VILNIUS - Tele2, one of the leading telecommunication investors in the Baltics, launched a three-country wide assault of state policy this week by announcing it would cease further investments in fixed-line operations in Estonia, Latvia and Lithuania due to the three states' lackadaisical approach to deregulation.
The company said on Oct. 17 that, although it would continue servicing existing customers, it would stop developing fixed-line products.
"We regret that, given the current regulatory environment in Estonia, Latvia and Lithuania, we do not, at this point, see any alternative other than to stop further investments in our fixed line operations," Lars-Johan Jarnheimer, CEO and president of Tele2, said.
"The implementation of the new EU legal regulatory framework is very late, and the necessary work required to be done by the local regulatory authorities to ensure an open and competitive market has barely started," he said.
Tele2, which is Swedish-owned, has for years run into difficulties trying to penetrate the Baltics' fixed-line markets, which in each country is dominated by one company 's Elion, Lattelekom and Lietuvos Telekomas. All three are controlled by TeliaSonera, a Finnish-Swedish telecommunication giant, though each government retains a significant, if not majority stake, in its respective company.
Tele2 executives in all three companies make it clear that the governments had failed to deregulate the markets.
"The government and the Communications Regulatory Authority have failed to create equal opportunities for competition with Lietuvos Telekomas in the fixed-line business, as required by the EU directives," Petras Masiulius, CEO of Tele2 Lithuania, said.
He added network interconnection charges set by the authority were too high and prevented Tele2 from providing services and competing in the market on equal terms with Lietuvos Telekomas. Competing with the former monopoly operator in the fixed-line telephony and broadband Internet business was impossible without sufficient state support, Masiulis said.
In Latvia, Tele2 Latvian company acting director Petr Kirdeika told the Baltic News Service, "The regulator has set too high a charge for network usage and has done nothing to make the historic monopolist [Lattelekom] to start offering accessing services which on the turn could open the way for honest competition based on reasonable conditions."
Kirdeika added, "Unfortunately, we must admit that the residents of Latvia will have to overpay several millions of lats annually for the lack of genuine competition on the fixed communications market."
In Estonia, Tarmo Osman, chief of regulatory affairs and interconnection services for the Baltic region at Tele2, said, "The decision is the result of the state's inability to ensure equal conditions for service providers in competition with the former monopoly Elion."
He said that, in order to foster competition, the state must exercise effective control over wholesale offers by Elion, prevent dumping and ensure free access to the means necessary for providing telephony and Internet services.
"Elion continues to be in a dominant position and is sitting in two seats 's being both network operator and service provider. The state has been unable thus far to control Elion's pricing policy and has enabled Elion to prevent access to the broadband market," Osman said.
The board chairman of Tele2 Eesti, Ullar Jaaksoo, said the disappearing of competition made the situation significantly worse for consumers as the company with significant market power no longer was under pressure to offer a better price.
Tele2 said it would continue developing its mobile phone operations in all three countries.