Download TELECOMMUNICATIONS SECTOR: PERRILS&OPPORTUNITIES

FOCUS - KNOWLEDGE SOCIETY
Do we need more
“STRONG REGULATION” or
“CLEVER GARDENING”?
Why focus Knowledge
Society?
Why now?
Future VISION - KNOWLEDGE ECONOMY
for Europe and for Lithuania
From Lisbon Declaration
“EU in 2010 - most dynamic and competitive Economy in the World”
towards National Agreement
“to ensure that Lithuania's economy becomes a competitive
knowledge-based economy, providing an abundance of knowledgeconsuming jobs”
and long term economic strategy
“The Goal – high tech as 25% share of GDP in 2015”
What is most important
today when focusing on
Knowledge Society?
INFORMATION SOCIETY –
the Basis of Knowledge Economy
Knowledge
Economy
(Productivity via
Innovation)
Information Society
(Ability to acquire and exchange knowledge)
In less developed Information society Knowledge Economy cannot become the
major contributor to national economy. If the majority of population is behind
the ‘Digital Divide’ only small islands of Knowledge Economy could survive.
Result: more wealthy and
prosper society
Information
Society
Knowledge
Economy
Knowledge Society
Higher productivity,
Faster income growth and stronger social protection
New possibilities for cultural development,
GROWING PROSPERITY OF THE WHALL SOCIETY
STRONG TELECOMMUNICATION INFRASTRUCTURE – THE MOST
SIGNIFICANT PART IN “KNOWLEDGE SOCIETY”
ICT
KNOWLEDGE
Access is key to Knowledge Society
Telecommunications provide access to Knowledge
Do we have
strong
Telecommunications
Infrastructure?
Fixed and Mobile Penetration
50,00%
45,00%
40,00%
35,00%
30,00%
25,00%
20,00%
15,00%
10,00%
5,00%
0,00%
Mobile voice is booming
Mobile
2002 Mobile voice telephony
penetration overcome fixed
Fixed
2002.12.
2001.12.
2000.12.
1999.12.
1998.12.
1997.12.
1996.12.
1995.12.
Mobile messaging is
rapidly gaining momentum
Omnitel mobile data messaging
exceeds Eastern Europe average by
more than 200% and Western Europe
average by 30%
Not only Penetration but also
Technology Leadership and variety of Services
•
•
•
•
Omnitel is one of the first in Europe to implement a wide range of integrated services,
One of the first in the world to start implementing GPRS technology
One of the first in the world implementing faster GPRS transmission using new coding
schemas
First I the world to trial new generation Horizon II BTS.
•“Omnitel” is the first to introduce GPRS Roaming Service
•BSA – “Omnitel” was the first in the country to provide an opportunity to receive incoming roaming calls in the
Baltic States free of charge;
•installed a wireless introduced the “SIM Plius” card offering particularly broad possibilities for each subscriber to
personalize the services received.
•Internet network (WLAN) in 2002.
•MMS service is launced in the end of September 2002.
•June, 2002 – parking by SMS solutions in Vilnius and Kaunas.
•January, 2002 - the first in Lithuania prepaid refill service via internet banking together with Hansa-LTB bank.
• December, 2001 - service “Work&Leisure” for business customers. It allows to separate business and personal
calls by account limit, work time and VPN calls.
•November, 2001 - TV chat via SMS with TV3 - SMS text is displayed on TV screen online.
•October, 2001 - joint portal OMNI.LT, which is accessed both via internet and mobile network.
•August, 2001 - the first in Lithuania mobile GIS & GPS based vehicle tracking system.
•June, 2001 - Omnitel was the first in the Baltics to introduce GPRS applications for business - applications for
brokers’ network and data collection from electricity objects.
•March, 2001- Omnitel introduced VPN service “Your team”, which enabled to provide short numbers for the
customer’s mobile subscribers and connect them into the unanimous system.
Changes in Fixed Telecommunications
The company made its first steps together with the newly-independent state.
after privatization of Lietuvos Telekomas
One of the founding members of Omnitel, Juozas Kazickas, was actively involved in the preparation of state programmes to transform the Lithuanian
This year Omnitel celebrates the 10th anniversary of its activities.
economy from the model of planned economy to a market economy.
The founding of Omnitel was one of his personal contributions to the development of the Lithuanian economy.
• LT has invested more than 500 million Euros into the state-of-the art
The importance of independent communications with the world was one of the most important issues to the state which at that time got involved in
information wars with Russia
technologies and network digitization.
• LT network digitilization rate increased from 12% to 90%.
Following the establishment of Omnitel, Lithuania opened its door to the world.
