Commission Report (2002): Latvia

• Progress since the last Regular Report
• Overall assessment
• Conclusions

Chapter 19: Telecommunications and information technologies

Progress since the last Regular Report

Since last year`s Regular Report, Latvia has made good progress in aligning with the acquis in the area of telecommunications and has also improved the administrative capacity, notably of the regulator.

The new Law on Telecommunications, adopted in November 2001, provides the legal basis for full liberalisation of the telecommunications market as of January 2003. The Law aims at aligning Latvian legislation with most of the acquis requirements. Amongst others, the Law provides for the expiry of the exclusive rights that are granted to the national operator Lattelekom, the monopoly provider, regarding the provision of telecommunications services through the fixed network as of January 2003. No progress can however be observed as regards the further privatisation of the national operator.

As regards the regulatory framework, the new Law on Telecommunications also transposed a number of acquis-related provisions, including provisions on licensing, tariffs, universal service provisions, interconnection, data protection, independent management of the national numbering plan and the frequency spectrum as well as number portability. Whiled most of the regulatory functions have been assigned to the Public Utility Commission (PUC), which started to exercise its regulatory functions for telecommunications in October 2001, responsibility for telecommunication policy and certain regulations remain with the Ministry of Transport. Since then, implementing legislation required under the transitional arrangements of the law has been adopted in accordance with an implementation plan. By May 2002, several regulations such as on general permits and licenses, undertakings with significant market power, the methodology for tariff calculation, dispute settlement as well as regarding the general principles on universal service and operation of the Universal Service Fund were adopted.

The capacity of the regulatory body has been enhanced through further staff increases (now 66 persons) and an increase in the budget for 2002 to LVL 1 million (EUR 1.8 million).

In the field of information technologies, in December 2001 the Government adopted the Action Plan for implementation of the Concept on Electronic Commerce. Latvia`s national programme for the eEurope+ Action Plan has been updated to include the concept of e-Latvia devoted to the inclusion of everybody in the process of information society development.

Since the last Regular Report, no new legislative developments were registered in the area of postal services other than the issuing of standards for universal postal service in September 2002.

Overall assessment

Latvia will need to transpose the updated telecommunication acquis before accession and to complete the implementation procedures as soon as possible afterwards.

Concerning the liberalisation of the telecommunications market, Latvia should enhance efforts to facilitate entry to the part of the market so far monopolised by Lattelecom. Latvia has committed itself under the WTO as well as under the negotiations for accession to fully liberalise the telecommunications market as of January 2003, instead of 2013 as originally planned.

In 1998, the Government had already decided to privatise the state`s remaining 51% shares of Lattelecom, but this has been delayed by a contractual dispute.

Penetration in mobile services has reached 30%. There are two GSM operators, but MTS licences have yet to be issued. Fixed network penetration reached 32% and is now static. Network modernisation and price rebalancing should be continued.

Regarding the regulatory framework, Latvia has transposed most of the core norms of the existing EC telecommunications acquis. Further efforts have been made to improve the administrative capacity and legal base for the functioning of the telecommunications branches of the PUC. The separation of functions required by the acquis is however prejudiced by the Ministry of Economy`s combined responsibilities for presenting PUC regulations to the to the Government for adoption and for privatisation of the state`s shareholdings in operating companies.

Latvia has adopted a strategy in June 2002 in order to be able to evaluate the economic implications of fully implementing the universal service acquis so as to achieve affordability. A decision on this point remains outstanding.

In the field of postal services, legislative alignment has to be completed regarding the licensing regime, universal service providers, reserved area, requirements for tariff principles, transparency and separation of accounts for postal service providers as well as standards for quality monitoring of postal services.

Conclusions

In its 1997 Opinion, the Commission concluded that Latvia would have some difficulty in meeting the acquis in the medium term because legislative reform was progressing slowly and existing commitments concerning exclusive rights for the public operator were a barrier to liberalisation. The Commission added that greater competitiveness for the public operator must be achieved to attract the investment needed to modernise and face up to competition.

Since the Opinion, and especially over the last year, Latvia has made good progress in aligning with most of the acquis requirements as well as in strengthening the administrative capacity in this field.

Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this domain.

In order to complete preparations for membership, Latvia`s efforts need to focus on the opening-up of the fixed telecommunications market to competition, on adopting implementing legislation, on improving the effectiveness of the regulator and on completing legislative alignment on postal services.

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