Phone upgrades slow to radiate

  • 2000-05-25
  • By Lauris Rinmanis
RIGA - Ivars Eisaks is not addicted to the Internet.

"I would like to get an Internet connection, but I am afraid that I
can't afford to pay long distance calls to Lattelekom, and we don't
have any local providers here in Saldus," says Ivars Eisaks, a local
representative of a large company and a one-month computer owner.

Saldus is not the only town in Latvia where the Internet access is only
through long distance calls to Lattelekom, which basically allows
Internet access only through the company's own phone lines, excluding
cheaper radio links which are beyond Lattelekom control.

Since 1994 when Lattelekom acquired a monopoly interest, it has
expanded and improved the company structure, company intranet, very
often leaving primary functions - providing good telephone connections
to the people of Latvia - aside. A perfect example is the suburb
Babite, about 10 km outside Riga and Melluzi, part of Jurmala, where
non-Lattelekom Internet users have problems getting even very slow
connections.

In this year's 4th International Conference and Exhibition of
Informational Technologies and Telecommunications in the Baltic States
"Baltic IT&T 2000" Lattelekom presented new data transfer services
(Ultra DSL, Fast Data Net, ISDN 2+ DATI)

The Ultra DSL presentation had a bold headline "DSL - new opportunities
for Internet users in Latvia!" promising up to 8Mbit/sec Internet
connections to "everyone." This "everyone" includes the center of Riga,
and maybe 80 percent of the capital city until the end of the year.
Then large towns will come, and after a few years, or so, smaller
places. Before such Internet connections are possible, there must be
good telephone lines and connections which Lattelekom is still unable
to provide to all citizens of Latvia, creating a gap between the people
of Riga and a few larger towns on the one hand, and other people in
Latvia who do not protest. That they do not know about service is their
fault and not Lattelekom's fault, said a board member.

"Market defines the choice of people. We can't decide in their place.
Maybe they don't want to have a phone at all. There is a monopoly,
theoretically, but practically it doesn't exist any more. You can
choose LMT, Baltcom, or a satellite connection. Everybody has a choice,
and if people don't want or are unable to get a phone - they are lazy
or uneducated - then that's their problem, not Lattelekom's," said
Viktors Kulbergs, the president of Latvian Chamber of Commerce and
Industry and a member of the board of directors at Lattelekom Ltd.

In 1999, the Cabinet of Ministers adopted a national program,
"Informatics," which states that the "information society's advantages
should be available for every member of society, and everybody should
be able to make use of it for his benefit.

"The fundamental goal of the national program Informatics (1999 - 2005)
is to integrate Latvia into this global development process and to form
an information society in Latvia."

The United Nations Development Program's yearly research on the
development of the nation recommends ending the monopoly of Lattelekom
as soon as possible.

"The development of the telecommunications infrastructure must be
promoted by speeding up market liberalization and by achieving prompt
elimination of the Lattelekom monopoly in the area of basic
telecommunications services. Quality telecommunications services and
Internet connections must be ensured nationwide at a socially
acceptable price," says the report.

Attention is turned to Lattelekom also by the report of the
Parliamentary Investigation Commission of the performance of the
agreement signed between the Republic of Latvia, Tilts Communications
and Lattelekom Ltd., analysis of the tariff policy, as well as the
compliance of operations of authorized representatives of the
Telecommunication Tariff Council with requirements of the law "On
Telecommunications."

The commission's report said Latvia's losses from Lattelekom's
performance can be measured in several hundred million lats.
Lattelekom's monopoly has had a negative impact on the economy of
Latvia and should be reduced, that the agreement contains many
deficiencies discriminatory for Latvia and should be annulled.

The report said also that Lattelekom hasn't fulfilled its business plan
and promises, on which the contract was signed: the promise to create
jobs, update Latvia's phone infrastructure evenly, setting up the
production of cables and payphones.

Lattelekom reacted with announcements. The representative of the
International Finance Corporation, which owns 10 percent of Sonera
holding company Tilts Communications, Douglas Gustaffson, said "this is
one of the worst analyses I've ever seen."

Lattelekom's president, Gundars Strautmanis: "Lattelekom should be
judged by the results, not by the exact fulfillment of the business
plan. We can't comment on numbers because we don't know their origin."

Latvia Privatization Agency director general Janis Naglis: "There are
more than 50 mistakes in the facts of the report."

Naglis assured that "talks of reducing Lattelekom's monopoly from 2013
to 2003 will continue after the approval of the government."

"It's not yet sure how big the compensation from Latvia to Tilts
Communications is going to be, but we can be sure it's not going to be
small," Naglis said.

Commenting on the gap between the agreement and the present law of
Latvia "On Telecommunications," Kulbergs emphasized that even in the
changes of legislation, the agreement works according to the laws at
the time of signing the monopoly agreement. Therefore the changes of
the agreement are not fair to Lattelekom, said Kulbergs, although there
is a point in the agreement that indicates that agreement should be in
conformity with Latvian law.

On the other hand, in all tenders the LPA's decisions are based mostly
on the business plan, but the business plan is "changing, no one
works perfectly according to the business plan," Kulbergs said.

In a time when the world fights against monopoly, Latvia might become
one of the examples of what happens when monopoly is given a green
light and hasty decisions have been made.