This report covers the Baltic countries of Estonia, Latvia and Lithuania, a small yet progressive telecom market. Each country has its own chapter and covers the following subjects:
Key Statistics and forecasts
Market and Industry Overviews
Major Players (fixed and mobile)
Mobile Voice, Data (GSM, CDMA, GPRS, EDGE, 3G/UMTS/WCDMA) and Content Markets
Emerging Internet economy
Broadband (DSL, FttH, cable, WiFi, WiMAX)
Convergence (VoIP, IPTV, VoD, cable TV, satellite TV, triple play and DTT)
The three Baltic nations of Estonia, Latvia and Lithuania comprise a small, sophisticated corner in Eastern Europe’s telecommunications market. Dominated by Scandinavian operators, all three countries exhibit high mobile penetration and growing broadband usage. High cable penetration for the region has seen cable operators launch triple play services and develop into significant alternative operators. The incumbent in each respective country has responded by launching broadband IPTV services, spurring the fixed-line broadband market with ADSL2+ and FttH services increasingly available. Wireless broadband services are widely available, with WiFi, WiMAX and CDMA technologies utilised. Third generation and HSDPA mobile is available in each country although widespread usage will be limited until capable handsets become widespread. A wealth of statistics, forecasts, information on major operators, market and regulatory developments makes this report prerequisite reading for anyone with an interest in the Baltic telecoms sector.
The incumbents still dominate the liberalised fixed-line market in each country, a situation partly brought about by the regulators, which have been slow to analyse the 18 communications markets in each country to identify market inefficiencies and recommend Significant Market Power (SMP) obligations. A number of alternative operators do offer services, with the region’s well-established cable operators providing the most competition due to the significant reach of their networks. We anticipate the alternative operators will make further market progress in 2007 and beyond as the regulators finish analysing markets, recommend and implement SMP operator obligations. The primary uncertainty will be how effectively the SMP operators delay implementing their obligations through the courts, as has been the case of all SMP operators in EU telecoms markets.
All three fixed-line incumbents share TeliaSonera as either a majority or significant shareholder, with Latvia the only country where it does not hold majority ownership. TeliaSonera attempted to further consolidate its position in the Baltic region by acquiring a significant Baltic IT services operator, a move that was approved in Estonia and Latvia but rejected in Lithuania. Much anticipated broadband TV (IPTV) offerings are now available from the incumbent operators in each country, and brings the incumbent operators into direct competition with the cable-based operators in the consumer telecoms market. Growing competition between the two parties in 2007 and beyond will benefit consumers, with increased services available at lower prices.
Increasingly affordable ADSL offerings have been launched in conjunction with IPTV offerings, stimulating broadband market growth. Speedier ADSL2+, required for a quality IPTV experience, was launched by the incumbents in Estonia and Latvia, with Lithuania’s incumbent deploying ADSL2+ infrastructure. The need for broadband speed has also spurred Fibre-to-the-Home (FttH) network deployment in all three countries, most predominantly in new housing projects and apartments.
Wireless broadband has become increasingly prominent. Estonia has deployed WiMAX networks to extend broadband connectivity to rural areas while CDMA 1x EVDO based offerings are widely available in Latvia. WiFi in widely available in each country, with Lithuania’s incumbent in particular making an effort to expand its WiFi network to approximately 1,000 hot spots by 2007. We believe wireless broadband will become increasingly prominent in 2007 and beyond due to greater availability of portable and mobile wireless broadband services, as well as the growing popularity of laptop computers, with approximately 65,000 laptop computers expected to be sold in Estonia in 2006 alone, up from 44,000 in 2005.
Estonia has had the most success in fostering an Internet economy, developed in recognition of the ability of Information Communications Technologies to improve social wellbeing. E-commerce and e-government services are widely available, allowing the country’s citizens to access services and carry out commercial and government-related activities online. Growing familiarity of such services, coupled with increasing broadband access will encourage usage among new users, generating efficiencies for both the providers and consumers of such services.
Mobile subscriber growth in all three countries, despite saturated markets, suggests multiple SIM card ownership. Mobile operators acknowledge there is little room left to grow through new subscriber additions and have been focusing on encouraging postpaid take up among prepaid users as a way to increase ARPU levels. Numerous Mobile Virtual Network Operators (MVNO)s offer services in each country although so far they have made little impact due to the short time they have been offering services.
Mobile data and content is also being sought to create new revenue growth opportunities. Third generation and HSDPA services are available in each country although widespread usage will be limited for the next two to three years when 3G-capable handsets become more widespread. In the meantime SMS and MMS continue to be the primary mobile data revenue generators. Mobile content available includes streaming mobile TV and mobile music in partnership with record companies. SMS-based mobile commerce (m-commerce) services are available.
Developments in sophisticated m-commerce services are underway; Lithuania’s largest mobile operators has launched a mobile digital signature offering that is compatible with conventional Public Key Infrastructure (PKI) products and has concluded agreements with certificate authorities to provide electronic certificate services. Agreements have also been concluded with another mobile operator to develop compatible mobile electronic signature infrastructure to promote usability.