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.

Broadband price and offer war starts

A broadband price and value proposition war seems to be breaking out in Latvia. First Lattelekom doubled the speed of its UltraDSL business class connections (to a maxium 4 Mbps), then Telia MultiCom (TMC) announced it was slashing prices yet again for the consumer sector, making a 1 Mb line at LVL 19.95 a bargain compared to the ca. LVL 18 one now pays for HomeDSL, including renting a DSL modem from Lattelekom. Even if Lattelekom doubles the speed of its HomeDSL connection (as rumored), the TMC deal is pretty attractive.
Now cable TV, internet and telecoms provider Baltkom is slashing its broadband prices (they are still above TMC's) but throwing in a LVL 1 subsidized computer deal. The machines on offer (starting from LVL 25 downwards) are relatively new, refurbished hand-me-downs from the US with some Linux bells and whistles installed. You have to sign up for at least two years of a package of services from Baltkom (presumably, the more, the cheaper your computer).
By adapting the subsidized mobile handset model, Baltkom has gotten the jump on its competitors, since there is not much to do with the internet unless you have a computer.
Watch for Lattelekom coming up with something similar, but more high-end. The killer value proposition here will be IP TV, so if you ask me, the deal should be for a big flatscreen monitor (say, 17 or 2o inches), with the whole Windows Media package (I grate my teeth, I would gladly take an iMac G5 ), payable in installments along with a turboclass DSL line. What it will be in reality is another question. Lattelekom flopped once with a computer and dialup deal, perhaps an exception that proves the rule.
To be sure, there are unanswered quality and coverage issues with most of the offers. TMC says it has a 100 mbps link to the international internet, but will that suffice if lots of folks jump on the 1 mbps offer? Baltkom owns its own optical cable from Latvia to the Swedish island of Gotland with a further link to the mainland and the global networks that terminate there. This means Baltkom has more than enough bandwidth, but so does everyone else, so this is probably not an issue. Both Baltkom and TMC cover only those areas within the reach of their private optical networks, Lattelekom can deliver DSL nationwide, almost in all cities and towns and probably via WiMax or cdma 450 anywhere.
On the business side, Lattelekom will probably look to hosting and "leasing" applications for small and medium sized businesses, perhaps packaging these with a business broadband subscription. The company probably realizes that the more broadband there is, the less pay-by-the-minute voice there will be, so my advice to Lattelekom would be to be skilled at implementing corporate VOIP, perhaps folding a Skype solution into its offer (for intraoffice and most other calls).

Lattelekom preparing to shapeshift

Look for Lattelekom becoming more of an IT services provider for small and medium-sized business and, at the same time, gearing up for IT TV for consumers within the next few months. The Latvian fixed network ex-monopolist's approach to the SMEs is "we can (almost) do it all". That means that Lattelekom actively offers SME business customers to completely wire their facilities - ISDN phone lines, a computer network, broadband internet, VPNs, the works...except for, you guessed it, the mobile phones no SME can operate without.
This blogger has learned that Lattelekom and Latvian Mobile Telephone (LMT) (both owned by the same part-parent, Swedish TeliaSonera have been talking for a couple of years about the obvious – seamlessly integrating their customer offering and essentially becoming a one-stop shop for each other, as is the case in Sweden with the parent's fixed and mobile divisions.
One reason why the talks (involving some powerful managers from Lattelekom) have been dragging on could be that LMT, which has been making huge profits, sees no need to bend to anyone. Also, like any other mobile operator in the world, it can just sit back and wait for more and more voice traffic to come its way. People, as one may have noticed, have been mobile for the past 50 000 years (location-based services and Nokia mobiles would have done wonders for mammoth hunting back then :) ) so that is where, unsurprisingly, they use voice services.
Meanwhile, the business and home side is becoming more and more of an IP-based show, whether for internet, data transmission (company WANs or whatever), entertainment and self-service (Skype) or bundled IP based voice.
In apparent anticipation of IPTV, Lattelekom has or may soon boost the speed of its HomeDSL services to 512 kbps from the current 256 kbps as it did for the business service UltraDSL. For home users, that still may not be the best deal on the block (if the block is near the right optical network), since Telia MultiCom, no longer owned by any Swedes, just doubled its speeds again, LVL 19.95 will get a 1 Mbps line in the home, which is twice as good as the expected HomeDSL on steroids, though one wonders about real end-to-end speeds for both.
In any case, Lattelekom has boosted the basic speed of its DSL link (DSLAM to the user) to 4 Mbps, more than enough to carry state-of-the-art compressed video. As this blogger has hinted, Lattelekom will be launching television services using IP TV over the next few months. Whether this will be fully commercial or just a pilot project remains to be seen.

The auction
This week will also see the March 31 auction of Latvia's third GSM/UMTS licence. Squaring off will be Danish TDC-owned Bite GSM and Peteris Smidre's consortium of SIA Alina and MVC Capital of the US. In a pre-auction announcement, TDC has thrown down the gauntlet to Tele2 by saying that if it wins, it will open its network to virtual operators (i.e. selling their own brand prepaid cards) from the very start. This means that any Latvian Bite (means bee) will first sting the biggest card-based operator on the market, which is Tele2. No surprise that Tele2 has been aggressively pursing corporate customers at the LMT end of the market. It is said to be close to a deal with Hansabanka, which so far has let its several hundred employees choose their own provider within the framework of a business call compensation deal. However, with telecoms expenses of around LVL 1 million per annum, Hansabanka may benefit from having all their mobiles services by one operator. The problem is, there is no official number portability until December 1, by which time the new operator will be up and running, with cdma 450 operator Triatel also making new moves as its network expands and it offers wireless DSL at 2.4 Mbps by the summer (so I am told).
It should be an interesting week. Sorry for not blogging more often, just lots of other stuff going on...

Licence auction preselect, Huawei coming

The winners of the pre-selection for the March 31 auction of Latvia's third UMTS/GSM mobile licence were announced on March 15, and it was no surprise that Danish TDC owned Bite GSM and Peteris Smidre's consortium (SIA Alina and MVC Capital of the US) were the winners. There was a third, unnamed contender that failed the pre-select. According to some reports, the mysterious International Telecommunications and Technologies (IT&T) sent a letter asking the auction be extended yet again to April 26. The completely unknown consortium failed to file for pre-selection, apparently because of discord among its participants, who apparently are from Lebanon and elsewhere in the Middle East. This, in turn, may be related to political tensions in Lebanon.
The contenders now have to pay a deposit pf 30 % of the minimum bid of LVL 1.3 million by March 22 in order to go on to the auction on March 31.
My guess is that it will be a very hard fight, but the Danes may come out on top. They need the Latvian licence in order to have coverage in all three Baltic states -- Bite in Lithuania, ally Radiolinja in Estonia, and the third licence in Latvia. This will drive up the price, depending on how far Smidre and his US financial backers are willing to go in what is, for the financial side, essentially a venture capital project. MVC Capital, it is my guess, sees that Smidre has done it before, building up Baltcom GSM and then selling it to Tele2 for well over USD 200 million (a sum shared by all the owners, including Metromedia and Western Wireless). Of course, it is a different game now, the potential market for a new operator is small and difficult -- not many new potential users and 1.4 million existing users to be pried away from Latvian Mobile Telephone (LMT) and Tele2. If the new operator goes after LMT, it will have to present an extremely attractive package for the hitherto high revenue business user. If Tele2 is chosen as the main adversary, we will see what is essentially a "battle of the prepaid cards".
This will, in any case, have the effect desired by Minister of Transport Ainars Slesers of cutting mobile tariffs, but it does not present an easy or attractive business model for the newcomer.

HUAWEI coming?

Chinese telecoms infrastructure equipment maker Huawei is advertising for staff in the Baltics, most likely Latvia. While it has hitherto proven impossible to get an answer from Huawei headquarters in China (despite calls and e-mails to an English-speaking person as part of my day job), it is obvious that Huawei will set up some kind of operation here. There is at least EUR 150 million to be spend, in accordance with auction requirements, by whoever wins the third licence, Lattelekom is spending LVL 30 million to finish totally digitizing the whole country (wireless solutions are likely for the last 2 % who live in some corner of the forest or swamp), and Triatel is building up its cdma 450 network. There is no shortage of business to be had. Smidre, too, says he has been contacted by Huawei. Even if he doesn't win the third licence, his fixed line and optical internet services will need equipment upgrades.
Huawei is mentioned everywhere in the business press as a serious challenger to established western equipment suppliers and infrastructure builders such as Ericsson, Motorola and Nortel.

