Development of the e-communications sector in Lithuania
By Ramutë Cirulytë
Recently, the Lithuanian e-communications sector has reported a fast growth of technological expansion of services and an increase in investments made into the e-communications infrastructure. The growth of investments into the electronic communications infrastructure is related to the implementation of new technological solutions and it is faster than the growth of general income of the electronic communications market.
When evaluating the electronic communications market upon income, the share of the mobile communications segment is the largest – according to data as of the first half-year of 2008 this segment‘s contribution into the common structure of the sector‘s income amounts to almost 45 per cent. The networks connection growing segment amounts 22,9 per cent, fast growing internet access and data forwarding segments - 11,8 and 2,1 per cent accordingly of the e-communications sector‘s income. A structurally decreasing fixed communications segment amounted 13,2 per cent of the sector‘s income amount.
During three recent years the number of participants of separate sectors of e-communications market has not been considerably changed, it means that there is a more intense competition in these sectors between the same participants of the market. Dynamics of the market participants’ number is presented in picture 3.
The largest growth of penetration at the end of the first half-year from 2006 to 2008 was reported in the mobile connections market: the mobile connections penetration has grown by 8.4 per cent and an amount of active subscribers per 100 residents reached 147,8 at the end of the half-year I of 2008. The internet penetration for the same period of time grew by 6,5 per cent and reached 18,8 per cent. Similar growth was reported regarding the penetration of fixed broadband connections – by 5,4 per cent. The fixed telephone communications penetration for the same period of time was nearly the same – its growth amounted only 0,1 per cent and at the end of the first half-year it reached 23,5 per cent.
During the first half-year of 2006-2008 fast growth was in the number of subscribers in the market of internet access and fixed broadband connections: the number of the internet subscribers grew by 51,1 per cent and by the end of reported period it reached 630,95 thousand; the growth of the number of broadband connections subscribers amounted 48,14 per cent, and by the end of the period concerned the numbers of the fixed broadband communications users reached 546,2 thousand. When the mobile connections market has reached its maturity, the growth of active subscribers of the public mobile telephone communications was considerably low by 5,2 per cent and at the end of the first half year 2008 amounted 4964 thousand, however, the number of the fixed telephone communications subscribers decreased by 1,1 per cent and by the end of reported period amounted 825,9 thousand.
At the end of the first half-year of 2008 the number of active public mobile telephone communications subscribers exceeded the amount of the fixed telephone connection subscribers by six times, by 7,9 times it exceeded the amount of the internet subscribers and by 9 times – the amount of the fixed broadband connection subscribers. However, taking into consideration the existing trends of growth of the internet and broadband connection subscribers this difference would be a bit less.
When analyzing income received from one subscriber per month (ARPU), it can be seen that although the amount of the public mobile telephone connections is by 6 times bigger compared to the number of the fixed telephone connections subscribers, the ARPU received from the public mobile telephone connections is by 1,7 times less compared to the public fixed telephone connections and by 2,1 times less than the ARPU received from the internet access services provided ARPU (there was not taken into account the fact that mobile connections are more personal connections, while the fixed connections are family oriented). There were no any significant changes in this indicator in any segments of electronic connections sector.
The fixed connection segment
The share of income is still the largest third in the income structure of the electronic connections market: since the half-year I of 2006 up to the half-year I of 2008 its average amount was equal to 14,5 per cent, however, upon its value the decrease in the market income of the reported period 5,7 per cent.
The duration of incoming calls in the fixed telephone connection networks is decreasing. In the half-year I of 2008 compared to the half-year I of 2006 this indicator’s decrease was equal to 4,9 per cent and amounted to 847,1 mln minutes.
By the 30th of September 2008 the telephone number transposition services in the fixed telephone connections network was used by 11,64 thousand subscribers of the Lithuanian public fixed telephone connections. Based on data contained in the European Community Commission‘s 13th report Lithuania, Malta and Estonia are the only European Union member states where the aforementioned services are being provided to the appropriate subscriber free of payment.
The mobile connection segment
Although the mobile communications market in Lithuania has reached its maturity stage, there can be noticed trends of growth as of the number of subscribers, as income and increased number of the appropriate services used. According to data contained in the European Commission‘s 13th report Lithuania remains one of the first European Union member states both as upon the mobile connections penetration, and as upon the growth of this indicator: according to data as of October 2007 the mobile connections penetration in Lithuania reached 144 per cent, while an average index of 27 other the European Union members states was equal to 112 per cent and increase in the mobile connections penetration per annum was equal to 10,7 per cent – a larger penetration growth was reported only in the following the European Union member states: Estonia, Italy, Latvia, Slovakia and Germany. An increase in the mobile connections penetration in Lithuania is one of the largest in the European Union within four recent years.
In 2007 users were actively using various services related to mobile connections: the number of SMS sent per year was annually increased by 3,8 per cent, the number of video messages sent – by 43,4 per cent, and the number of users involved in a packaged data forwarding (GPRS, EDGE, UMTS) was increased by 32,8 per cent. This growth was mainly based by the price for the mobile communications services that are one of the lowest in the European Union.
The duration of incoming calls of the public fixed telephone communication networks in the first half-year 2008 compared to the first half-year of 2006 grew by 29,9 per cent and amounted 2410,8 mln minutes.
Since the implementation of the telephone number portability service in 2005 up to the 30th of September 2008 the public telephone communications portability service was rendered to 274,73 thousand subscribers of Lithuanian mobile connections network. According to data contained in the Commission‘s 13th report the public mobile connections telephone number portability services were provided free of payment in only four European Union member states: Estonia, Spain, Lithuania and Malta. In other EU member states an average price for such services is equal to EUR 7,7.
