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2006-2007 Europe - Telecoms, Mobile and Broadband in Estonia, Latvia and Lithuania


Attention: There is an updated edition available for this report.

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
Regulatory Environment
Major Players (fixed and mobile)
Infrastructure
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.

Key Highlights

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.

1. ESTONIA
1.1 Key statistics
1.2 Telecommunications market
1.2.1 Overview of Estonia’s telecom market
1.3 Regulatory environment
1.3.1 Background
1.3.2 Regulatory authority
1.3.3 Telecoms sector liberalisation in Estonia
1.3.4 Privatisation
1.3.5 Interconnect
1.3.6 Access
1.3.7 Carrier selection and carrier preselection
1.3.8 Number portability
1.3.9 Regulatory developments
1.4 Fixed network operators in Estonia
1.4.1 Overview of operators
1.4.2 Eesti Telekom / Elion
1.4.3 Uninet / Elisa
1.5 Telecommunications infrastructure
1.5.1 National telecom network
1.5.2 International infrastructure
1.5.2.1 Submarine cable networks
1.5.3 Infrastructure developments
1.5.3.1 FttH/FttB
1.5.3.2 VoIP
1.6 Internet market
1.6.1 Overview of the Internet in Estonia
1.6.1.1 Estonia’s emerging Internet economy
1.6.1.1.1 Internet economy-related legislation
1.6.1.1.2 Measuring Internet economy development
1.6.1.2 Internet statistics
1.6.2 ISP market
1.7 Broadband market
1.7.1 Overview
1.7.2 Broadband forecasts to 2015
1.7.2.1 Scenario 1 - stronger broadband subscriber growth
1.7.2.2 Scenario 2 - slower broadband subscriber growth
1.7.3 Cable modems
1.7.4 Asymmetric Digital Subscriber Line (ADSL)
1.7.4.1 ADSL2+
1.7.5 Fibre-to-the-Home (FttH) networks
1.7.6 Wireless broadband
1.7.6.1 Wireless Local Loop (WLL)
1.7.6.2 WiFi
1.7.6.3 WiMAX
1.8 Convergence
1.8.1 VoIP
1.8.1.1 Hotifon
1.8.1.2 Skype
1.8.2 Triple play
1.8.3 Overview of broadcasting market
1.8.4 Broadcasting regulation
1.8.5 Digital TV
1.8.5.1 Broadband TV (IPTV)
1.8.5.2 Digital Terrestrial TV (DTTV)
1.8.5.3 Cable TV (CATV)
1.8.5.3.1 Major operators
1.8.5.4 Satellite-based digital pay TV developments
1.9 Mobile communications
1.9.1 Overview of Estonia’s mobile market
1.9.1.1 Mobile statistics
1.9.2 Regulatory issues
1.9.2.1 Third Generation (3G) licences
1.9.2.2 Mobile Number Portability (MNP)
1.9.2.3 Significant market power & termination fees
1.9.3 Mobile technologies
1.9.3.1 Analogue
1.9.3.2 Digital
1.9.3.3 3G mobile
1.9.4 Major mobile operators
1.9.4.1 Eesti Mobiltelefon (EMT)
1.9.4.2 Radiolinja Eesti / Elisa
1.9.4.3 Tele2 Eesti
1.9.4.4 Mobile Virtual Network Operators (MVNO)
1.9.5 Mobile voice services
1.9.5.1 Prepaid
1.9.6 Mobile data services
1.9.6.1 Short Message Service (SMS)
1.9.6.2 Multimedia Messaging Service (MMS)
1.9.6.3 Wireless Application Protocol (WAP)
1.9.6.4 General Packet Radio Service (GPRS)
1.9.6.5 Enhanced Data rates for GSM Evolution (EDGE)
1.9.6.6 Mobile TV
1.9.7 Mobile content and applications
1.9.7.1 M-commerce
2. LATVIA
2.1 Key statistics
2.2 Telecommunications market
2.2.1 Overview of Latvia’s telecom market
2.3 Regulatory environment
2.3.1 Background
2.3.2 Regulatory authority
2.3.3 Telecom sector liberalisation in Latvia
2.3.3.1 Lattelecom monopoly curtailment dispute
2.3.4 Interconnect
2.3.5 Access
2.3.6 Carrier preselection / Carrier selection
2.3.7 Number portability
2.4 Fixed network operators in Latvia
2.4.1 Overview of operators
2.4.2 Lattelecom
2.4.3 Telekom Baltija / Triatel
2.4.4 Baltkom
2.4.5 Telecentrs
2.5 Telecommunications infrastructure
2.5.1 National telecom network
2.5.2 International infrastructure
2.5.3 Infrastructure development
2.6 Internet market
2.6.1 Overview of the Internet in Latvia
2.6.1.1 Internet statistics