Digital
broadband
ADSL
infrastructure
reached majority of district
We did this •before
Latvia, Estonia,
Byelorussia, Ukraine
and many
other neighbouring countries.
Furthermore,
centers
the establishment
andofis
a telecommunications
available for
company
80%meant
oftheLTinflux
subscribers.
of huge private capital to Lithuania.
The first major investments into the newly-independent Lithuanian economy gave this country a real opportunity to get on its feet.
• Today Lithuania has most advanced fixed network infrastructure in
From the very start, Omnitel became one of the largest investors into the Lithuanian economy and one of the largest Lithuanian companies.
Baltic States.
The founders of Omnitel set a goal to bring the latest telecommunications technologies to Lithuania and provide the broadest possible range of
The idea of Mr Kazickas to found a telecommunications company which would be independent from the Russian dictatorship was approved and
encouraged in 1991 by the Lithuanian Government of that time.
services.
The successfully chosen operational strategy and the philosophy of a company striving for leadership allowed fast development of activities and
formed a basis for securing a leadership position for this company working in the field of telecommunications.
TELECOMMUNICATIONS SIGNIFICANT
PLAYER IN NATIONAL ECONOMY:
Capital Investment 2001
Telecomunication Revenue growth
15%
35%
30%
Other
Telco sector
25%
85%
20%
15%
VAT Inflows 2001
9%
10%
5%
Other
0%
1997
1998
1999
2000
2001
Telco sector
2002
91%
Contribution to 2002 GDP: 4.2%
Do we have
effective competition?
MARKET WITH EFFICIENT COMPETITION:
- WHAT THE REGULATION SHOULD BE
• Regulation should be more forward looking and preventive against
abuse of dominance in a pursuit of a fully competitive environment;
• New commercial models and services must be allowed to develop to
meet changing consumers’ demand without regulatory intervention;
• Sector-specific regulation should be applied only for the markets
which are not effectively competitive;
Consumers Opinion
How much are listed markets free and liberalised?
10
8,48
9
8,1
8,06
7,82
8
7,38
6,97
6,84
7
6,22
6,07
5,68
6
4,56
5
4,12
4
3
2
1
Services
SPINTER 2003
Restaurants
Mobile tel.
Drugstores
Banks
Gasoline
Public
Stations
Transportation
Utilities
Retail
Education
Healthcare
Fixed tel.
IS TELECOMMUNICATIONS’ MARKET
THE MARKET WITH EFFECTIVE COMPETITION?
Market is effectively •Differentiation in costs structure;
competitive, if there • Competitive differentiation in products and
services;
is :
•Continuous decrease in wholesale and
retail prices;
•Aggressive customer acquisition;
•Rapid technological evolution;
•Increasing demand from the customers.
COMPETITIVENESS FACTORS IN 1998
FIXED
MARKET
MOBILE
MARKET
Competitive differentiation in products and
services
NO
YES
Differentiation in costs structure
NO
YES
Continuous decrease in wholesale and retail
prices
NO
YES
Aggressive customer acquisition
NO
YES
Rapid technological evolution
YES
YES
Increasing demand from the customers
NO
YES
Before Fixed Incumbent Privatization
and Fixed Market Liberalization
Fixed market was not competitive.
Mobile market – effectively
competitive.
COMPETITIVENESS FACTORS IN 2003
FIXED
MARKET
MOBILE
MARKET
Competitive differentiation in products and
services
Emerging
YES
Differentiation in costs structure
Emerging
YES
Continuous decrease in wholesale and retail
prices
Emerging
YES
Aggressive customer acquisition
Emerging
YES
Rapid technological evolution
YES
YES
Increasing demand from the customers (Voice)
NO
YES
Increasing demand from the customers (Data)
YES
YES
After Fixed Market Liberalization
there are first signs of competition in
Fixed market. Competition in Mobile
market is still highly effective.
IS THE REGULATION ALLWAYS EFFICIENT?
Least objectively required
- Requirement to compensate invoice payment costs;
- Requirement to combine statement&invoice into one document.
Enhancing
- Limited possibility for credit check;
Balanced
- Outdated ‘invented here’ metrology requirements;
TELECOMMUNICATIONS IN LITHUANIA
Telecommunications sector
is vital to the development of
Knowledge Societyc and thus
the Lithuanian Economy, although
it’s role – not realised.
TELECOMMUNICATIONS IN LITHUANIA
Effective development of
telecommunication services and
effective competition is possible
only under the conditions of the
least objectively required.
Mobile market – is the market with
the effective competition
Do we need something
more then regulation?
The need to think Different
“Liberalization and Modernization Mindset is
not longer enough. Building Knowledge
Economy Advantages means adopting new
type of Mindset – Knowledge Economy
Mindset.”
