Telecoms lining up for open market

According to Swedish virtual fixed-line telephone operator Terraflex's Nordic Director, Bo Jansson, it is six times more expensive to call Sweden from Latvia than the other way around.

This, among other things, is something he believes has to change in order for the Latvian economy to continue growing. It will likely be starting next January when Latvia's fixed-line telephone market opens for competition. .

The Latvian government is still locked in a legal dispute over deregulating the market with the Danish company Tilts Communi-cations and its parent company Sonera, which owns 49 percent of the monopoly fixed-line provider Lattelekom.

The Latvian government has said the market will open Jan. 1. Sonera is suing, saying the government promised it wouldn't allow competition until 2010.

Meanwhile, Terraflex and others are already making plans.

"Latvia has to open up and press down the prices," Jansson said. "It is very important for Latvia to get this to work."

Terraflex is one of the youngest companies on the Swedish telecommunication market. The company began operating there in January, but low overhead and tariffs - the lowest in Sweden - has helped the company grow fast enough that it is already set to expand beyond Sweden's borders.

A virtual fixed-line provider is a company that leases space on a physical network from another operator for a fixed, per-call rate.

Customers then have the option to subscribe to the virtual operator's service.

Because they have no line maintenance costs, virtual operators are able to charge extremely low tarrifs.

Terraflex has signed an agreement with the Swedish Trade Council in Latvia to represent them here, and the company expects to start operating in Latvia early next year.

"We have already started to translate parts of our home page into Latvian," he said.

RSL COM is another Swedish provider interested in the Latvian market. Unlike Terraflex, RSL COM is a telecoms operator and would be interested in maintaining its own network. To do that it would have to be licensed by the state.

"We are currently looking into how this license might look," said Bjorn Rydstedt, president and CEO of RSL COM. "The state, however, must want competition on the market. We would be very interested to move in on the market if the conditions were favorable."

Among Sweden's 32 operators, Terraflex and RSL COM are the only two to make a profit last year. They are both relatively young companies. RSL COM began operations in 1994.

They will undoubtedly not be the only two companies to sniff around Latvia after the market opens.

According to Per-Ake Sjoblom, director of the local office of the international telecom firm Telia, there could be several other companies already waiting.

"I think Lattelekom could lose 20-30 percent of the market share once the market is deregulated," he said. "Smaller companies with experience will be able to use the deregulation to their advantage because the bigger companies move too slowly."

All this comes as little surprise to Lattelekom.

"We are preparing ourselves for more competition," said Lattelekom spokeswoman Anita Leiskalne.