Q:  In honour of the 15th anniversary of mobile communications, the Latvian Postal Service is preparing to release a new stamp with a hot air balloon on it as a symbol of mobile freedom.  LMT has owned a hot air balloon, the �Porcupine�, for many years now.  How do you think the understanding of operators and users has changed over the course of 15 years when it comes to mobile freedom?

A:  One of the first LMT slogans was �We Offer You the Feeling of Freedom�, and a hot air balloon was our symbol.  Over the course of 15 years, people�s understanding of mobile freedom has changed radically.  A new generation has grown up � people who don�t remember the first mobile phones, which weighed several kilograms.  The mobile phone now is a pocket-size toy which provides access to mobile communications, short messages, games and lots of other things.  For most people in Latvia, life without mobile communications is now unimaginable.

Q:  On the one hand, the boundaries of freedom have expanded, because mobile and wireless communications underpin not just calls, but also a far wide range of services.  On the other hand, 3G services in Latvia will continue to be so-called niche services for some time yet.  Fairly few people will use them.  How do you think this situation could be changed in the future?

A:  The idea that these are niche services � that is an impermanent diagnosis.  The development of mobile communications has never occurred in leaps and bounds � you need lots of time to build UMTS base stations and ensure wide coverage.  Alas, the transmission infrastructure and trunk networks in Latvia are insufficiently developed, and that is partly the fault of Lattelecom, which used to have exclusive rights to transmission networks.  As the network expands, however, 3G services will unquestionably become a very normal mass product.

Q:  Do you have a plan, however, as to how 3G services could be developed more rapidly in Latvia?

A:  There aren�t usually any recipes in business, but the mobile environment right now allows us to develop data transmission speed quite quickly, starting with GPRS and EDGE in GSM networks and ending with UMTS and HSDPA services (up to 3.6 Mb/s).  That makes it possible for small and medium companies to develop their businesses via a wider range of 3G services � the environment is already in place.  The only question is how to make these services more accessible, more interesting and more progressive.  This segment of content-related services has enormous business potential.  Operators don�t interfere there � it�s a completely different market.

Elsewhere in the world we�re seeing a mutation of mobile technologies.  It develops differently in various countries � technologies and services are merging, and that attracts clients.  The situation is much different than in the 1990s, when people were interested in technologies.  Now they�re more interested in services.  That�s one of the reasons why there is this stupid idea that calls don�t cost anything.  People forget that the technological environment which underpins calls and relatively simple services is actually very complicated.  It must be maintained and developed, its capacities have to be expanded.  That represents major capital investments.

Q:  Do you have a sense of how many LMT clients use 3G services?

A:  We know how many 3G telephones have been sold in the shops of our distributors � nearly 18,000 in mid-November.  The number is rising rapidly, because 3G phones are becoming more accessible, and they are attractive and modern.  Only a few models used to have GPRS and EDGE support, but now there are virtually no phones without such features.  The same will be the case with 3G functions in the future.

Q:  The situation is that Latvijas Mobilais Telefons was the first to introduce nearly all of the technologies and major services.  That�s not easy � the leader is always noticed, but on the other hand, it�s difficult to be the first to create a new market segment.

A:  There are various strategies, and each has its own risks.  When you introduce a new technology, it can fail because there is insufficient demand for services that are based upon it.  New technologies are usually only half-ready, there has to be adaptation and testing.  Of course, we�re not the first company in the world to introduce such technologies.  The 3G excitement phase had almost ended elsewhere when we began to put together the UMTS infrastructure in Latvia.

A new service market can also be affected by the specifics of mentality in a country.  We were forced to close down the voice mail service, which is very popular in Scandinavia and elsewhere.  Just 10,000 clients or so signed up in Latvia, and that proved to be unprofitable.  On the other hand, the introduction of new technologies is a competitive advantage, because when you�re first, people will always associate you with the technology.  Perhaps it is more expensive and more thankless, but the gains are greater than the possible losses.  However, everyone watches the leader.  It�s easier to become the champion that to remain the champion.

