The Landscape of Information Technology in Latvia:

Liberalization and Deregulation  

 

Overview: In 1998 and 1999, significant progress was made toward improving information technology in Latvia.  This spurt of activity resulted in and was propelled further by the National program "Informatics," a complex and ambitious target program for the period from 1999-2005, consisting of 13 subprograms.  However, when the privatization of Lattelekom entered a court of arbitration to determine the end date of its monopoly, this seemed to curb all other activity as well.  In the fall of 2001, the Latvian Parliament (Saeima) has begun reviewing several of the proposed laws and legislation and perhaps progress has been re-started as Latvia works toward a more liberalized market economy and membership with the European Union.

 

The Government of Latvia is restructuring the telecommunications sector to better meet the needs of national economic and social development in an increasingly information-intensive regional and global economy¹³. The government is also working to harmonize the telecommunications sector and align it with EU requirements, principles and practices. The reform of the telecommunications sector and its was outlined in the  telecommunications sector policy for Latvia, which was approved by the Cabinet of Ministers in 1998¹³. The policy envisions:

·       opening the telecommunications market to new providers and competition;

·       establishing a National Regulatory Authority independent from the government and the operators;

·       privatizing the state ownership interests in Lattelekom, Latvia’s telecommunications supplier¹³.

This policy included the end of Lattelekom’s monopoly in January 2003.  However, the sale of the state’s majority stake (51%) in Lattelekom was complicated by the renegotiations of the end of Lattelekom’s fixed-line monopoly, which was set to be moved forward from 2013 to 2003.  When negotiating its World Trade Organization membership, the Latvian State made a commitment to the WTO to revoke Lattelekom’s monopoly at the beginning of 2003, but according to the agreement between Latvia and Tilts, the exclusive rights are valid up to the end of 2013.  The Latvian Privatization Agency ( LPA) engaged in negotiations with Tilts Communications, the foreign consortium (90% Sonera of Finland, 10% International Finance Corp of the World Bank) which owns 49% of Lattelekom, to find a compromise on an acceptable compensation package. Because Tilts and the Latvian government did not reach an understanding on the compensation to be paid for shortening the period of exclusive rights, Tilts brought the matter before a Court of Arbitration. Deliberations on the case are in progress as of publication of this page.  

Aiming to speed up completion of enterprise privatization, the government decided last year to involve international investment banks and consultants in the divestiture of the remaining large enterprises. The Coordination Board for the National Program "Informatics" includes representatives of all ministries, the biggest telecommunications and data transmission operators, manufacturers of hardware and software and academic institutions. Its main task is to ensure implementation of the Program in accordance with the defined and approved priorities, to assess and audit the basic projects, and to regularly update the Program¹³.  This support by independent professionals should help to increase the transparency and efficiency of privatization, as well as take enterprise-related economic decisions out of the political sphere. So far this policy has met with relative success. 

 

Liberalization Status table (adapted slightly from Klevitsky and Paradise, 1999)¹⁰

Infrastructures	Liberalization Status	Comments
Public telecommunication network	Monopoly--end of monopoly in either 2003 or 2013 (depending on court's ruling)	Lattelekom (Telecommunications Law)
Local networks for voice telephony
Leased Lines
Alternative Infrastructure (railways, utilities, highways, etc.)	Not permitted to provide public services	Latvian Railway, State Radio & TV Center, Latvenergo, etc.
Broadcasting and cable TV	Fully liberalized market	Up to 100 radio, TV, and cable TV providers, mostly small local ones.
Voice Telephony
Local communication	Monopoly--end of monopoly in either 2003 or 2013 (depending on court's ruling)	Lattelekom (Telecommunications Law)
Domestic long-distance
International communication
Provision of voice services to cosed user groups
Mobile Communication
Analog	Monopoly--end of monopoly in either 2003 or 2013 (depending on court's ruling)	LMT
GSM digital	Partially liberalized market	LMT and Baltcom GSM
DCS 1800 digital	Partially liberalized market	LMT and Baltcom GSM
Paging	Open market	Two operators (Info, Baltcom)
Satellite communications	Partially liberalized market	Lattetelekom (Eutelsat)
Data Transmissions	Fully liberalized market	TCP/IP and X.25 services
Value Added Services		Up to 50-60 private companies
Internet Service Provision		23 ISP
Equipment Provision		More than 100 private companies

   

 

Please refer to the "Telecommunications Infrastructure" page in this site for additional information about the progress of the privatization of Lattelekom, the monopoly company in fixed public telecommunications services in Latvia, as well as pricing comparisons.   Please also refer to the "Legal Environment" section for additional information.

 

   

 

 

Last updated December 13, 2001