J-F Richard, Vice-President, Europe, World Bank
The need to think Different
Liberalization
Mindset
Modernization
Mindset
Knowledge-based
Economy Mindset
Is about:
Undoing things
Building things
Building winning
opportunities
Creates:
•Freedom
•Fluidity
•Even playing field
•Modern institutions
•Rule of law
•Good basic business
environment
• Vision
• A winning mentality
• Clusters
Main
Focus:
Stability, incentives
Productivity catch-up
Becoming globally
competitive
Domain
Economy
Economic, Social
Societal
Government
Role:
• Get out of the way
• Stop being an
operator
• Become a good
regulator
• Become a challenger
• Become an integrator
Anxiety:
Did you liberalize
too fast?
Did you modernize too
slowly?
Did others leave you in
the dust?
J-F Richard, Vice-President, Europe, World Bank
Building a KBE advantage means
moving today, not tomorrow…
especially for accession countries
Think Fast
DRUCKER’s 1. Leapfrogging is best done in times of extreme
change like these
POINTS AT WB
2. Hurry to create a stable middle class of
KE PARIS
knowledge technologists
CONFERENCE:
3.
Your agriculture + manufacturing  services
labour force redeployment will be major, so start
early
MORE DOWN- 1. You have little time to tilt your accession strategies
towards KBE
TO-EARTH’S
2. Use e-Europe + and Intl. Organizations for help
POINTS:
3.
But don’t wait: begin your own actions, support your
first movers
The Role of the Government
“Government should act the Gardener: to seed,
fertilize, protect and grow the Champions.
Champions will make new Champions.”
Bruce Arthur, Economist ,Professor, Santa Fe University
Do we have new KE
“Gardener” mindset?
Omnitel pioneered Knowledge
Society Development Initiative
joining leading ITT companies
and Banks
WINDOW TO THE FUTURE
ROLLING SNOWBALL Model:
From Idea to the Massive Movement
MASSIVE
MOVEMENT
More Partners Joined
NEW FORCES
FIRST
STEPS
NEW
INTIATIVES
Enthusiastically welcomed by Local
Governments and Communities
IDEA
Lithuanian Government joined
INNITIATIVE
NEW ATCHEVEMENTS
Unique Internet penetration growth
from 10% up to 21% was achieved
only in three quarters!
Today it evolved into National Public/Private Knowledge
Society program with central and local Governments and
leading ITT Business acting together
Result of national wide commitment to Information Society
Development - Business and Private investment into ITT
2002 Non Public spending on ITT in Lithuania
(mln. Euros)
Operator's investments into network infrastructure
Business and consumer investments into telecommunication devices
Business and consumer investments into hardware and software
Business and consumer investments spending on IT services
Business and consumer spending on telecommunications
Total
200
60
150
60
530
1000
One billion Euros is very impressive amount for such small countlry like Lithuania!
(for example 2002 Lithuania total GDP is estimated about 14,7 billion Euros)
Why we need even more
“Gardening”
When regulation is reactive
the “gardening” is proactive
The talk you hear today
about adapting to change is
not only stupid, it’s terribly
dangerous. The only way
you can manage change is
to create it. By the time you
catch up to change, the
competition is already
ahead of you.
– Peter Drucker
NEW EUROPE needs Exponential Growth!
Internet penetration in Lithuania
50,00%
45,00%
40,00%
35,00%
30,00%
25,00%
20,00%
15,00%
10,00%
5,00%
0,00%
25,0%
20,0%
Mobile
Fixed
MASSIVE
MOVEMENT
15,0%
NEW FORCES
FIRST
STEPS
NEW
INTIATIVES
IDEA
INNITIATIVE
NEW ATCHEVEMENTS
10,0%
Our experience show that
sometimes it is possible to do!
2002.12.
2001.12.
2000.12.
1999.12.
1998.12.
1997.12.
1996.12.
1995.12.
5,0%
0,0%
2001 1Q 2001 2Q 2001 3Q 2001 4Q 2002 1Q 2002 2Q 2002 3Q
Future welfare of New Europe heavily depends of how successful new EU
entrants will transform their National Competitiveness from “Cheaper
Labor” to “Higher Productiveness and Innovativeness”.
Lithuania was very successful in Liberalization and Modernization.
Today is the time to make another step forward – adopt new
KNOWLEDGE ECONOMY GARDENER MINDSET
Focus on Knowledge Society the only Way
to Long Term Nation Prosperity
Government plays a Key Role
The FIGHT time is over
We are already liberated and modernizing fast!
It’s TIME TO GARDEN!!!
THANK YOU!
[email protected]
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