Estonia is the leading light in the Baltic States for broadband penetration, but its position is starting to be challenged as both Latvia and Lithuania are closing the gap. Lithuania has grown twice as fast as Estonia , in terms of subscriber numbers, in the 12 months to the end of Q3 2007, from a higher installed base.  Latvia has outstripped them both growing by more than 50% in the period. In Estonia penetration (by population) currently stands at 22.4%, up 3.9% in the year to Q307.  Latvia makes the strongest showing improving penetration by 4.6% to 13.6%. Broadband penetration in Lithuania is 13.5% at Q3 2007, up 4.2% on the same period last year and, according to a cautious forecast from the Lithuanian regulator, is expected to increase to 17% by 2009.

As is typical of the region, and most of the world, internet penetration is higher in the cities than in rural areas. This imbalance may be partly addressed with the prospect of large scale introduction of WiMax services after the Lithuanian regulator recently awarded three WiMax licences.

Lithuanian Radio and Television Centre, which was granted one of the licences, has plans to cover 85% of the country by 2010 with the first services available this year. Their investment in WiMax deployment is estimated at LTL 300 million (EUR 87 million) by 2017.

Estonia-based operator Norby Telecom, part of a bid winning consortium with Nelte and MicroLink Lithuania, is already operating the first and currently the largest WiMax network in the Baltic States .  They plan to integrate its proposed Lithuanian network with existing WiMax networks in Estonia , where they cover about 60% of the territory. They are looking to launch quickly and plan to spend LTL 100 million (EUR 29 million) in the next ten years.

However the biggest operator in the region, TEO, failed in its bid for a WiMax licence. It owns 98% of DSL lines in Lithuania and competes for broadband customers primarily with the cable companies.

Without a WiMax licence TEO faces more challenges to its dominance.  As a consequence it has been forced to look to other mechanisms to try and preserve as much of its market share as it can. It is launching IPTV and DTT services and plans an aggressive expansion of Wi-Fi Hotspots.

As competition increases the pressure on prices and the need to bundle services to gain and retain customers will accelerate broadband take-up in all three countries, but it is Lithuania , with the largest potential market in the Baltic and a re-invigorated competitive landscape, that shows the best medium to long term promise. www.point-topic.com