Q:  Your difficult role as a groundbreaker, but also the advantages of that role � these are seen in the history of how you increased client numbers.  You had 320 in 1992, an average increase of 200 clients per month in 1993 and an average increase of 550 clients per month in 1994.  You got your 50,000th client in 1997.  In October 2000, you had the 250,000th.  In August 2001, it was 300,000 clients.  The further you go, the more rapid the dynamics are.

A:  We have more than 917,000 clients at the time � post-paid and prepaid clients.  According to Eurostat data, the spread of mobile communications in Latvia is at 84%, or a bit more than 1.9 million users.  Nearly one-half of these are LMT clients, and their number is increasing.  We see a lot of client activity in choosing new services, in changing connection categories and in looking for the best way to reduce costs.  This year we have increased client numbers by more than 67,000.  I think that the number next year may be similar.  Of course, we�re never going to see the skyrocketing increase in client numbers which we experienced in the latter half of the 1990s, unless a new and enormously attractive service appears on the market � one which telecommunications experts call a �killer application�.

Q:  It seems that there are only two ways to avoid losing market position today � do what you can to hold on to your clients, and do what you can to offer more attractive and high-quality services or a better reputation so as to attract the clients of some other operator.

A:  Each client is unique, there�s no universal service that will be of use to everyone.  That�s why we have different tariff and service plans and client loyalty programmes.  Throughout the world people are choosing services from different operators.  They buy several SIM cards and change them on the basis of habit or need.  If you use two SIM cards, however, you still can�t talk on two phones at once.  That means that the volume of alls or data transmission will be divided up among several operators.  In that case, the criterion to be taken into account is financial turnover.  That explains the difference between Eurostat data as to the spread of mobile phones and the actual number which operators publish as their achievement � the former number is far lower than the latter.

Q:  Could it be that a single user has two SIM cards from the same operator � one number for business, one for private contacts?

A:  You can have one SIM card for voice calls andSMS and one for data transmission.  You can have phone modules that are connected to security systems, but that is not a particularly large market at this time.  That might be a scenario for development in the future.

Q:  LMT started to offer prepaid cards to clients only in the ninth year of operations and not before.  That�s why your main trump card has always been client loyalty, your job has been to strengthen loyalty.  What�s happened to that principle?

A:  Our approach to prepaid cards differs from that in most other countries, where operators don�t pay much attention to prepaid customers.  LMT has felt since the introduction of the �OKarte� that this is just a different way of paying, and these clients have a chance to use almost all of the functions and services which are used by post-paid clients. That�s our tactical approach, it has not changed.  We have loyalty programmes for �OKarte� clients, as well.  We encourage clients to remain with our network.  We don�t pass out SIM cards for free as some of our competitors do.  The only result is that phone numbers are misused.  That�s why we had to go to an eight-digit numbering system.  That caused fairly serious problems for operators and some users � particularly in terms of roaming services.  That�s because operators with which Latvian operators have roaming agreements must change  all their exchanges to accept our eight-digit numbers.  That requires a lot of time and resources, because operators are usually in no big hurry.  We are patient, and we keep sending reminders to various countries, African states included.  Our clients deserve normal roaming services.

Q:  What do you think have been the most successful services in LMT history, and which have been of the greatest social importance?

A:  Socially important services have been �Baby�, �First Grader� and �Write Me!�  The latter is for people with hearing difficulties, and there�s a special and lower tariff.  We�ve worked with the Latvian Association of the Hearing Impaired to publish a Braille version of our booklet �My Time and Yours�.  It is the same in content and publication frequency as the basic booklet.  We�ve been doing this for several years.  It was our initiative to cover people with special needs.

A very successful service in recent times has been the �OKarte Friends� service which allows �OKarte� users to form interest groups and to converse and send SMS messages to these friends.  It is a very flexible service which satisfies the social need for communications in such groups. HSDPA data transmission, too, has become quite popular in a fairly short period of time.  In 2007, Nokia promises to increase data transmission speed to as much as 14 Mb/s.

Q:  LMT has gone through all of the traditional mobile communications development phases in these 15 years � from NMT-450 to UMTS.  You�ve worked closely with manufacturers, especially Nokia.  Can you agree with the popular view that the manufacturer is really the one to influence the market?