Latvian "friendster" blocked at workplaces
Draugiem.lv, a wholly-Latvian networking and socializing site inspired by Friendster in the US is getting increasingly blocked by workplaces in Latvia. This blogger's newspaper put a content filter on draugiem.lv (which now has more than 210 000 members), as did, reportedly, Hansabanka, the large, Swedish-owned Latvian bank. At the newspaper, the reason was that certain sales staff were staring at the friendship website all day.
Draugiem.lv is actually not all that exciting, little "happens" on it day to day, except when one's friends and friends-of-friends randomly change their thumbnail-sized photos. Also, draugiem.lv has proven to be a spam-free e-mail platform where anyone can be contacted by clicking through on a name rather than using an e-mail address and seperate program, The site has also launched a beta version of chat, something that can actively addict staff at a workplace (indeed, during a "chat craze" some years ago, it was obvious that the IT staff at many Latvian ministries and state institutions had little better to do).

Blogger sucks!

I have been busy and not so much has been happening, hence the sparse blogging for a couple of weeks. However, when I tried to get in all day yesterday, Google's www.blogger.com simply didn't work. This started at home on my Lattelekom DSL line, so it was not an overbroad application of whatever content blocker has been used by the newspaper.

Frequency weirdness threatens mobile operators

The Latvian Ministry of Transport has produced an apparently innocent looking document listing about 20 pieces of radio spectrum that it believes should be considered restricted access. Taken together with article 47 of the Electronic Communication Law, the document, if adopted as policy by the Cabinet of Ministers, would allow all restricted-use spectrum to be auctioned off once present user licences expire.
This could mean that all three Latvian operators – Tele2 and Latvian Mobile Telephone (LMT) on the GSM spectrum, and cdma450 operator Triatel – could have their spectrum useage rights subject to auction in the next couple of years. Triatel, which is just starting to build out its 3G network, could have its frequencies auctioned off as early as next year.
Triatel wrote a letter to the Public Utilities Regulatory Commission warning that the draft document (approved by a meeting of ministerial State Secretaries on February 10) effectively permitted "business theft" should a competitor or speculator win in the bidding and then demand (having paid a significant sum) that the spectrum rights be exclusive. The regulator filed a critical comment urging the document be redrafted allowing for a mechanism for incumbent frequency holders to extend their rights.
The authors of the draft document in the Communications Department of the Ministry of Transport say they had no choice but to word it in a manner that left it open to such interpretation. Indeed, one source close to the drafting process tipped off this blogger in a call describing what had been written as "madness".
Once the possibility that Latvia's GSM network could be disrupted (you can't operate without frequencies) made front-page news, the Ministry of Transport briefed this blogger (in his day job as a reporter) making it clear, yet again, that their intent was not to indirectly put the interests of 1.4 million mobile phone users on the auction block. Indeed, they, too, wanted to achieve an end-result where incumbents could extend their frequency useage rights, where unused frequencies would be auctioned to the highest bidder and where all players would start paying some kind of frequency use fees in accordance with Latvia's long term telecommunications policy principles.
At this point, it is unclear whether this can be done without amending the Electronic Communications Law. At the briefing, the Ministry and Communications Department officials stressed that there was no other way they could have drafted the frequency use document given the way the law is formulated. At the same time they were reluctant to amend the law yet again.
Some interesting observations after all this:
- there are still embarrassing loopholes in the way wireless telecommunications markets are managed in Latvia (the LVL 100 paid, wholly legally by the Triatel brand partners, for cdma 450 spectrum is one example).
-the low intensity conflict between the Ministry of Transport and the Regulator continues, with the latter being blamed for not timely objecting to the draft spectrum use memo (even though the Ministry claims there was no other way they could draft it). Another simmering issue is number resources, with the Regulator urging a rapid swith to eight digit numbers before a severe shortage (due to exploding mobile use and the third/fourth operator) hits. The Communications Department says these alarmist statements are exaggerated.
-an undercurrent of feeling in the Ministry that some mobile operators, such as Triatel, (who are these people, really? – asked one official), should be given a shaking because they, somehow, are dubious. As for the big incumbents, they are making too much money (there is some merit to this, LMT's profitability runs at around 30 % and it has the rec0rd for earnings of any Latvian company).

SOME REMARKS
I have been a little remiss in blogging because I have been recovering from a system crash on my Powerbook G4 which required a so-called clean install of MacOS X. All files burned to CD or an external drive, then recovered. I've also been feeling some kind of late winter lethargy, believe it ir not. The Swedes call it "spring fatigue" but at -19 C during the night in Riga, it's still the middle of the fucking winter as far as I am concerned.

At least two applicants for Latvia's auction pre-select

There are at least two applicants who filed for preselection for the March 31 auction of Latvia's third UMTS/GSM mobile operator licence. They are Danish TDC's Lithuanian subsidiary Bite GSM and a consortium consisting of telecoms entrepreneur Peteris Smidre's Alina and MVC Capital Inc., a US business development fund that last year invested USD 10.5 million into a Latvian car dealership. MVC started out as a dotcom era venture capital fund that almost burned out, but is now recovering under new top management and making relatively conservative investments in food processing, manufacturing, agricultural equipment and finance.
A big surprise was that the mysterious International Telecommunications & Technologies (IT&T) pulled out at the last minute, leaving its local representative, Edgars Zakrizevskis, fuming that he had wasted a year of his time and effort paving the way for the virtually unknown, partly Lebanese-based consortium. Zakrizevskis thinks the last minute retreat could have had something to do with the car bomb assassination of former Lebanese prime minister and billionaire Rafik Hariri. Another theory is that the whole IT&T thing was a scam to begin with. This blogger raised the scam issue early on, but then backpedaled a bit when it seemed there were real people behind IT&T. But then most con-men are real.
Guntis Macs, the high Ministry of Transport official who heads the auction commission hinted that there might be some other applicants not mentioned in the press previously. He is not at liberty to say anything to the press except that that applications have been filed, but not their number.
One "dark horse" could be China-based Huawei, who is advertising for an office manager in Latvia. Previously they have denied having anything going in Latvia. Huawei was also mentioned as a possible partner for IT&T. Perhaps they have joined with another unknown participant. Mainly a builder of infrastructure and telecoms equipment, Huawei is a rising star mentioned, for example, in Business Week in the same breath as Cisco.
The next critical date is around March 14 or perhaps March 22, when the names of those who have passed pre-selection involving a check of their business and investment plans by international auditors are announced.

Lattelekom and Smidre both go down

Lattelekom announced it will implement a maximum 45 % cut in interconnect tariffs that was previously rejected by the Public Utilities Regulatory Commission (the regulator set a cieling of LVL 0.008 per minute that amounted to a 80 % cut from the highest rates hitherto). The cut is made possible by a court's suspension of the regulator's cieling. The long term goal of Lattelekom is to cut interconnect rates to the European average, which an EU study says was 0.59 eurocents in 2004.
Meanwhile, as this blogger predicted, the Ministry of Tranport has rejected telecom entrepreneur Peteris Smidre's call for a postponement of the third UMTS/GSM licence auction until interconnect issues are resolved. The Ministry wrote, among other things, that a postponement would only prolong the present situation with high tariffs for both interconnect and for services to consumers and businesses.

Licence auction suspension will be rejected

The government will reject Latvian telecoms entrepreneur Peteris Smidre's appeal to suspend the third UMTS/GSM licence auction until issues concerning Lattelekom's interconnect rates are settled. A statement will be issued later today, February 16.
Smidre's letter to the government has, in fact, generated negative speculation about the true reasons for his appeal.
According to one version being discussed in government circles, Smidre is trying to delay the auction indefinitely because he has not gotten a committment from the American partner he hinted would join his personal company Alina in the bid. One reason for this could be the turmoil on the US mobile market, with mergers and aquisitions taking place from week to week. No one will pay much attention to an auction in a market that, at best, will yield as many customers as a mid-sized Midwestern city, say, around 200 000.
The other grounds for rejecting the appeal is that it effectively postpones the auction indefinitely, until Lattelekom and the Public Utilities Regulatory Commission finally adjudicate their dispute. Rumor has it that the case on the legality of the sharp cut in interconnect rates will be heard as early as March, but if it is appealed, the process could drag on for months or years. That would essentially kill any prospects for a third operator coming into Latvia (at least formally, by winning the licence auction) during 2005. In effect, it would defeat the government's efforts to get a "real" third operator (not counting Triatel, which honored its 1000 th customer today) into the Latvian mobile market.
It looks like Smidre's efforts will not only fail but may raise (perhaps unnecessary?) doubts about his own readiness to apply (in a consortium) for pre-selection on February 25.