2.7 Broadband market
2.7.1 Overview
2.7.2 Broadband forecasts to 2015
2.7.2.1 Scenario 1 - stronger broadband subscriber growth
2.7.2.2 Scenario 2 - slower broadband subscriber growth
2.7.3 Cable modems
2.7.4 Asymmetric Digital Subscriber Line (ADSL)
2.7.4.1 ADSL2+
2.7.5 Fibre-to-the-Home (FttH) networks
2.7.6 Wireless broadband
2.7.6.1 Wireless Local Loop (WLL)
2.7.6.2 Code Division Multiple Access (CDMA)
2.7.6.3 WiFi
2.8 Convergence
2.8.1 Triple play models
2.8.2 Digital TV
2.8.2.1 Regulatory environment
2.8.2.2 Digital Terrestrial TV (DTTV)
2.8.2.3 Broadband TV (IPTV)
2.8.2.4 Cable TV (CATV)
2.8.2.5 Satellite-based digital pay TV developments
2.9 Mobile communications
2.9.1 Overview of Latvia’s mobile market
2.9.1.1 Mobile statistics
2.9.2 Regulatory issues
2.9.2.1 CDMA licence awarded
2.9.2.2 Third Generation (3G) licences
2.9.2.3 Third GSM/3G licence
2.9.3 Mobile technologies
2.9.3.1 Analogue
2.9.3.2 Digital
2.9.3.3 3G mobile
2.9.4 Mobile operators
2.9.4.1 Latvia Mobilais Telefons (LMT)
2.9.4.2 Tele2
2.9.4.3 Telekom Baltija / Triatel
2.9.4.4 Bite
2.9.4.5 Mobile Virtual Network Operators (MVNO)
2.9.5 Mobile voice services
2.9.5.1 Prepaid
2.9.6 Mobile data services
2.9.6.1 Short Message Service (SMS) / Multimedia Messaging Service (MMS)
2.9.6.2 Wireless Access Protocol (WAP)
2.9.6.3 High-Speed Circuit-Switched Data (HSCSD)
2.9.6.4 General Packet Radio Service (GPRS)
2.9.6.5 Enhanced Data Rates for GSM Evolution (EDGE)
2.9.6.6 Wideband Code Division Multiple Access (WCDMA)
2.9.6.7 Broadband wireless data service (1x EVDO)
2.9.6.8 Mobile TV
2.9.7 Mobile content and applications
3. LITHUANIA
3.1 Key statistics
3.2 Telecommunications market
3.2.1 Overview of Lithuania’s telecom market
3.3 Regulatory environment
3.3.1 Background
3.3.2 Regulatory authority
3.3.3 Telecom sector liberalisation in Lithuania
3.3.4 Privatisation
3.3.5 Interconnect
3.3.6 Access
3.3.7 Carrier preselection / carrier selection
3.3.8 Number portability
3.4 Fixed network operators in Lithuania
3.4.1 Lietuvos Telekomas / TEO
3.5 Telecommunications infrastructure
3.5.1 National telecom network
3.5.2 International infrastructure
3.6 Internet market
3.6.1 Overview of the Internet in Lithuania
3.6.1.1 Internet statistics
3.6.2 Internet access locations
3.6.3 ISP market
3.7 Broadband market
3.7.1 Overview
3.7.2 Broadband forecasts to 2015
3.7.2.1 Scenario 1 - stronger broadband subscriber growth
3.7.2.2 Scenario 2 - slower broadband subscriber growth
3.7.3 Cable modems
3.7.4 Asymmetric Digital subscriber Line (ADSL)
3.7.5 Fibre-to-the-Home (FttH)
3.7.6 Wireless broadband
3.7.6.1 WiFi
3.8 Convergence
3.8.1 Triple play models
3.8.2 Overview of broadcasting market
3.8.3 Digital TV
3.8.3.1 Broadband TV (IPTV)
3.8.3.2 Digital Terrestrial TV (DTTV)
3.8.3.3 Cable TV (CATV)
3.8.3.4 Satellite-based digital pay TV developments
3.9 Mobile communications
3.9.1 Overview of Lithuania’s mobile market
3.9.1.1 Mobile statistics
3.9.2 Regulatory issues
3.9.2.1 GSM licences
3.9.2.2 Number portability
3.9.2.3 Third GSM licence awarded
3.9.2.4 3G licences awarded
3.9.3 Mobile technologies
3.9.3.1 Third Generation (3G)
3.9.4 Major mobile operators
3.9.4.1 Omnitel
3.9.4.2 Bite GSM
3.9.4.3 Tele2
3.9.4.4 Mobile Virtual Network Operators (MNVO)
3.9.5 Mobile voice services
3.9.5.1 Prepaid
3.9.6 Mobile data services
3.9.6.1 Short Message Service (SMS)
3.9.6.2 Multimedia Messaging Service (MMS)
3.9.6.3 Wireless Applications Protocol (WAP)
3.9.6.4 General Packet Radio Services (GPRS)
3.9.6.5 Enhanced Data for GSM Evolution (EDGE)
3.9.6.6 Wideband Code Division Multiple Access (WCDMA)
3.9.6.7 Mobile TV
3.9.7 Mobile content and applications
3.9.7.1 M-commerce (micropayments)
4. GLOSSARY OF ABBREVIATIONS


