Executive summary
Latvia's future competitive fibre infrastructure needing effective regulation
Latvia’s telecom market has been shaped by the country’s ascension to the European Union in 2004 and its adoption of the EU’s 2002 regulatory framework for communications as well as the revised New Regulatory Framework. This was devised in 2009 and must be transposed into Latvia’s national laws by mid-2011. Latvia is also a member of the Economic and Monetary Union of the EU, but it is not expected to introduce the euro until 2014 at the earliest.
Although Latvia’s economy showed considerable growth following independence from Russia, this was swiftly halted in 2008 as a result of the economic crash. Real GDP contracted 18% in 2009, the highest among the EU27 member nations. This improved in 2010, with an expected GDP decline of 1%, while growth of 3.3% is anticipated for 2011. This has had a profound effect on the telecoms market, with consumer confidence in the economy resulting in lower expenditure. The incumbent, Lattelecom, as well as the main mobile network operators, has reported lower revenue since 2008, creating a knock-on effect in the ability to fund network upgrades. Nevertheless, in contrast to many other economic sectors, spending on telecom services will be buttressed by the utility nature of most services.
Latvia’s broadband market continues to suffer from inadequate progress on local loop unbundling, with operators finding it easier to build their own networks rather than front the cost of some of the most expensive wholesale access charges in the EU. Nevertheless, the revised New Regulatory Framework presents an opportunity to introduce more effective regulation, particularly regarding fibre networks. Plans by the main broadband provider, Elion, to build a national fibre network cannot be matched by smaller players, and these will therefore be encouraged to seek wholesale fibre access.
A healthy digital TV market is evident, with offerings available from established cable TV, satellite, digital terrestrial TV and broadband TV providers. Digital TV uptake is increasing rapidly, and although parallel analogue broadcasting exists, the switch to digital terrestrial TV was completed in mid-2010, many months earlier than originally scheduled.
Four GSM/CDMA/WCDMA mobile network operators vie for customers in a market where SIM card penetration exceeds 100%. The experience of Elisa and Tele2 in other Nordic markets in building and commercialising LTE networks will stand Latvia in good stead in coming years, as the country edges away from mobile voice services to embrace high-end mobile data services. In common with many other EU markets, growth in the number of mobile subscribers will continue steadily during the next few years though the overall subscriber count will be lower to 2012 as operators rationalise and discount dormant SIM cards.
Key telecom parameters – 2009; 2012
Sector
| 2009
| 2012 (e)
|
|---|
Broadband:
|
|---|
Fixed broadband subscribers (thousand)
| 410
| 560
|
Fixed broadband penetration rate
| 19%
| 27%
|
Mobile broadband subscribers (thousand)
| 204
| 270
|
Subscribers to telecoms services:
|
|---|
Fixed-line telephony (thousand)
| 590
| 570
|
Mobile phone (million)
| 2.36
| 2.32
|
Mobile SIM penetration (population)
| 104%
| 102%
|
(Source: BuddeComm)
Market highlights:
- Fibre rollouts are dominated by Lattelecom, which offers up to 500Mb/s access. Although other players offer services for greenfield sites and in some urban areas, the dominance of Lattelecom will necessitate appropriate regulatory measures to ensure competitor access to ducts and reasonable wholesale prices.
- Digital TV uptake has accelerated, with satellite and cable TV dominating digital access. Analogue switch-off, originally scheduled for late 2012, was completed in mid-2010 since many national TV channels terminated analogue transmission earlier as a cost saving measure. This has placed Latvia ahead of most EU countries.
- The question of issuing digital dividend frequencies not required for digital broadcasts is on the backburner, though such future use may be complicated by likely interference problems in border areas with Latvia’s non-EU neighbours, the Russian Federation and Belarus, where analogue switch-off is scheduled for 2015. Securing sub-GHz spectrum for mobile broadband use will become increasingly pressing in coming years to alleviate the anticipated pressure on existing spectrum.
- Increasing competition in the mobile broadband market is evident as all four mobile networks offer increasingly generous amounts of bundled data. The challenge for mobile operators in coming years will be maintaining service levels across networks under heavy traffic loads.
This report provides a comprehensive overview of trends and developments in Estonia’s telecommunications market. The report analyses the mobile, internet, broadband, digital TV and converging media sectors. Subjects include:
- Market and industry analyses, trends and developments;
- Facts, figures and statistics;
- Industry and regulatory issues;
- Infrastructure;
- Major players, revenues, subscribers, ARPU;
- Internet, IPTV;
- Mobile voice and data markets;
- Broadband (FttH, DSL, cable TV, wireless);
- Convergence and Digital Media;
- Broadband market forecasts for selective years to 2020.
Data in this report is the latest available at the time of preparation and may not be for the current year.
Henry Lancaster
March 2011