Smidre asks extension of licence auction deadline

Latvian telecoms entrepreneur Peteris Smidre has asked the government to delay the planned auction of a third UMTS/GSM mobile telephony licence until unresolved issues concerning the regulation of interconnect fees are settled. Smidre is planning to enter the contest through his private company Alina together with an unnamed American partner. Smidre also heads the Baltkom fixed telecommunications and cable-TV group.
The pre-selection deadline for the auction was already once postponed from December 21 to February 25 after the Latvian Telecommunications Association said the auction was being rushed.
Smidre's PR consultant Evija Ansonska told this blogger that Smidre intends to go ahead with a preselection application on or before February 25 if the government doesn't change its plans.
A dispute arose after the Public Utilities Regulatory Commission sharply slashed the interconnect fees that Lattelekom, the dominant and incumbent fixed network operator, could charge. Lattelekom appealed the decision, effective January 1, to the Administrative Court and won a suspension of implementation of the new lower tariffs. The regulator sued to invalidate the suspension, but lost.
It appears unlikely that the government will extend the auction deadlines yet again, especially since the final settlement of the dispute between Lattelekom and the regulator, if appealed at all possible levels, could take years. It is rumored that the appeal against the lower interconnect rates will be heard on the merit some time in March. Lattelekom is challenging both the way that the regulator calculated the new interconnect rate ceiling as well as the legality of any regulation of these rates per se.

Lattelekom - coming to a video screen this spring?

Lattelekom looks ready to launch IP TV services - at least experimentally- sometime later this spring. This blogger's sources say the company is shopping for, or perhaps has already bought some Ethernet DSL equipment needed to provide the kind of high-bandwidth connections that TV over IP, fast internet and voice over IP combinations services required.
"Look for an announcement after Easter (which falls at the end of March)" said one highly-placed informant.
By offering TV over DSL, Lattelekom would be fulfilling predictions made by its managing director Nils Melngailis and following in the footsteps of "half-mother" :) TeliaSonera which just announced IP TV services in Sweden. Lattelekom has already had one experimental videocast – a concert by Latvian popgroup Brainstorm late last year.
With Baltkom TV, Latvia's largest cable TV company pushing triple-play internet, voice and digital cable and hinting that video on demand may be one of its first interactive premium services, Lattelekom has to move into the game quickly. Certainly, the telecoms incumbent has a customer base of some 630 000, but at best it can hope to get a portion of its 40 000 broadband customers to upgrade to TV/video services.
Both companies will benefit from the fact that digital terrestrial TV is practically dead in the water here with no resolution in sight (the existing project was denounced as a fraud by the earlier government of Einars Repse and will be dragged through various courts for years, scaring off other potential partners). If we simply look at digital moving images (the old concepts TV, video, etc. are actually falling apart) as a product for the middle class with disposable income (and forget, for better or worse, the public service aspects of TV), then we can see the seeds of some business models for the telecoms sector.
Instead of broadcast programming (except for breaking news), the tendency will be toward self-programmed entertainment and information, anytime, anyplace, any platform. So there are synergies in having digital content that can be fed to PCs or ordinary TVs (though a wireless LAN adapter, even Bluetooth), played (and eventually recorded) to 3G phones, stored on Video iPod-type devices and the like.
Aside from making the technology work, a problem facing both Lattelekom and Baltkom will be making money from an initially small customer-base with high-cost quality content Baltkom's selection of old Russian movie channels, Ukrainian MTV or whatever, Russian dubbed Discovery Channels can go only so far as the audience becomes more sophisticated and wants to see better quality content in a variety of languages (digital already makes this possible). With Baltkom hinting it will offer video on demand in the second half of 2005, Lattelekom has to get a jump on what in this market sector is it's major competitor.

TCIL drops third licence bid after visa hassle

Telecommunications Consultants India Limited (TCIL) has dropped out of contention for Latvia's third GSM and UMTS mobile telephony licence, citing visa-related travel problems for its executives who wanted to visit Latvia in early January.
TCIL finance director Chandra Shekhar told this blogger that a TCIL delegation attempting to fly to Riga, Latvia on Aeroflot from New Delhi via Moscow was denied boarding because they did not have Latvian visas in their passports. It is a widely-accepted airline practice to check whether international passangers have valid travel documents to their final destinations, since they can be fined and/or required to undertake return transportation of persons not admitted to country.
Shekhar said that TCIL executives travel widely across the world and could not, as a practical matter, send their passports from India to London to be processed over several days by the Latvian Embassy there.
Guntis Macs, the head of the licence tender commission and a deputy state secretary in the Ministry of Transport, said that every effort had been made to facilitate the arrival of the TCIL executives. Apparently, there was a misunderstanding or failure to communicate to Aeroflot that the India citizens would be issue visas upon arrival at Riga airport.
Whatever the reason, TCIL's withdrawal leaves only three known likely applicants for the pre-selection deadline on February 1 -- Denmark's TDC through its Lithuanian subsidiary Bite GSM, Latvian telecoms enterepreneur Peteris Smidre through his company Alina (with a possible US partner) and the mysterious International Telecommunications and Technology (IT&T), a consortium apparently formed for the sole purpose of bidding for the Latvian licence. Yet another executive for a major international telecoms supplier, who spent several years in Lebanon (where IT&T purports to have one of its offices) told this blogger none of his Middle Eastern contacts had heard of the company.
A rumor circulating in Riga claims that IT&T may be a front for Russia's Vimpelcom, though it is unlikely that such a large Russian operator would need to come into Latvia under a "front organization". The rumor is perhaps illustrative of the suspicions and speculation generated by the secrecy and obscurity around IT&T.

Interconnect battles - the Great Satan resurgent :) ?

Around 40 minutes into an angry press conference called by the Latvian Telecommunications Agency (LTA) on February 1, I remarked to the panel of speakers that "some of us have to hurry to another press conference by the Great Satan." This drew some smiles and giggles, as most of the small crowd of Latvian telecom & IT hacks was also heading for a briefing, coincidentally scheduled an hour later by the incumbent Lattelekom.
The events were sort of about the same issue. The LTA 's president and Baltcom board chairman Peteris Smidre and LTA managing director Janis Lelis launched both humorous and angry diatribes against an interim decision by Latvia's Administrative Court to suspend a ceiling of LVL 0.08 per minute on all interconnect charges imposed on Lattelekom by the Public Utilities Regulatory Board (hereafter, the regulator, as I keep varying the English translation for this outfit). The interim ruling, pending a full hearing of an appeal by Lattelekom on the merits, apparently put several alternative operators in Latvia in a bind -- they had already factored the up to 80% cut in interconnect charges (for national long distance connects) into new tariffs.
Smidre lambasted the decision as typical of a country that was "a circus with clowns" while Lelis, with uncharacteristic passion, called the interim ruling a "catastrophe" for the non-incumbent telecommunications industry in Latvia. He even went so far as to say that the suspension of the lower charges could torpedo the planned auction of Latvia's third UMTS and GSM licence (although the two incumbent operators, Latvian Mobile Telephone /LMT/ and Tele2, have prospered with the interconnect arrangements hitherto, which are different than for fixed line operators -- I think /?/). Smidre read parts of the court ruling, which I have not seen, and indicated that he thought the judge was a buffoon who blatantly sided with Lattelekom.
Inna Steinbuka, the chairman of the regulator was an invited guest to the LTA's panel. She called the ruling "an affront to the professionalism" of the regulator. Later in the day, the regulator said it was filing a pleading to (weird Latvian name - blakussudziba/ "side-pleading" ?) to overturn the suspension imposed by the Administrative Court. It also demanded that the court sit with a new panel of judges, excluding judge Kaspars Berkis (the man lambasted by Smidre).
Raimonds Bergmanis, director of the Ministry of Transport's Communications Department, the main telecoms policy unit, also sat in the LTA's panel and said the court ruling would not advance the national policy of fostering competition.
At its press conference, "the Great Satan" presented figures from an EU report showing that Latvian telecommunications charges tp consumers were low to moderate compared with the rest of the EU. The line subscription charge to households, in euro, was the lowest in the EU and other charges compared favorably. Lattelekom officials did admit, however, that interconnect charges were high for "historical reasons" and that for international fixed line calls, Lattelekom did not have the lowest prices on the Latvian market, though it could claim better coverage and quality.
So what is the battle about? Obviously, the alternative operators would like interconnect charges pushed lower. As Baltkom's Smidre said, the charges even when capped are still almost twice what the EU average is 1.14 eurocents instead of 0.59 eurocents. The issue of whether the cap of LVL 0.08 is correct, however, is an issue to be decided on the merits, and the real issue here is procedural. Should a disputed norm be applied when it has an immediate UNAVOIDABLE effect only on one party -- in this case, Lattelekom "The Great Satan" in the eyes of the alternative operators. Lattelekom was obliged to cut its interconnect rates from January 1. The alternative operators had a choice whether or not to risk cutting their tariffs accordingly, since it was, as the Latvian saying goes, like "amen in Church" that Lattelekom would appeal the regulator's action and that there could be procedural demands to suspend the disputed regulation until a hearing on the merits. The slashed interconnect rates by some accounts would have decreased Lattelekom's profits by 10%. Now some, like the LTA, say that Lattelekom's earnings are quasi-monopolistic, but that goes to the merits of the case, not the issue of whether a one sided (whether you like the side or not) impact should be delayed.
According to my informants, a court date for a hearing on the merits of Lattelekom's appeal against the regulator will be set for some time in March.