LIST OF TABLES


Table 1 - Country statistics Estonia 2005
Table 2 - Telecom revenue - 2005
Table 3 - Telephone network statistics - 2005
Table 4 - Internet provider statistics - 2005
Table 5 - Internet user statistics - 2005
Table 6 - Broadband statistics - March 2006
Table 7 - Mobile statistics - June 2006
Table 8 - National telecommunications authority
Table 9 - Market share of Elion voice traffic - 2005 - 2006
Table 10 - Elion financial data, January to September and annual change - 2005 - 2006
Table 11 - Elion Group financial data, January to September and annual change - 2005 - 2006
Table 12 - Elion financial data and annual change - 2004 - 2005
Table 13 - Elion Group financial data and annual change - 2004 - 2005
Table 14 - Fixed lines in service and teledensity - 1995 - 2005
Table 15 - Elion PSTN / ISDN subscribers and quarterly change - 2002 - 2006
Table 16 - Internet user growth and penetration - 1998 - 2005
Table 17 - Internet subscribers and annual change - 2000 - 2005
Table 18 - Internet host computers - 1994 - 2005
Table 19 - Elion Internet and % broadband subscribers - 2003 - 2005
Table 20 - Broadband subscribers and annual change - 2000 - 2006
Table 21 - Total broadband subscribers by connection type - March 2006
Table 22 - Elion broadband subscribers and quarterly change - 2003 - 2006
Table 23 - Forecast broadband subscriber growth - stronger market growth scenario - 2006 - 2010; 2015
Table 24 - Forecast broadband subscriber growth - weaker market growth scenario - 2006 - 2010; 2015
Table 25 - Mobile subscribers by operator and annual change - June 2006
Table 26 - Mobile subscriber growth and penetration - 1998 - 2006
Table 27 - EMT financial data, January to September and annual change - 2005 - 2006
Table 28 - EMT financial data and annual change - 2004 - 2005
Table 29 - Radiolinja Eesti financial data and annual change - Q3 2005 - Q3 2006
Table 30 - Radiolinja Eesti financial data and annual change - 2004 - 2005
Table 31 - EMT prepaid subscribers - 2002 - 2006
Table 32 - Country statistics Latvia - 2005
Table 33 - Telephone network statistics - 2005
Table 34 - Internet provider statistics - 2005
Table 35 - Internet user statistics - 2005
Table 36 - Broadband statistics - March 2006
Table 37 - Mobile statistics - June 2006
Table 38 - National telecommunications authority
Table 39 - Number of agreements for different types of access - October 2003 - October 2005
Table 40 - Lattelecom wholesale ADSL lines and annual change - March 2006
Table 41 - Lattelecom Group financial data - 2005 - 2006
Table 42 - Lattelecom Group financial data - 2004 - 2005
Table 43 - Lattelecom fixed-line subscribers and annual change - 2002 - 2006
Table 44 - Fixed lines in service and teledensity - 1995 - 2005
Table 45 - Lattelecom digitalisation rate - 2001 - 2005
Table 46 - Internet user growth and penetration - 1996 - 2005
Table 47 - Internet host computers - 1994 - 2005
Table 48 - Broadband subscribers by access technology - March 2006
Table 49 - Lattelecom broadband subscribers and quarterly change - 2002 - 2006
Table 50 - Forecast broadband subscriber growth - stronger market growth scenario - 2006 - 2010; 2015
