5 Jul 2011Lithuania Broadband Overview

Despite deregulation, the incumbent TEO (previously known as Lietuvos Telekomas) continues to dominate the telecommunications market in Lithuania. The operator has retained its monopoly not only due to technological innovation, but also due to exclusive rights awarded by the State. The Law on Telecommunications passed by the Lithuanian government on 9 June 1998 contains a clause which granted TEO the exclusive right to provide fixed telephony services until 31 December 2002. Since then, privatisation and deregulation of the telecoms market has had some positive impact but it is by no means strong enough to sufficiently undermine the incumbent’s market dominance.

By 31 December 2007, two agreements for LLU service provision were signed, and TEO was providing fully unbundled access to 443 local loops. As of Q410, 51 companies provided fixed public telephony services, of which 34 were using IP including 16 that were using cable television networks. However, TEO still had the largest share of the fixed telephony market. At the end of Q410, there were 753,400 fixed lines including ISDN channels. Only 8.5 per cent of telephony subscribers were served by alternative operators.

In recent years, Lithuanian authorities decided to use public intervention for construction of broadband infrastructure in rural areas in order to stimulate growth of employment, social inclusion and economic cohesion. It was decided to support the construction of the infrastructure which will be made available to all operators on non-discriminatory terms. These operators will use this infrastructure to supply broadband services to end users. For construction of such infrastructure, the project ‘Development of Rural Area Information Technology Network - RAIN’ is being implemented, using the state aid scheme. The value of the project is EUR 60.5 million, with EUR 51 million coming from the European Regional Development Fund (ERDF) and the remaining amount from the Lithuanian budget. Project duration is 40 months.

With the funding coming from the Economic Growth Programme, the project started in December 2009. It has two phases: (i) the tender to select the companies for constructing a passive network infrastructure (ducts and fibre); (ii) management of the new infrastructure and the offering of wholesale services to ISPs who will in turn provide retail services to end users at the conditions and prices similar to those in urban areas. The RAIN project is being implemented by the Ministry of Transport and Communications in partnership with ‘Placiajuostis Internetas’ which is a public non-profit entity.

Overall, next-generation services are being developed at the fastest rate in the country’s largest cities – they are available for use to approximately 86 per cent of residents in the capital Vilnius, 95 per cent of residents in Klaipeda, 75 per cent of residents in Kaunas and more than 50 per cent of Panevezys and Siauliai residents.