Lattelekom - look what mom's doing!

TeliaSonera, Lattelekom's half-mother (I love mistranslating these foreign terms for parent company :) ), is starting IP television services in Sweden as part of a triple-play offering, according to the Swedish business newspaper Dagens industri.
The paper says that this puts TeliaSonera in direct competition with ComHem, the cable TV company it was forced to sell as part of the Telia and Sonera merger a couple of years back. The former Swedish monopoly will be able to reach 70 - 80 % of Swedish households via its copper wire network, since the TV will be pumped down DSL lines where speeds of 8 Mbps are not uncommon (I saw this in action when visiting my "middle son" who lives outside Stockholm and turned 18 over the weekend).
Baltkom TV offers a triple play package in Latvia (the uptake so far is only around 350 users) using its optical cable, but the TV here is delivered as a DVB signal over cable, whereas IP TV, I think, is another technical solution. At the end of the wire, if the user gets good picture (and the IP TV can be routed to an ordinary TV set), it really doesn't matter.
Nils Melngailis, the managing director of Lattelekom, has been hinting at a move into TV services. Now that TeliaSonera is doing it, it may be time to crystallize these visions. It may require an upgrade of the household DSL offering from a miserly 256 kbps (2 Mbps for some domestic network level services, like Apollo Internet's video on demand for various short films). Now that mom's doing it, it is time for the kids (half-kids, TeliaSonera holds 49 % of Lattelekom) to start getting into the act.
More sobering news for Nils -- The Economist writes this week that WiMax, another technology that Lattelekom has been talking about, to put it simply, isn't. According to the weekly magazine, there is "zero" WiMax equipment on the market. Depends on what you call WiMax, though, since some Swedish town recently set up an experimental network and it was reported Argentina was setting up a WiMax network.
Meanwhile, DI also reports a brouhaha in Sweden about whether cdma450 might be a cheaper 3G technology to give coverage to the vast wooded wastelands of our Nordic neighbor than UMTS, which requires loads of towers and base stations. Ericsson's research head Håkan Eriksson thinks even cdma450 would be a waste of money to get wireless broadband to the reindeer, but Jan Freese of Nordisk Mobiltelefon thinks it's a great idea.
Meanwhile, Latvia's cdma450 operator Triatel is apparently chugging along, though there are rumors of some kind of management reshuffles.

INTERCONNECT UPROAR
A court has suspended implementation of the Public Utilities' Commission's ruling that Lattelekom has to cut its interconnect charges to a maximum of LVL 0.088 per minute
pending a full hearing on the merits, leading to an uproar by smaller operators who had adjusted their domestic rates to reflect the changes now challenged by the incumbent.
Gotta run now to a press conference where the Latvian Telecommunications Association will have its say, followed by Lattelekom an hour later. Jogging on the snowy streets of Riga. Hope to get around to blogging what comes of these events.

US companies may back Latvia licence bid

Latvian entrepreneur Peteris Smidre may bring in two US companies – an investment fund and a mobile operator – as partners in a bid by his private firm Alina for Latvia's third UMTS/GSM licence. Smidre mentioned this in a casual conversation after talking to reporters about the operations of Baltcom, the cable TV, internet and fixed network telephony company where he is chairman of the board.
Smidre didn't say who his American partners were, noting that negotiations were incomplete ahead of the February 25 deadline for applying for pre-selection in the auction. The investment fund would provide much of the financing for the project, where the Latvian government has insisted that the successful bidder invest at least EUR 150 million in a new network and submit a detailed investment business plan as part of the pre-selection. The unnamed American operator would, most likely, assist with equipment purchasing and provide an easier entre into roaming contracts (perhaps tacking the new Latvian entity onto existing arrangements).
There now appear to be at least three more or less serious bidders for the licence at a starting price of LVL 1.3 million – in addition to Alina's consortium, the little-known International Telecommuncations and Technologies (IT&T) and Denmark's TDC (though its Lithuanian subsidiary Bite GSM). India's TCIL was to send a delegation to Latvia between January 9 - 15, but this visit was suddenly cancelled without explanation.
TDC may well have the highest stakes in getting the licence in order to cover all three Baltic countries.
Smidre also said to this blogger that Baltcom Fiber, the company formed when he bought the partly-stranded (but physically completed) optical cable stretching from Sweden's Gotland island to Ventspils, Latvia, was now supplying international capacity for Baltcom Telefonsakari, the tandem of subsidiaries serving some 9000 corporate and 1500 household customers. The telecoms entrepreneur, who started Baltcom GSM (now Tele2) in the late 1990s together with Metromedia and Western Wireless of the US, said Baltcom Fiber was cautious about entering the corporate data transmission market. This could lead to a destructive price war, Smidre said, noting that there was excessive capacity under and around the Baltic (with cables owned by Telia International Carrier and Lattelekom/Tele2, as well as links through Estonia, Finland, and Lithuania) but relatively few large corporate customers.
Meanwhile, we also learned that Baltcom's "triple play" packages combining internet, digital cable TV and telephony have only been sold to around 350 customers. This figure is expected to rise during the year as the telephone offering becomes more competitive due to sharp cuts in Lattelekom's interconnect fees ordered by Latvia's Public Utilities Regulatory Commission.

Latvian PM to Microsoft: Come hither...

Latvia's Prime Minister Aigars Kalvitis will be asking Microsoft chairman and chief software architect Bill Gates to consider setting up a development operation in Latvia, sources told this blogger.
Kalvitis will meet Gates on February 2 at an inivitation only Microsoft Executive Summit in Prague.
According to Edvins Karnitis, a Latvian IT specialist who often advises the government, the proposal will be for developing a specific set of technologies in which the Latvian IT sector has considerable experience.
Karnitis told this blogger (who was doing his day newspaper job) what the specific field was, but later asked that it be kept confidential until later in the week. I went along, though I hardly think the Lithuanians, Estonians or Czechs read Dienas bizness (www.db.lv) with any regularity. In any case, such information is more likely to leak through an English language platform now that I seem to have hundreds more readers/undocumented searchbots that before. So, later...
Another area where Latvia may try to entice Gates to invest, or rather, put some of his charitable donations, could be in vaccines. The Latvian pharmaceuticals and biologicals industries could make some generic vaccines (don't remember the exact list of pestilences that Gates the philanthropher is fighting) with funding by Gates' charities.

