1. “Lithuania: ICT status and potential” Mr. Vytautas Vitkauskas, President of Association Infobalt, Lithuania

2. Lithuanian ITT market, 2000 - 2001 In 2001, the Lithuanian ITT market grew by 28 percent.

3. Lithuanian ICT market growth 42,5% 17,2% residents 20,8% residents 30% residents 2002 22,5%34,7% Computers for home use connected to the Internet 87% 9,2% residents Computers for home use 90% 11% residents Internet use 50% 20% residents Computer use Growth2001

4. Lithuanian ITT Market Growth in 2002  The turnover of ITT wholesalers increased twice faster compared to 2001.  According “Prime Investment” data, during the first quarter of 2002, compared to 2001, IT turnover index increased 23%.  In 2002 IT market will stay at the same last year rate of growth which exceeded forecasted growth 30% (during nine moths of this year –27%)  Turnover of personal computers in 2002 – 75 000 – 80 000 computers (during 9 months) or 50% more than during 2000.

5. Lithuanian ITT Market Growth in 2002  The number of the computers in Lithuania exceeds 700 000.  During 2002, compared to year of 2001, the turnover of ITT retailers increased 20% on the average.  The use of mobile telecommunications increased to 40%. Forecast for 2002:  mobile operators – USD 340-360 million (2001 / USD 225 millions ),  Lithuanian Telecom – around USD 320 million.

6. Lithuanian ICT market trends the Internet is used for  Email ~ 61%  Corespondence with business partners~ 43%  E-banking~ 33%  Market information~ 31%  Informative media~ 27%  Partner / product search ~ 18%  Entertaiment~ 16%

7. Lithuanian ITT Market Trends Data Protection The conclusion is that around 47% of common problems in ICT sphere are solved by unskilled specialists.

8. Penetration of mobile communications in 2002 PenetrationGrowth compared with the third quarter of 2001 Estonia60 %16 % Lithuania40 %84 % Latvia30 %38 % Cellular penetration in Lithuania increased 84 % in one year period and its growth was the most rapid of the mobile communications markets of Middle and East Europe.

9. Import of mobile phones (January – November, 2002, Lithuania) Year 2002Comparison with the same period of 2001 Imported mobile phones: quantity value 647,729 phones 206.271 mln. litas 95.5 % more 78.3 % more Average price of imported mobile phone318 litas8.9 % less Import from Finland : quantity value Share of all imported mobile phones 245,770 phones 80.992 mln. litas 37.9 % 2.6 times more 38.3 % more Import form Germany: quantity value Share of all imported mobile phones 172,964 phones 53.168 mln. litas 26.7 % 63.7 % more Twice more Exported mobile phones: quantity value24,190 phones 8.42 mln. litas 22.5 % less 1.5% less Source: Department of Statistics to the Government of the Republic of Lithuania

10. Lithuania manufactures high technology products and services Potential for applied research is in place Lithuanian industry uses fundamental technologies:  information technologies  Biotechnologies  laser industry  Nano technologies Sufficient industry and science concentration Integration into the EU technological area accelerates and cheapens investments Prerequisites for R&D progress in Lithuania

11. Potential fields of Lithuanian ICT industry and science technologies for the next 5 years  Implementation services of traditional hardware (programming).  Programs (PKI, etc.) of e-signature for e-business, e- government and e-education  Development of such systems like Intellect-House, social security, hospital, transport, etc.  Protection of e-accounting and m-accounting systems by e- signature and bio-metric voice and finger-pint technologies.  Development of e-business applications in ERP, SCM and CRM fields.  Development of open source technologies creating business applications.

12.  Electronic sensors for food, security and other industrial sectors of Lithuania.  Laser technologies related to ITT.  Scientific computer applications for biotechnology sector – development of databases and hardware instruments.  Development of multimedia products (applications, encyclopedia, multilingual programs, Internet sites, CDs, DVD, etc.).  Implementation services of traditional hardware (programming).  Programs (PKI, etc.) of e-signature for e-business, e- government and e-education  Development of such systems like Intellect-House, social security, hospital, transport, etc. Potential fields of Lithuanian ICT industry and science technologies for the next 5 years

13. ICT Share in Lithuania’s GDP in 2000-2015 according INFOBALT Strategy

14. INFOBALT Association  The INFOBALT activities in the ICT frameworks of the European Union serve as a catalyst for the growth of the information society in Lithuania.  Established in 1994.  154 members of Association INFOBALT include:  Lithuanian information technologies, telecommunications and office equipment companies.  Higher education and research institutions and other education institutions.  Public organizations and concultancy firms.

15. Mission of the Association Infobalt  Consolidate, within the framework of the Association, Lithuania- based companies engaged in such fields as the IT, telecommunications, office supplies, and production of electronics to operate jointly.  Seek to ensure favourable conditions for the development of the IST industry with an aim of raising its share in the national GDP to 20%.  Partake and promote joint partnership initiatives together with science, culture and business communities as well as authorities.  Boost the flow of foreign investments to the Lithuanian IST sector.  Enable the Lithuanian IST sector to fulfil its potential on the global markets.  Support education, science and programmes promoting development of the information society.

