the political elite.

The appointment will also bring public attention back to Lattelecom after a period of quiet when the once-monopoly "Great Satan" of telecommunications in Latvia has built up a good, relatively low-key reputation and stayed out of controversial headlines about privatization models and the like. It will cast an unncessary aura of political corruption over what should be a company running like a competitive private enterprise judged by its service to customers.