Why all the attention? :)

I have one of these Adsense counters monitoring this blog, and last week, like a seismograph recording a 9.0 Richter (compared to my baseline of clicks), people seem to have gone apeshit for little 'ol Telecoms in Latvia.
There could be a couple of reasons for this. One is that there are new searchbots out their and their visits haven't been filtered out yet.
The other is that there was something really interesting. Don't know what it could have been? The Man in the Middle thing? Nobody's confirmed it yet, plus, internationally, this is nothing new. It's just phishing where, thanks to the miracles of technology, you can watch the bait being taken and swallowed in real time and ram it down your victim's throat. At least I think that's how it works.
Another theory is that Coolynx, the author of the demolished www.pods.lv Latvian geek and cyberhead website, linked to the Man in the Middle article and all of his followers paid a visit. Pod.lv now is at the Berlin 1947 stage. The rubble has been removed and a skeleton of buildings is reappearing. I still can't forgive myself for not noticing how he got wiped out in November, for fuck's sake. But I guess I had no interest in reading stuff about how to install the RatBat Version 0.875 (nor did I have any idea what you do with the RatBat 0.875 once it runs), which was sort of the daily bread of the website, although it often had some inside stuff about what was going on in the Latvian IT scene, like the infamous pilfering of a school pupil database some year or two ago.
Also, I write this on a Powerbook G4 with Mac OS 10.37 or something, and most of the Pods.lv discussions are for the Linux/Wintel world. In fact, one of the more bizarre reasons cited for breaking the pot (pods is pot in Latvian) was that Coolynx was considered too much of a Linux wise-ass. Tell that to the childrens' site www.calis.lv or the town of Mālpils, whose websites went down when the server with pods.lv on it was whacked. Interestingly, they never got inside of pods, so, like with a guy who has put steel doors and alarms on his apartment, they took down the whole building with the cyber version of a laser-guided 1000 kg bomb.
Whatever the reason, please do keep visiting and do visit the new pods rising from the ashes, if you read Latvian.

Police know nothing of alleged bank scam

The Economic Police in Latvia have not received any formal complaint nor have they arrested anyone in connection with an alleged "man in the middle" scam involving a Latvian bank and a Latvian ISP reported on this blog. That doesn't mean that sort of stuff isn't happening.
Just to be clear-- in this scheme, it is the ISP and infrastructure along the way to the bank's website that is compromised.
I will continue to look into this with my confidential sources. As one source said: the issue needs to be publicized.
Some people are connecting this to a bizarre incident where an e-mail warning of phishing under the guise of Latvia's Hansabanka (part of a Swedish-owned banking group) was circulated, but then Hansabanka denied that any such threat had been spotted. Might have given some people ideas, however.
Man-in-the-middle (well, to be fair, hackergrrls can do this too :) ) is, of course, more sophisticated than phishing and requires some work, although the tools are out there, scattered on the internet.

"Man in the Middle" reported busted in Latvia

My sources tell me that someone pulled a "man in the middle" hack on a Latvian bank and an internet service provider, but got burned for it. Awaiting confirmation from the Economic Police that they have someone under arrest.
The «man in the middle» works as follows:
The hacker uses a nasty tool (CAIN or something like that) to corrupt the address resources of an internet service provider. He puts up a clone of a popular internet banking homepage.
The innocent internet bank customer starts to log on to his bank and thinks all is well, since he gets a secure SSL link, not to his bank, but the clone.
As soon as he starts to log on the clone, where the malevolent hacker sees the customer's information «in the clear», the hacker uses it to log onto the real internet banking page. When, as at some Latvian internet banks, the real bank site asks for a code on a preprinted card at random (please enter code 6). The hacker passes it on to the unwitting customer, who provides the code, allowing the hacker to log on to the real bank account and start stealing.
The hacker had apparently been a pest to the ISP for a long time, and now, with a serious crime committed or at least attempted, both the ISP and the bank are glad to have him/her put away.
Apparently, this rather sophisticated type of cybercrime has occurred elsewhere around the world, including Estonia. No bank is likely to confirm that it has been victimized. Nor is an ISP likely to put out a proud press release on how it was hacked.

A belated report of near-death

You sometime read about people who want to look up a seldom visited distant relative or aquaintence only to find that the person in question has been dead for XX (fill in the blank) weeks, months or years. I think the record may be held in efficient welfare Sweden, where social workers found (in the 90s), a skeleton sitting at a 10-year old breakfast with a 1986 newspaper. Nobody noticed the poor geezer was gone, money went to his account automatically and the rent was paid (including electricity).
Well, the same has just happened with a lively and informative (for those who knew what was being talked about) Latvian language IT blog or quasi-blog, www.pods.lv. Seems that some envious folks disliked the editor (nick: coolynx). Apparently some teeny-hackers, trying to get at coolynx, whacked the whole server, taking out a number of hosted sites and more or less wrecking www.pods.lv to this very day.
As someone who did look at pods (in Latvian, and very technical, sometimes) just to feel the buzz of what was going on among the sysops and people in the business, I am ashamed to say that its near-destruction passed me by, as well as a couple of other people at my day job paper who used to monitor it. We never noticed! All this seems to have happened in November. Forgive us, who slept!
BTW: pods is back, a pale shadow of itself, as the whole site and its files were apparently totally erased. Don't know if it will ever come back to life. It had extensive files, archives on various esoterica (for us laypersons) on linux, tools, software tricks, etc, and long and passionate discussions of these in Latvian.

Various happenings

One should not blog for the sake of blogging, and nothing much has happened for the past week, until a few days ago.
Latvia was hit by a very powerful storm, a hurricane by American standards, or perhaps a Baltic typhoon on January 9- 10. It knocked out much of both mobile phone networks, which is no surprise, since what was actually knocked out was the electricity grid. The base stations on reserve power then faithfully worked on until the batteries ran out. Few actual base stations were blown down in the wind – these and the towers they are mounted on are pretty robust. There is one rumor that Latvian Mobile Telephone (LMT) lost a station when the roof it was standing on blew away. Now if this was a roofing industry blog, I could have a lot to say about all the new shiny tin or ceramic shingle roofs that were "relocated" by the storms to places like neighboring fields, nearby trees, on top of someone's car, etc.
Both LMT and Tele2 had restored service in Latvia's approximately 26 regional center cities and towns using portable generators. As the electricity (most of it cut by millions of fallen trees) is restored, so too do the mobiles come back to life. Lattelekom's fixed network lost service to less than 5 % of its customers at the height of the storm, reserve power was available to most of its switches affected by the failure of Latvenergo's power.
There is now all kinds of talk about how municipalities should buy backup generators (they cost upwards of USD 20 000 apiece) for the next "worst storm in 40 years". So 40 years from now, they can dust off the museum piece and wonder what it was for, since the whole town may be running on a smart network of household fuel cells connected by buried cables.
The Latvian authorities should. however, consider buying a number of satellite phones, perhaps a few to each regional center, should there be another failure of the mobile networks for whatever reason. Even if the fixed network stays up and running, the portable satellite phones are useful for moving around and reporting on the situation on the ground in case of an emergency. Satellite communications worked from places wiped off the face of the earth by the tsunami, they should suffice if the world gets cut off from Moss Village (Sūnuciems to my Latvian readers) by a falling pine tree.

The Indians don't show up
Two representatives of third mobile licence contender Telecommunications Consultants India Limited (TCIL) who were scheduled to visit Latvia January 9 -15 cancelled at the last minute. Unforeseeable and unavoidable circumstances were cited. No new dates have been set. The deadline for pre-application for the auction of the third UMTS/GSM licence, with a starting price of LVL 1.3 million is February 25.
No one is attaching any special significance to the cancellation, this blogger was unable to get in touch with the person at TCIL said to be in charge of the Latvia project. Probably, the reasons must be taken at face value – something in in India or perhaps a flight cancellation in anticipation of the hurricane.