Table 51 - Forecast broadband subscriber growth - weaker market growth scenario - 2006 - 2010; 2015
Table 52 - Lattelecom ADSL subscriber growth and annual change - 2001 - 2006
Table 53 - Mobile subscribers by operator and annual change - June 2006
Table 54 - Mobile subscriber growth and penetration - 1995 - 2006
Table 55 - Bite financial data and annual change - 2005 - 2006
Table 56 - LMT Prepaid subscribers - 2002 - 2006
Table 57 - Country statistics Lithuania - 2005
Table 58 - Telecom revenue and investment statistics - 2005
Table 59 - Telephone network statistics - June 2006
Table 60 - Internet provider statistics - 2005
Table 61 - Internet subscriber statistics - 2005
Table 62 - Broadband subscribers - June 2006
Table 63 - Mobile statistics - June 2006
Table 64 - National telecommunications authority
Table 65 - Telecom revenue, investment statistics and annual change - January - June 2006
Table 66 - Number of agreements for different types of access - 2003 - 2005
Table 67 - Market share of fixed-line alternative operators - 2003 - 2006
Table 68 - Market share held by TEO in different fixed-line markets - 2004 - 2006
Table 69 - Lietuvos Telekomas Group financial data and annual change - 2005 - 2006
Table 70 - Lietuvos Telekomas Group financial data and annual change - 2004 - 2005
Table 71 - Lietuvos Telekomas Group revenue breakdown - 2005
Table 72 - Fixed lines in service and teledensity - 1995 - 2006
Table 73 - Lietuvos Telekomas PSTN/ISDN subscribers and quarterly change - 2002 - 2006
Table 74 - Internet user growth and penetration - 1996 - 2005
Table 75 - Internet host computers - 1994 - 2005
Table 76 - Internet subscribers - residential, business and annual change - June 2006
Table 77 - Connection speeds of subscribers with unlimited connections - June 2006
Table 78 - Lietuvos Telekomas Internet and broadband subscribers - 2002 - 2006
Table 79 - ISP market share by revenue - March - June 2006
Table 80 - Subscribers per ISP - June 2006
Table 81 - Broadband subscribers by access type - June 2006
Table 82 - Broadband ISP market share by subscribers - June 2006
Table 83 - Lietuvos Telekomas broadband subscribers - 2003 - 2006
Table 84 - Forecast broadband subscriber growth - stronger market growth scenario - 2006 - 2010; 2015
Table 85 - Forecast broadband subscriber growth - weaker market growth scenario - 2006 - 2010; 2015
Table 86 - Mobile subscribers by operator and annual change - June 2006
Table 87 - Mobile subscriber growth and penetration - 1998 - 2006
Table 88 - Revenue by mobile service offered - March - June 2006
Table 89 - Market share by service providers of the postpaid residential market - June 2006
Table 90 - Market share by service providers of the postpaid business market - June 2006
Table 91 - Percentage of prepaid subscribers - 2003 - 2006
Table 92 - Prepaid subscribers by network operator and market share - June 2006
Table 93 - Omni Prepaid subscribers - 2002 - 2006
Table 94 - Total SMS messages sent and annual change - 2004 - 2006
Table 95 - Total MMS messages sent and annual change - 2004 - 2006


LIST OF EXHIBITS


Exhibit 1 - 2G spectrum awarded

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