The internet and broadband connections
The number of the internet subscribers as well as this market income is increasing fast: the growth of the number of subscribers from 2006 up to the first half-year of 2008 amounted 51,5 per cent and increase in income in the first half-year of 2008 compared to the first half-year of 2006 reached 39,9 per cent.
Technological structure of broadband connections in Lithuania is favourable for competition and further development of the market: according to data as of the quarter II of 2008 in Lithuania 44,7 per cent of broadband access was provided by xDSL technologies. Besides usual technologies based on which there were provided broadband connections, such as xDSL, cable television networks, local lines (LAN), fixed wireless communications lines in 2007 in Lithuania there were started to use the third (3G) and the third and a half (3,5G) generation mobile telephone connections technologies.
In the first half-year of 2008 the most internet subscribers, 86,6 per cent, used the fixed broadband connections technologies. Therefore, based on the growth of the internet access segment, the fixed broadband connections segment is growing as well. It should be noticed that despite the fixed broadband connections penetration in Lithuania at the end of 2007 was less than an average index of such penetration in the European Union, 20.0 per cent, but the growth of this penetration was faster compared with the European Union: from the first half-year of 2006 up to the end of 2007 the growth of this index in Lithuania was 6,6 per cent, in the European Union – 5,1 per cent.
According to data as of April 1, 2008 in Lithuania an average month payment for 1-2 Mbits broadband connections, equal to EUR 21,4, was the fifth in the list of the lowest prices in the European Union member states and an average price for 2-8 Mbits broadband connections, equal to EUR 33,3, was the eighth in the lowest prices list for such services in the European Union member states.
Since 2006 in Lithuania the number of households provided with the internet access increased by over 15 per cent and the share of households with personal computers was equal to 11,5 per cent.
According to data as of the end of 2007, one computer at least had 57 per cent of households in the European Union, while this index in Lithuania despite its fast growth, still was less and was equal to 46 per cent.
The index related to the use of computers and the internet by Lithuanian companies reached a rather high level: during 2006 - 2008 the growth in the use of computers amounted 3,1 per cent and reached 94,8 per cent and the growth of the internet users within the same period of time increased by 5,2 per cent and at the beginning of 2008 it was equal to 92,7 per cent.
The transmitting market income within the year 2007 grew by 21,6 per cent and reached Litas 345,1 million. The growth of income in the first half-year of 2008 compared to the first half-year of 2006 was equal to 24 per cent compared with the first half-year of 2007 – 5,5 per cent.
Income from cable television, microwave multichannel television, radio and television programme transmitting as well as wire radio segments in the total structure of income of electronic connections sector shall be a rather small share, less than 4 per cent. However, monetary value of the audiovisual market income received in the first half-year of 2008 compared to the first half-year of 2006, this segment income grew by 32,9 per cent up to Litas 57,9 million.
In the first half-year of 2008 in Lithuania digital television service based on IP technologies (IPTV) were being provided by 3 companies. The number of IPTV subscribers reached 28,3 thousand and per annum grew by 2,5 times. The Lithuanian Radio and Television Commission has already issued to ten companies the licenses for transmitting by broadband networks that have been issued without the appropriate tender.
According to data of the Lithuanian Cable Television Association, nowadays, the digital television services by the cable and microwave multichannel television networks are being provided by 12 legal subjects in thirteen towns of Lithuania. The digit television services provided by the cable and microwave multichannel television networks in the first half-year of 2008 were used by 29,2 thousand users, since the end of 2007 this amount increased by 2,4 times.
A digital satellite television signal can be received within the whole Lithuania. A company VIASAT that started providing paid television services since the first of January 2002, up to now is the only supplier of the digital satellite television services in Lithuania, offering over 40 coded television and 10 radio programmes as well as the possibility to receive all uncoded television and radio programmes transmitted by VIASAT. On the 1st of January 2008 VIASAT declared that the number of its subscribers in the Baltic States is about 164 thousand.
The programmes on cutting off the ground analogous television and promoting the digital television in Lithuania was approved by the Government of the Republic of Lithuania on the 24th of September 2008. Analogous ground television shall be finally replaced with digital television on the 29th of October 2012. Since that time television programmes shall not be transmitted by analogous ground networks. At present, in Lithuania digital ground television programmes can be watched by about 85 per cent of Lithuanian residents, and before the beginning of 2009 at least one digital; TV network would cover not less than 95 per cent of the territory of Lithuania.
Summarizing the trends of the Lithuanian communications market development it is possible to state that the electronic communications sector shall be further based on the fast technological development and the growth of investments into the electronic communications infrastructure as well it has been noticed the fast development of audiovisual, the internet and broadband communications segments.
 According to the list of general conditions related to the electronic connections activities (Þin., 2006, No. 131-4976), the number of subscribers of the fixed telephone connections includes the number of telephone lines used for provision of the fixed telephone connection services and the number of subscribers provided with the fixed telephone connection services by other operators.
 European Electronic Communications Regulation and Markets 2004 (10th Report), Brussels, 2004; European Electronic Communications Regulation and Markets 2005 (11h Report), European Commission, Brussels, 2006; European Electronic Communications Regulation and Markets 2006 (12th Report), European Commission, Brussels, 2007; Progress Report on the Single European Electronic Communications Market 2007 (13th Report), European Commission, Brussels, 2008.
 Progress Report on the Single European Electronic Communications Market 2007 (13th Report), European Commission, Brussels, 2008.
 Commission staff working document accompanying document to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, „Future networks and the internet. Indexing Broadband Performance“, SEC(2008) 2507, Brussels, September 2008.
 European Commission, E-Communications Household Survey, June 2008.
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