Looking forward to 2005

Well, the New Year has started and a few things may be happening in Latvian Telecoms. Later today (January 3), Lattelekom will issue a statement on its response to the Public Utilities Regulatory Board setting an interconnect tariff ceiling of LVL 0.008 (thats 0.8 santims) per minute for the incumbent. For the moment, Lattelekom is prepared to comply, although, contrary to gleeful comment from the Latvian Telecommunications Association, it will be a couple of months before any alternative operators feel the lower tariffs in their expense outlays. The fact is that interconnect accounts (in Latvia, probably elsewhere, too) are kept in traffic minutes. These are then tallied by both interconnect partners, and then a bill is sent for the agreed figure. This means that January traffic will be tallied and billed in March. Also, there is probably a set off (Operator X used 125 000 minutes of Lattelekom network time, Lattelekom used, say 25 000 minutes of X's network time).
Representatives of Telecommunications Consulting of India Ltd (TCIL), a contender for the "third" GSM and UMTS licence auction were supposed to be coming to Latvia in January. One wonders whether the tsunami disaster could have affected these plans, although TCIL is headquartered in Delhi, far from the seacoast. We may also see Denmark's TDC (through Bite GSM) clarify its position on the auction.
As I see it, TCIL is at least a known and experienced contender trying to break into a new market, while TDC needs a Latvian licence to complete its presence in all three Baltic states and be able to compete with TeliaSonera's subsidiaries in the mobile market. My guess is that these two could be serious bidders.
Meanwhile, I have received some feelers from still-mysterious International Telecommunications and Technologies (IT&T) to perhaps meet with their executives and be informed of who really stands behind this consortium (which shows up on no one's radar). It depends on whether my day job newspaper will agree to me going to either London or Beirut at IT&T's expense. A bit dodgy, but interesting. No one else is likely to get the story. I keep hearing that HuaWei, the Chinese telecoms infrastructure builder, is one of the technology partners behind IT&T, although there is no confirmation of this. HuaWei is also trying to break into the European market, they just did some kind of deal in the Netherlands.
It will be interesting to look at Triatel's figures for mobile CDMA-450 use in a couple of months. This will be a test of 3G services (fast data, mostly) takeup. If Triatel gets off the ground, it may inspire Latvian Mobile Telephone (LMT) and Tele2 to move beyond their own buildings in building out their UMTS networks. Triatel looked pretty optimistic when it upped the number of phone numbers it wanted from 40 000 to 60 000. A number of these, however, could be fixed mobiles(desktop phones) or wireless DSL-speed internet access.
DSL lines in Latvia grew by 68 % (regulator's figures) despite there being no national broadband policy coming out of the Communications Department of the Ministry of Transport. No one really knows how much broadband is used in Latvia because many 2 Mb or higher connections are resold or redistributed in apartment buildings and by smaller, semi-fly-by-night ISPs. I am pretty sure that official figures (mainly Lattelekom's DSL services) will zip past 100 000 in the first half of 2005. It would be nice if they speeded up the basic service for existing customers from the present 256 kbps (say, to 512 kbps or 1 Mb, the DSLAMs serving HomeDSL reputedly are set to 2 Mbps and then slowed by software to 256 kbps). In Sweden (home to TeliaSonera), multimegabit speeds are standard - one of my sons has 8 megs (in a Stockholm suburb), the other 10 megs (in Umeå). There is some service pushing 26 megs on posters in the Stockholm subway (there was, at least, when I was there in November).
Look, too, for some kind of merged marketing by Lattelekom and LMT, as well as the launch of a few new consumer/business products by Lattelekom, such as video on demand or digital cable TV (probably toward the second half of 2005). Both need higher basic speeds.

Stealth start for Tele2's UMTS in Latvia

Tele2, the Swedish-owned mobile telecommunications operator, has quietly launched UMTS or 3G services in Latvia, limited to one base station in its offices in the Pardaugava district of Riga. The fact that the base station was operational was confirmed by Tele2's PR representative, Evita Matisone.
She confirmed that Tele2 had started the service in compliance with the licence it bought for LVL 5.8 million in 2002, but had made no public announcement. "Next year, when we are required to have coverage of 30 % of the population by the end of the year, we will announce something," Matisone said. The PR consultant explained that there appeared to be a very limited market for 3G services in Latvia due to the small number of available UMTS/GSM phones and their relatively high price.
Latvian Mobile Telephone (LMT), the leading operator owned by TeliaSonera announced the start of its 3G services aty a press event on December 13. LMT has installed a base station in its own office building and the new 26 story offices of Hansabanka. At the same time, LMT announced it would be launching EDGE, a higher-speed data service that runs on the current GSM network. A number of mid-range business class handsets now come with EDGE capability and LMT apparently used the press event to announce it was starting EDGE in January as to start up its limited UMTS service.
Your blogger was in the US at the time of the press event and cannot relay any first-hand information. However, the activities of both operators show that they are being very cautious with expanding their UMTS services, something that those vying for the new "third" licence should take into consideration.

Holiday Greetings

So as we all booze it up a little here at the offices of my day job (the editors are having some kind of seminar away from the offie, so the mice...er reporters are playing, no paper tommorrow), I will take this chance to extend warmest holiday greetings to the small but apparently loyal readership of this blog. A Merry Christmas, Happy New Year, Joyous Kwanzaa (assuming there is at least one reader of African descent) and belated Hannukah greetings! Oh, yes, and belated happy Solstice (Saulgrieži) to any Latvian Dievturi (adherents of the old Latvian Diety, who was not very much into the fire, brimstone and commandments scene, but prefered to ride his pony so gently that not even a blossom was disturbed). Plus any Russian Orthodox readers who will have barely recovered from the Latvian Christmas partying to do Orthodox Christmas and Staray Novi God and all that stuff all over again. So Happy Whatever to all!!

A homeboy unwires Daugavpils

This one flew under this blogger's radar about a month ago. It seems that Belam Latvia, a subsidiary of Belam Inc in the US, used Trade Development Agency funds to set up a pilot/demonstration largely wireless network linking municipal agencies, small town governments, libraries, etc, with private network, internet and voice-over-IP services in and around the eastern Latvian city of Daugavpils. Around USD 400 000 was spent on the project, USD 300 000 from the TDA and USD 100 o00 from Belam Inc. Belam is an agent for the telecoms equipment maker Nortel, which is headquartered in Canada, but does most of its development and manufacturing in the US.
Mark Katz, the president of Belam Latvia, is especially proud of this project, since he was born and raised in Daugavpils and has opened his home town and surrounding villages to the information age. Whether other, perhaps wealthier (Latgale, Eastern Latvia, is seen as an underdeveloped and poor region) municipalities follow suit remains to be seen. Certainly the idea of publically financed, wireless or fiber municipal area networks is once which is competing against commercial service providers in the US and Western Europe.
Christmas approaches and here at the editorial offices of my day job, we have all been sipping gluehwein (hot spiced wine), so I can be excused for makings some wacko observations. Katz of Belam was an avid fencer in high school and bears a more than slight resemblance to the American 1950s actor Guy Williams who played the swashbuckling mysterious Zorro on TV. So perhaps this homeboy from Daugavpils is a kind of Cyber-Zorro bringing the internet to the poor with the money of the rich US?

India's TCIL may bid for a Latvian licence

India's Telecommunications Consulting of India Ltd (TCIL) may be a contender for Latvia's third UMTS/GSM licence, this blogger learned. The head of the auction commission, deputy state secretary in the Ministry of Transport Guntis Macs, told a parliamentary anti-corruption commission that an Indian company was a serious contender.
Macs misspoke the company as a Delhi Telecommunications & Consulting, but it is in fact TCIL, according to Manoj Dairola, a helpful colleague who covers telecoms for the Economic Times in Delhi.
Macs said representatives of the Indian company would come to Latvia in early January to acquaint themselves with the auction terms and the Latvian market. TCIL has participated in a number of mobile projects in India, neighboring countries and Africa.
I also chased down a rumor that Huawei, the Shenzen, China based builder of mobile infrastructure, was associated with the still mysterious potential bidder International Telecommunications and Technologies (IT&T). Huawei officials denied any association with IT&T.

IT&T goes after rival, claims murky Tele2 ties

In what could be a case of the hitherto invisible pot calling the kettle black, International Telecommunications and Technologies (IT&T), one of two announced potential bidders for in Latvia's third (now extended) mobile operator licence auction, has accused the other bidder, cable-tv and telecoms enterepreneur Peteris Smidre's Alina, of having murky ties to the Swedish Tele2 group.
IT&T's representative in Latvia, Edgars Zakrizevkis told local media he would challenge any bid by Alina based on alleged ties to Tele2 as well as a lack of international experience and insufficient financing to meet the minimal requirements of the auction (guarantees that the company can put up at least EUR 25 million). Smidre, who started and built up Baltcom GSM (later sold and its name changed to Tele2), dismissed the allegations as nonsense. He said that his only direct ties to Tele2 – non-competition agreements signed when Baltcom GSM was sold - had lapsed. As for international experience, this blogger has pointed out that IT&T has never been heard of by a number of international telecoms analysts. The IT&T representative claims that Alina will be bidding as a straw man for Tele2 with the purpose of blocking competition. Interestingly, Minister of Transport Ainars Slesers also mentioned the possibility that existing operators Latvian Mobile Telephone (LMT) and Tele2 could launch a straw man operation to buy the licence (and then spend EUR 150 million on what – or lose it?)
Zakrizevskis says that the reason for IT&T being unknown ist that it is not really in the telecoms business directly, but actually a financing consortium. He says details of exactly who is behind IT&T will be disclosed when the pre-selection applications are file on February 25 (under the extended deadline). He did hint, however, that private equity funds were behind IT&T.
Smidre, regarded as an independently wealthy man in Latvia after selling his holdings in Baltcom GSM to Tele2 (he got a slice of the more than USD 200 million deal), told this blogger that he gets many offers from private equity outfits, but would never put his money in a deal that involved spending EUR 150 million to capture, at best, some 200 - 300 000 new customers (plus some churn from existing operators) in Latvia.
This blogger has suggested that the next step in the ongoing "fix the engines while flying" approach to the Latvian auction may be to change the minimum investment requirement. Good news for the Financial Times, which is now running ads changing the deadlines for the auction announced in earlier ads.

