1 psl Investments in Lithuanian e-communications infrastructure

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Investments in Lithuanian e-communications Investments in Lithuanian e-communications infrastructureinfrastructure

Vaiva LazauskaitėCommunications Regulatory Authority

LITHUANIA

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2000-2004 - a period of constant decline in investments; Since 2004 we can observe a slight increase; On 1st May 2004 the NRF came into force in Lithuania.

Might there be any causal nexus between these two issues? Might the increase of investments be explained by

implementation of NRF? How strong are relationship between regulatory regime and

investment level?

Investment: some statistics and factsInvestment: some statistics and facts

588619

729778

213

194

112

9079 80

100

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006*

0

100

200

300

400

500

600

700

800

900

Market value (revenue) Investments

Dynamics of Lithuanian e-communications market value and investments, mln. EUR, 2000–2006.

Source: RRT

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Investment: some statistics and factsInvestment: some statistics and facts

The coverage of UAB „Omnitel“ EDGE network, 2005Source: www.omnitel.lt

The coverage of UAB „Bitė Lietuva“ EDGE network, 2005 Source: www.bite.lt

In 2004 we already had:

3 GSM and GPRS networks, covering the whole territory of Lithuania;

The fixed public telephony network with digitalization level of more than 90 per cent;

A fair part of the territory of Lithuania was covered by EDGE networks with connection speed-rate up to 4 times faster compared to GPRS technology.

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Investment: some statistics and factsInvestment: some statistics and facts

Source: RRT.

Šaltinis: RRT.

The coverage of broadband connections in Lithuania, 512 kbps

2004 m. 2005 m.

At the end of 2005 the majority of Lithuanian

inhabitants and organizations had a possibility to receive

broadband connection (especially in urban areas)

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Investment: some statistics and factsInvestment: some statistics and facts

In February 2006 3G (UMTS) licenses were issued.

All 3 operators started commercial launch in 2006: UAB „Omnitel“ - in February, UAB „Bitė Lietuva“ – in April, UAB „Tele2“ – in December.

Today 3G services are accessible in 8 biggest cities of Lithuania - Alytus, Kaunas, Klaipėda, Marijampolė, Palanga, Panevėžys, Šiauliai ir Vilnius – and the coverage amounts about 29 per cent of households in Lithuania.

Since 2006 we have a new wave of investments in e-communications sector

3G (UMTS)

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Investment: some statistics and factsInvestment: some statistics and facts

DVB-T DVB-C DVB-S IPTV Mobile TV “Triple play”

July 2006 – the beginning of DVB-T broadcasting in Lithuania. 5 TV stations are operating in Vilnius at the moment, offering the possibility for about 25% of households to receive DVB-T services.

Balticum auksinis – the first DVB-C TV programs package, introduced in 2004. Balticum auksinis started from 6 TV program in 2004, followed by 40 programs in 2005 and 60 programs in

2006.

VIASAT offers DVB-S programs package, which consist of 40 TV and 10 radio programs.

October 2006 - the beginning of IPTV broadcasting. Incumbent operator TEO LT, AB offered GALA TV services.

Commercial or pilot broadcasting provided by other service providers –e.g. , www.tvaidas.lt , www.skynet.lt,

www.tiltas.lt/iptv ir t.t.

In 2005 two mobile operators started the provision of mobile TV services. Up to 21 TV programs might be seen on 3G network.

Voice + Internet + TV

Digital TV

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Investments into e-communications sector are cyclical. The duration, periodicity and ect. of these cycles are determined by many factors: Current infrastructure; Current and potential competition; Technological development; Existing and potential demand; Timing and correctness of regulatory decision.

In the near future the increase of investments in Lithuania is expected mostly due to development of new technologies in the country: Further development of 3G networks; Digital TV networks; Investments into wireless broadband networks (especially after the issue

of 3,5GHz licenses).

Investment: some statistics and factsInvestment: some statistics and facts

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Investment: driversInvestment: drivers

Source: London Economics

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Investment: driversInvestment: drivers

ECTA Regulatory Scorecard 2006

0 50 100 150 200 250 300 350 400 450

Poland

Greece

Germany

Belgium

Czech

Austria

Finland

Portugal

Ireland

Hungary

Spain

Italy

Sweden

Netherlands

France

Denmark

UK

INSTITUTIONAL FRAMEWORK

GENERAL MARKET ACCESSCONDITIONS

EFFECTIVENESS OFIMPLEMENTATION

Source: ECTA Correlation coef.: 0,64

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Do we want “social” competition, where the main aim is to ensure that every competitor is equal, or do we want “real” one, where only innovative, creative, fast and efficient market players are rewarded by the market regardless they are incumbents or new entrants?

Do we want competition, markets, innovation and technological development shaped by regulation, or do we want regulation to respond to clear market failures?

Do we want (if will) regulatory enforced ICT’s, but not users utility maximising ICT’s or visa versa?…

Main principlesMain principles

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Main principlesMain principles

For appropriate response to undergoing changes regulators have to answer several questions:

are we – regulators - open? non-discriminatory? walls’ removers? legal certainty providers? or … do we think, we are better experts than the market?

the issue is our attitude to any changes…

More reliance on market decisions and priority to minimum intervention to the market should be considered.

Changing the attitude…

Infrastructure-based competition, which is sustainable in the long term, requires from regulators to ensure:

•Regulatory neutrality and certainty.

• Sufficient access to the inputs, administrated by the state (esp. radio frequencies).

•Appropriate remedies to the real (not possible) market failures.

• Appropriate costing, providing for the right signals to the market and promoting ladder of investment.

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Main principlesMain principles

Service convergence, vertical integration between transport and content, triple or even quadruple play bundles are increasingly common around the globe... What this really means:

• Move beyond mere pipeline operator…

• Creation of “walled garden”…

• Discrimination of traffic…

• or just costs (thus and prices) minimisation and new innovative services to users?

Clear boundaries between content and transport is dwindling away…

Coping with new competition problemsProprietary platforms versus open platforms

•Equality of input

•Accessibility

•The public??

Where is the balance?/ Whom to protect?Where is the balance?/ Whom to protect?

•Creativity and first mover advantage

•Innovations and new ideas

•The author

VoIP expansion: has not only undermined the business and pricing models of industry making most of its money from voice calls,

but has also raised the “diffusion of nationality of resources” issue as well...

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Main principlesMain principles

International – global approach

With globalisation and convergence we cannot address the situation in a piecemeal and national fashion. As online services lead to truly global usage patterns and ICT market players expand their business boundaries, regulation cannot be geographically isolated.

A number and magnitude of mergers and acquisitions in the past couple of year is impressive:

17,7 billion £

2,6 billion $ 6,9 billion $ 67 billion $

8,4 billion $ 11 billion $

on the way1,65 billion $109 billion $

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Thank you!Thank you!Vaiva Lazauskaitė

Communications Regulatory AuthorityAlgirdo 27, Vilnius, Lithuania

tel. +370 210 5689E-mail: [email protected]