A:  It�s a two-sided process.  Manufacturers have their own view about the technology and how they can sell the technologies and service platforms.  On the other hand, operators, too, can influence a manufacturer�s product.  When we receive a product for testing, we can define shortcomings or find that the product is not promising.  We can also determine that it is very promising but needs some improvements.

Q:  To simplify the issue, we can say that the history of mobile communications at LMT and in Latvia has involved constant lowering of tariffs without any lowering of investments in technologies � on the contrary, those investments have sometimes been increased.  This has happened at a time when the cost of energy resources and other products continues to rise.  How long will this be possible?

A:  There are two opportunities here.  Either the government finds mechanisms which stop the overall price hike, which means that the costs faced by mobile telecommunications operators will also not rise, or we face the worst scenario � in order to compete and to continue to lower prices, operators will be forced to reduce quality.  That has happened already in many countries in the world.  When I talk about this fairly harsh possibility to various audiences, harsh comments appear on Internet portals.  I�m an expect in this sector, however, and I look at this issue from the macroeconomic, business and national economic perspective.  This is all a consequence of globalisation � gas and electricity and supplied from comparatively few sources, but money that is invested in electronic communications comes from all over the world, and this is an unlimited source.  Ten years ago investments in the sector were used mostly to develop the infrastructure, but now it�s being spent on marketing, cross-subsidies, dumping prices and low-cost telephones.  This is not an example of normal economic development.  We might just as well ask petrol retailers to allow us to buy a new and subsidised car every couple of years � that would be based on the same logic.

The point is that regulatory institutions are not prepared to become involved here, they say that non-intervention in the market represents a defence of consumer interests.  OK, but one thing is clear � if the worst case scenario comes to pass and quality drops, the operators will be responsible, but the victims will be the clients.

Major moments in the history of LMT

January 2, 1992	LMT is established.
October 7, 1992	LMT launches its own exchange � LMT Independence Day.
January 19, 1995	The GSM system is launched.
August 25, 1998	LMT has its 100,000th client.
October 7, 1999	LMT hooks up 2,622 clients during the day � 17,739 people become LMT clients in October, and that is an unprecedented number.
November 6, 2000	The �OKarte� is launched � a prepaid mobile calling card.
May 7, 2001	LMT introduces a long-term discount programme with monthly fee or call discounts for anyone who has been a client for a year.  The programme is introduced gradually, and the size of the discount gradually increases.
December 4, 2001	Thanks to co-operation among LMT and its leading colleagues in Lithuania and Estonia (EMT, Omnitel), calling costs for LMT clients in Estonia and Lithuania decline significantly.
January 16, 2002	LMT is the first company in the telecommunications sector in the Baltic States to receive the ISO 9001:2000 quality management certificate.
February 28, 2002	A new LMT administrative and technological building is opened at Ropa�u Street 6 in R�ga.  On eight floors, there are administrative offices, space for all of the company�s units, and a client service centre.  Some 500 people work there.
January 16, 2003	LMT is the first mobile communications operator in Latvia to receive the UMTS license for establishing a third-generation mobile communications network.  The license will last until December 31, 2017.

Q:  How are you doing with self-evaluation and self-confidence, both in terms of having started the route toward mobile communications and in terms of your competitive position right now?

A:  We�re doing just fine with self-confidence, and with good reason.  The history of LMT is, in fact, the history of mobile communications in Latvia, and we have always worked in pursuit of the development of the mobile business.  We�ve taken part in various social and cultural projects.  That proves our civic attitude vis-à-vis society and the country � lots has been done during these 15 years.  There will always be critics and sceptics, but we are still prepared to wear the yellow shirt of the leader in the sector.

Q:  On this anniversary, what would you like to wish to your employees, your clients, yourself and perhaps even your competitors?

A:  First of all, I would like to thank everyone who has ever worked for LMT or been our client.  People have been with us for the whole 15 years, others are with us now.  I thank them for their trust and their co-investment in the development of the company and the entire sector.  I wish to thank our employees, both current and former employees, who have done enormous work to make sure that LMT is the leader in the sector.  As for our competitors � keep in mind that we are and will continue to be the best.  That principle is still very much in place.

Source: Sakaru Pasaule