The trial and error auction moves along

Latvia's trial and error auction of its third GSM and UMTS mobile licence went through another iteration when the government accepted on December 20 the Ministry of Transport's proposal to extend the auction's pre-selection application deadline by two months to February 25.
The government (Cabinet of Ministers) didn't, however, change the requirement– considered excessive if not bizarre by some analysts – that the third operator spend at least EUR 150 million to build an new independent network. It merely added the requirement - proposed by the Ministry of Transport, that applicants file a detailed investment plan for how the EUR 150 million will be spent.
However, there are signs that this mininam requirement may change. Minister of Economics Krisjanis Karins (New Era) has wondered aloud why the new operator simply couldn't use the existing networks (at least to start with) on a domestic roaming basis. Infrastructure sharing is also common among competitors when building UMTS networks (Telia and rival Tele2 in Sweden, for example).
The companies, which have expressed a renewed interest in the auction, also are extremely skeptical about the need for such a high investment "floor". Jesper Eriksen, managing director of Danish TDC's Lithuanian subsidiary Bite GSM, thinks the sum could be acceptable as a spending guideline over "the life of the licence" which would probably be quite a few years. Peteris Smidre, who has declared over the weekend that his private company Alina will apply for a licence also privately says the EUR 150 million requirement is "crazy". The Latvian Telecommunications Association, where Smidre has considerable influence, also asked that the investment quota be modified.
It seems now that the next step in Latvia's trial and error process, probably before the February 25 deadline, will be steps to modify the investment requirement. That will not, of course, undo the damage to the reputation of the whole process, which started off with at least the appearance of a desperately rushed procedure aimed at having only one bidder win.
What made the deadline almost impossible to meet was not the timeframe, but the huge investment requirement plus the timeframe. If it were a question of spending LVL 1.3 to, say, 3 million, some international operators could have made a decision on short notice. But spending EUR 150 million when there are, perhaps, only 300 000 new customers to be had, is another story...
Advice to those interested – wait until the New Year. The Minister of Transport may, yet again, reconsider the terms of the auction. At the same time, don't rule out another fiasco. Until the pre-selection applications are in, there are no guarantees. Before the 2002 flop, there were also rumors that Lithuania's Bite or Radiolinja of Finland/Estonia were coming. In fact, both confirmned their interest. But on the big day in 2002 nobody came.
One more thing about the 2002 flop – the starting price was a bit high at LVL 7.6 million and all of the big operators were spooked by the huge sums spend in the big European markets that later brought some companies close to ruin. So perhaps it was mostly external factors beyond Latvia's control. In the present auction, the main factor of uncertainty seems to be precisely the unpredictable trial and error approach of the Latvian government in trying to auction off the licence.

Third licence auction deadline extended

Minister of Transport Ainars Slesers has asked the government to extend by two months the deadlines for the third GSM and UMTS licence auctions. The government (Cabinet of Ministers) will meet Monday, December 20, just one day ahead of the old deadline for application to be pre-selected for the auction. Slesers has asked that a decision on the extension be placed at the top of the agenda of the extraordinary Cabinet meeting, originally called to discuss budget matters.
The Minister of Transport is apparently responding to harsh criticism of the short deadlines and other terms of the auction. Delna, Latvia's branch of the anti-corruption organization Transparency International, has said the auction should be investigated by the anti-corruption authorities because it looks like blatant state capture on behalf of one company (the elusive, Middle East based International Telecommunications and Technologies, or IT&T). Also, a parliamentary anti-corruption commission will discuss the matter at a meeting on December 21.
IT&T is the only potential applicant and bidder, although Slesers and Ministry of Transport Deputy State Secretary Guntis Macs said there were at least four contenders. It was not clear whether these four contenders would have applied for the Dec 21 deadline, or whether (more likely) they would consider applying under the extended deadline. International analysts, such as EMC's Kester Mann, have been unable to find any traces of IT&T's activities in their extensive data bases.
Both Denmark's TDC (through its Lithuanian Bite GSM subsidiary) and Latvia's Baltcom have indicated the short deadline and other terms of the auction meant they would not apply by Dec 21.
Slesers said he would not remove the mandatory minimum investment of 150 million euros, but demand, instead, that applicants supply a detailed investment plan that could be scrutinized by auditors to make sure it was not spending for the sake of spending. Analysts have said that the requirement goes completely against the grain of trends in Europe, where operators building 3G networks try to share resources even while competing on end-user pricing and services.
Slesers insists that the high level of investment will ensure that the third operator makes a long-term committment and, by cutting tariffs sharply (the minister expects a third operator to cut mobile costs by 50 %), to start recovering one's investment only after several years.
Meanwhile, sources have told this blogger that at least ten contenders have expressed interest in setting up virtual mobile operations in Latvia. Currently there is only one mobile virtual network operator (MVNO? do I have that right?), Zetcom, which sells Amigo cards and runs on Latvian Mobile Telephone's (LMT's) network. Amigo has been growing rapidly in its niche of youth-oriented pre-paid cards, a signal that it is possible to compete on the existing network. LMT has apparently decided that it is more rational to lease capacity for running several tens of thousands of lines and take a wholesale revenue stream rather than carry the cost of marketing and administering the same number of post-paid lines.
The 150 million euro investment floor is privately regarded as a crackpot scheme with little rational basis even by Latvian telecommunications officials. One wonders where the 150 million euro investment scheme will fit in with the Ministry of Transport's other scheme to build yet another independent network by merging the infrastructure assets of Latvenergo, Latvian Railways and other state companies and agencies - the Alliance described earlier in this blog? Such a small country, so many networks, so many schemes...

Regulator cuts interconnect charges by 80 %

The Public Utilities Regulatory Board has cut the interconnect charges Lattelekom can charge other operators for using its network by up to 80 %. The agency ordered Lattelekom to slash its local interconnect (Riga and environs) to a uniform 0.8 santims per minute from 1.656 santims and also reduced the national interconnect from 3.88 santims to 0.8 santims.
Lattelekom is expected to contest the ruling in the Administrative Court. The regulator says its interconnect ceiling is based on actual Lattelekom costs. Lattelekom has said throughout the process (there were hearings on the proposed sharp cut) that no operator has passed on any interconnect savings to its customers (Lattelekom cut inteconnect charges by 20 % at the start of 2004.
Meanwhile, the hasty auction of Latvia's third UMTS/GSM licence going ahead despite there being only one potential bidder, for whom the auction appears to have been tailor-made. The somewhat mysterious Middle Eastern company, International Telecommunications & Technologies (IT&T) has, at last, put up a rather jargon-filled home page describing its services. You can see it at www.it-t.net, where just before my departure for the US (I am now back in Latvia), there was nothing. So they are making an effort.
Unfortunately, whatever the intentions were on all sides, this has the appearance of an auction with a pre-arranged winner. Whether this is true or not -- the IT&T people vehemently deny it– appearances will keep the company under some kind of cloud even if it seems to win "fair and square." Politically, it is hard to see why Prime Minister Aigars Kalvitis didn't at least extend the deadline for the pre-selection. Normally, Minister of Transport Ainars Slesers should have been called on the carpet for the whole matter, for its appearance of scandal, if nothing else. But that wasn't done, nor were pleas to change the auction terms heard. All of which fuels the impression that some kind of state capture may be behind the whole business.

Back to timesharing a la wireless?

