Latvia offers tender for third operator

RIGA - The Latvian Cabinet of Ministers last week approved a tender for a third mobile telephone operator in Latvia. It decided to organize a tender in order for companies to start bidding for the license early next year.

Juris Binde, president of Latvijas Mobilais Telefons, said the Cabinet's decision to allow a third operator in Latvia will, at least, put an end to the endless rumors and discussions whether it is necessary for Latvia to have one on the small market.

Still, companies offering services to operators are already preparing for their new potential customer.

"Whoever gets the license we will offer our services. We have been very successful lately," Hakan Johansson, president for Ericsson Latvia, said. "To my mind there have been 22 new mobile phone network operators starting this year, and Ericsson has signed contracts with 17 of them."

In the beginning there was NMT, also known as 1G (first generation), then it turned into TACS, an improved version, and then it was, at least in Europe, GSM, or 2G. In the United States GSM's counterpart was called AMPS. These are all mobile phone networks, and keeping up with the abbreviations is not always easy.

The latest, the Rolls Royce of mobile phone network systems, has come to Latvia, and it is Universal Mobile Telecommunication System (UMTS), which will be the type offered in the coming tender here.

UMTS is solely a digital system. It means all communications over UMTS are translated into ones and zeros - binary numbers. This allows information to travel faster and more accurately between two or more communicating devices.

Neither of the two operators in Latvia - Baltkom GSM, recently bought by Sweden's NetCom, and LMT, are licensed to the new UMTS network, but it is probably just a matter of time until they will apply for licenses.

Ministry of Transport spokeswoman Inara Rudaka told LETA, however, that presenting Baltkom GSM and LMT with licenses for operating on the UMTS system is a major problem.

She also said a competition would be a better method than a tender for issuing the third mobile network license since it is her opinion that the license will cost more at a tender, and later the operator's clients would have to pay for it.

This view is not shared by the LMT president, who believes a third operator on the scene could be a good thing.

"Customers may possibly benefit, but only if the newcomer acts in accordance with fair business practice," Binde said.

The Ericsson Latvia president agrees with Binde.

"From the consumers' point of view it would be good," Johansson said. "Increased competition will lower the prices for the users."

The mobile phone penetration in Latvia is steadily on the rise. In Riga, mobile phones are heard and seen almost everywhere.

Mobile phone use increased 61 percent this year compared to last year and is now estimated at 13 percent -14 percent of the population, according to industry estimates.

A third operator faces a competitive environment.

Binde said three operators in Latvia should be more than sufficient.

"International experience indicates that the optimum is one operator per million of population," Binde said.