Analysis

Latvia’s Lattelecom: 1Gbps will be standard by 2018

Juris Kaža

Lattelecom, Latvia’s fixed network telephony, internet and pay television provider, expects 1Gbps fibre-to-the-home (FTTH) connections will be standard for household customers by 2018. It also claims to already have the network capacity to deliver it.

Latvia, a Baltic country with a population of around two million, already ranks seventh in the world for internet speeds, according to the latest Akamai ‘State of the Internet’ survey.

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Lattelecom itself was founded in 1992 – then called Lattelekom – on the basis of a Soviet-era fixed network telephony enterprise. The main foreign shareholders from 1994 holding 49% were Telecom Finland and British Cable & Wireless, later becoming TeliaSonera by a series of divestments and mergers.

Lattelecom has since expanded into providing broadband internet (both DSL and FTTH), interactive, internet and digital terrestrial broadcast television, as well as datacentre and IT services.

The company had 2013 group earnings of €28.5 million, down 4% from 2012 on revenues of €188.2 million.

The Latvian telcom’s chief technology officer (CTO) Uldis Tatarčuks says customer demand and the proliferation of internet-connected devices in households is the main reason Lattelecom has boosted connection speeds.

It currently offers 1Gbps download and upload speeds as its premium service, often used by photographers, video editors and graphic artists who need to move large files around on the internet.

Last October, Lattelecom, 51% of which is owned by the Latvian government, with 49% held by Swedish TeliaSonera, boosted speeds for all customers, jumping the most commonly subscribed 100Mbps connection to 250Mbps and doubling the speed of its premium service to 1Gbps from 500Mbps.

The broadband speeds are offered in a range of bundles including interactive television delivered on a dedicated slice of the connection and IP-based, flat-rate nationwide voice services.

The Lattelecom GPON-based optical network covers around 60% of Latvia’s 820,000 households and has more than 135,000 subscribers – a figure that now exceeds the number of DSL broadband users, according to Tatarčuks.

“Lattelecom’s optical network penetration is currently above 26% and we expect it to grow significantly in the next few years,” he said, adding that customer satisfaction and Net Promoter Scores (NPS) were higher for fibre-network subscribers.

The company has around 400,000 fixed-line voice telephony subscribers, down from more than 560,000 five years ago, but those customers have been replaced by broadband and television subscribers.

Since launching interactive TV services in 2007, Lattelecom claims a market share of 38%, alongside its 50% share of fixed network internet services.

Lattelecom’s optical network penetration is currently above 26% and we expect it to grow significantly in the next few years

Uldis Tatarčuks, CTO, Lattelecom

The main suppliers of equipment and software for the network are Alcatel-Lucent, Cisco, Ericsson and Huawei. Huawei has provided the IMS-based voice over IP (VOIP) platform to which all FTTH subscribers with telephony services are being migrated, with Tatarčuks claiming more than 80,000 were already using it.

Interactive television, which offers subscribers the option to record, pause and play archived programming, as well as rent videos-on-demand, places the biggest demands on the network, the Lattelecom CTO explained.

Currently the television stream takes up 6-8Mbps of a subscriber’s connection, even when high-definition (HD) channels are viewed. However, Tatarčuks says Lattelecom is anticipating the arrival of ultra-high definition (UHD/4K) services toward the end of the decade, which will consume around 32Mbps of a connection.

This is one reason he predicts the “standard” connection after 2018 could be 1Gbps to serve a proliferation of television screens, tablets, laptops and other devices in a single household, many of which will be HD capable by then.

Subscriber demand for television is balanced among ten network nodes in various parts of the country, with program files downloaded to nodes where they are in demand for local streaming rather than streaming to all subscribers from a single point in Riga.

Overall, data traffic on the network is growing by at least 30% annually and Tatarčuks says work being done to upgrade the network in 2014 “is in anticipation of our needs in 2015.” Three nodes have been upgraded and improvements to all ten will be finished during the year.

Lattelecom has also launched a pilot project in some of its own buildings in anticipation of “the internet of things”. A telemetry platform is being used to monitor and manage the functioning of systems at several locations and Tatarčuks says the intent is to offer the platform as a commercial service to utilities, building managers and security companies for such purposes as remote reading of electricity, water and gas meters.

This will enable them to compile data on energy efficiency, and give warnings of anomalies, such as break-ins, flooding, fire or serious equipment malfunctions.

Baltics and Nordics top fiber broadband league

The Baltic and Nordic countries top the fibre-based broadband league in Europe, and Latvia’s Lattelecom is one showcase for Alcatel-Lucent’s GPON access technologies, according to Ana Pesovic, a Belgium-based Alcatel-Lucent senior marketing manager for fixed networks,

However, Latvia, Lithuania, Estonia, Denmark, Finland, Norway and Sweden all have different strategies for putting high-speed fibre in homes, she said.

The Nordics have done it by building municipal fibre networks, while in the Baltics, the incumbent fixed network operators have led the way.

Pesovic said both customer demand and market competition were leading the drive to higher and higher bandwidth, so Lattelecom’s forecast of 1Gbps connections as standard was reasonable.

Device proliferation in the household was a major factor in creating demand for higher speeds in many markets. “It is not any one service that requires high bandwidth, but all of them together,” Pesovic said.

But a key reason for an apparent rush to 1Gbps is it serves as a competitive benchmark service providers can display, even if few of their customers can consume the bandwidth.

 


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