Back around 1965, when I was a young teenager and my father worked for Honeywell, I asked what it was exactly that he did. He said he sat at a thing like an electric typewriter connected to a computer the size of four big refrigerators. There were several other typewriters attached to the computer and this was called timesharing. The users ( a systems test team) asked the computer to do things (test routines) and checked what it printed against standards.The electric telexes, alone, could only type, but the computer gave them the full power of a mainframe of the time (about what you have in a mid-priced mobile phone of 2004, and the Honeywell mainframe cost USD 2 million then).
Now, according to Scott McNealty of Sun Microsystems, speaking at Oracle OpenWorld, the future belongs to "thin clients" connected wirelessly to servers and clusters. If the connection breaks, you can't even type on the equipment, it is almost brainless. In fact, what will put "your work" on the thin client desktop is a small chip, a kind of super SIM card, and when you take it out, someone else can snap in his and have a completely different desktop workspace. So we have come full circle in 40 years to timesharing of a new kind.
When I think of the young guys in the Latvian IT business, I always imagine that they will not even work like people did in the mid-90s, nevermind the 80s -- with clunky systems, green on black screens, the like. Legacy is not a problem, compared to the US and Western Europe, where legacy going back to the 1960s is one reaon Oracle and its competitors have to come up with elaborate solutions to make this zoo look simple again For instance, the Data Hub idea. But now it looks like we are coming around to timesharing again, when everyone feeds off the power of the once great central virtual computer.
Just some scribblings from Oracle. A great speech by Larry Ellisson, as usual, summing up the Oracle vision more clearly than some of the technobabbling and buzzword dropping heard earlier. He was only tripped up a bit and perhaps said the wrong things by washing his hands of what Oracle may be used for by the Chinese government. Ellisson correctly said that the company didn't make government policy, but the person questioning him gave him an opening by not asking a) whether there are some customers, whose oppressive uses for information are so obvious that Oracle should question selling to them b) whether the company has some ethical standards about how it allows its software to be used.

Hello from Mars (Oracle, SF)

Somehow that Latvian Eurovision (?) song seems appropriate. When you look at the statistics of use of IT among Latvian priavte business (officially, 13 percent according to the Latvian Information Technology and Telecommunications Association/LITTA, probably about twice that), then all the talk here about information driven enterprise and the grid-enabled adaptive enterprise seems that either we here in San Francisco, or Latvia are on Mars. All of this presumes a profound degree of IT penetration of entire enterprises in all of their functions (I saw how, on a business intelligence dashboard, you could drill down from a divisional level summary expense report to a record of a single expense approval made just a few days ago). This is not the case in Latvia except for some big companies. At the same time, I found myself telling people at some journalist cocktail party how advanced Latvian IT skills and services were in companies such as Dati, Exigen, IT Alise, Lattelekom, how stuff like GREID (the secret, in part, of Exigen's success). It's kind of a paradox. Gotta run now...

New PM to review third licence auction terms

To catch up with some Latvian developments even as I write here on a sunny San Francisco morning, the new Prime Minister Aigars Kalvitis has said he wants to "review" the terms of the auction for Latvia's third GSM and UMTS mobile operator licence.
That auction was announced on November 23, the applications to be short-listed must be filed by December 21, and the auction itself will be held January 7. Applicants should be ready to bid starting at LVL 1.3 million and to invest at least EUR 150 million in a new, independent network.
All of which, as I wrote earlier, sounds suspiciously like the offer from International Telecommunications and Technology (IT&T), which appeared out of nowhere in early November. IT&T, contrary to my earlier remarks, appears to be a real company, some kind of international consortium. They have been planning to come into the Latvian market for about a year, aided by a local entrepreneur who, in the past, had done some deals in the real estate business with the current minister of transport, Ainars Slesers.
The Latvian Telecommunications Association has also demanded that the auction application deadline be extended by at least a month and that the requirement to invest a rather enormous minimal amount be striken.
All of this makes the new Prime Minister's willingness to review and perhaps modify the auction terms a reasonable gesture. The political nuance here is that even if Slesers and IT&T's local consultant had never done any business at all, the "review" amounts to questioning the judgement of the new/old minister of transport even before the ink on the new coalition government's policy declaration has dried.
That, of course, is a political, not a IT/telecoms issue, but it does not bode well for the stability of the coalition. The PM, by changing the terms of the auction would, in effect, be expressing diminished confidence in his minister of transport for something Slesers was working on in both the old and new governments. Indeed, those who actually drafted and signed the auction terms (Vilis Zvidrins of the Ministry of Transport Communications Department) seem to say the main reason the terms are as they are is that Slesers asked them to do it that way.
According to this blogger's sources, Communication Department head Raimonds Bergmanis was more than glad to be on vacation when the decision to call the auction was approved.
On the other hand, one can admire Slesers' "can do" approach to moving ahead quickly in developing a more competitive telecommunications market, just as he is understood to be behind the entry of Ryanair and Easyjet into Latvia's aviation market. But the downside of haste in getting a third (fourth, really, if you follow this blog) mobile operator up and running is that you may scare off the understandably cautious, internationally known majors such as Vodaphone or Bell Mobility (Canada) and even Latvia's Baltcom, where owner Peteris Smidre has never been known to shun risk. Then, when a little known company, which in all probablity is legitimate, comes in the way IT&T is doing it, you create a climate of suspicion of impropriety. Although, actually, such a climate is the prevailing weather system in Latvian politics...

Your blogger is in San Francisco

I'm in San Francisco to cover the Oracle OpenWorld event for my day job (Oracle in Latvia sponsored me). If there's anything of interest on the IT side with a Latvian angle or that generates interesting thoughts about IT in Latvia (as for uses of big corporate Oracle systems, count 'em, but don't bother your left hand to help with the count if it's doing something else). Nonetheless, the keynotes by Carly Fiorina (Hewlett Packard), Scott McNealy (of Sun, the nemesis of Microsoft), Micheal Dell, etc. promise to be interesting. Hope to do an interview with Exigen, too.
If I have the time, watch this spot.

Third licence contender in Latvia looks for real

One of the pleasures of blogging is that you can correct your own misapprehensions or mistakes. It now seems that International Telecommunications and Technologies (IT-T), which I dismissed as a "Nigerian letter" company in an earlier post, is more real that I thought and quite serious about buying the third Latvian GSM and UMTS licence at a hastily organized auction. I talked to IT-T's chief operating officer Nicolas Abinader in Beirut and his local consultant, the Latvian entrepreneur Edgars Zakrizevskis.
Mr. Abinader says the company is an international consortium of carriers, operators and technology providers that includes participants from Switzerland, Spain, France and the United Arab Emirates (perhaps other countries, as well). There will be complete disclosure of the composition of IT-T once the pre-selection application is filed by December 21. The Ministry of Transport, which announced the licence auction on November 23, set the starting price at LVL 1.3 million and a condition that at least EUR 150 million be invested in building an independent, nationwide network.
This, to some commentators, sounds disturbingly similar to the offer made by IT-T in the letter I wrote about earlier, where they said they would pay LVL 1.3 million for a licence (GSM, UMTS and CDMA-450) and invest between EUR 150 -220 million. Janis Lelis, the managing director of the Latvian Telecommunications Association has been outraged by the auction terms, calling the deadlines impossible to meet by any professional operator, and describing the requirements for a nationwide independent network and a minimum EUR 150 million investment as irrational, if not something worse. Mr. Lelis points out that a cost-conscious operator would try to cut investment costs while still meeting network build-out requirements.
A source speaking to this blogger with the understanding his identity would not be disclosed went even further and called the whole arrangement "corrupt" and clearly aimed at giving the licence to IT-T to the exclusion of other contenders. IT-T has been preparing to enter the Latvian market for about a year, according to Mr. Zakrizevskis, who has been the group's local consultant.
Mr. Zakrizevskis strongly denied any favoritism or that Minister of Transport Ainars Slesers, with whom he has been linked in a number of real-estate transactions some years ago, was lobbying the Lebanon-based company. He also stressed that he had had dealings with a number of persons in Latvia who later entered politics, but this did not mean any special relationships continued when they came into public office. The Latvian enterpreneur, who has mainly worked in real estate development, described his role as a generator of project ideas which he often finances at a very early stage (research, etc.) and agreed that he was something like an "angel investor" in the US.
Still, the fact that IT-T has apparently gotten the jump on everyone else (it is starting a Latvian subsidiary as required by the auction terms -- something that can take several weeks) is likely to raise eyebrows. Before it was known that IT-T was participating in the auction, several analysts this blogger spoke to (for an article in my "day job" at Dienas bizness) said they though the auction of the third would probably fail, as it did in 2002.
Mr.Zakrizevskis also disclosed that the long-term goal of IT-T, as he understood it (he did not pretend to speak for the company) was to create a demonstration project for later moving into the Russian market. He also indicated that IT-T intended to become a pan-Baltic operator, probably in all three technologies --GSM, UMTS, and CDMA-450 (although in Estonia, there already are three operators).
After all is said, the whole business does look a little strange, but I've let the parties speak for themselves, which is what a journalist/blogger must do...