16. Initiatives of the Committees and Working Groups of the Association INFOBALT:  Development of the new Law on Telecommunications;  Coding plan;  Copy right protection;  E-business law;  Computerization of the customs services;  Increase the number of prepared ITT specialists two times in universities of Lithuania;  Long-term computerization plan for schools.

17. 1.Representation of the members of INFOBALT in Lithuania and abroad; 2.Development of Lithuanian ITT market; 3.Services to the members of INFOBALT; 4.Development of information society (IS) of Lithuania:  Events  IS projects  International activities Activities of the Association INFOBALT:

18. Аssociation INFOBALT takes part or prepares the following EU and Lithuanian projects:  Phare BSP I and BSP II of the EU – participation in the European ITT activities.  TELEBALT – promotion of distance learning and work in the Baltic States (2002-2003); development of virtual societies in order to render assistance to small and medium enterprises and organizations in projects of IST EU.

19. TELEBALT Conference “Teleworking for Business, Education, Research and e-Commerce”  Vilnius, Lithuania, 21-22 October 2002  100 speakers from 25 countries  300 participants from 6 countries  173 on line participants  13 workshops  110 presentations  24 presentations of IST projects  10 video – conference connections  The TELEBALT Conference was a major event of the FP5 IST programme in the Baltic countries.

20. EU IST Project TELEBALT  Teleworking as a Tool  for Information Society Programme  promotion to Baltic States www.infobalt.lt/telebalt

21.  Project on strengthening the copyright in Lithuania with support of Phare EU (2001).  Project on establishment of Information Service Center (ISC) in Visaginas with support of the Government of Lithuania and Phare (from 2002).  International conference “Information Society 2002” and Investors’ League (21 – 22 September).  The largest exhibition of information technologies in the Baltic countries, INFOBALT 2002 (23-26 September) Аssociation INFOBALT takes part or prepares the following EU and Lithuanian projects:

22. INFOBALT 2002  International exhibition of information society technologies INFOBALT 2002 23-26 September 2002, Vilnius International Week of the Information Society INFOBALT 21-26 September 2002, Vilnius

23. Mobile Services Industry in the Baltic States: Lithuanian Case Edmundas Žvirblis, TELEBALT Project Manager, Lithuania Saulius Arelis, Project Manager, Association INFOBALT, Lithuania 27 January 2003, Budapest

24. Mobile phones penetration in the Baltic States (‘Global Mobile’ Data)

25. Mobile operators in Baltic States LithuaniaLatviaEstonia 2001OmnitelBiteTele2LMTTele2EMTTele2Radio linija Market share, % 5626185545522523 Organisation for Economic Co-operation and Development, CENTRE FOR CO-OPERATION WITH NON-MEMBERS TRADE DIRECTORATE

26. Assumptions Penetration of mobile sets in general is still lower then EU average Penetration growth is inversely proportional to current cellular penetration rates Penetration rate is directly proportional to GDP per capita in each country, (according to data 2001, end of the year) Strong GPD growth lead to further sector growth Cellular penetration growth in Lithuania is highest among Middle and Eastern Europe while current penetration rate in the Baltic States is highest in Estonia and mobile market potential highest in Latvia

27. Mobile industry in Lithuania Mobile penetration is already higher then fixed line phones Mobile penetration (over 40 %) is much higher then Internet (21%) Over 80 % of businesses using mobile services Usage of mobile data (SMS, GPRS, WAP) increases Competition in prices contrast between mobile market and fixed line market up to 2003 Difference in mobile market players size direct them to different client groups and stimulate variety in services

28. Mobile Services providers in Lithuania Omnitel (1991)Bite GSM (1995)TELE2 (1999) Market share 54%*Market share 28%*Market share 18%* Main advertising policy and usage benefit: lower price inside the operator network covering every second mobile subscriber Main advertising policy and usage benefit: individual solutions and their sets adopted to individuals and business clients and their groups Main advertising policy and usage benefit: lowest average talk price, lowest fixed monthly limit price Cover approximately 90% of Business clients from top 100 companies Business clients market stake increased from 21.4% to 28% at 2002 Directed toward small business and commercially active population (current business sector share 3- 3,5%) * Omnitel data, 2002

29. Foreign Investment In Lithuanian Mobile Market Owning Company Company Name Owned Company % Share DKTDC Mobile international AS Bite GSM100% SwedenNet Com ABTele 2100% FinlandSoneraOmnitel27,5% SwedenTeliaOmnitel27,5% USMotorolaOmnitel35% Private holdersOmnitel10% Organisation for Economic Co-operation and Development, Centre for Co-operation with Non-members Trade Directorate

30. Import of mobile phones (January – November, 2002, Lithuania) Year 2002Comparison with the same period of 2001 Imported mobile phones: quantity value 647,729 phones 206.271 mln. litas 95.5 % more 78.3 % more Average price of imported mobile phone 318 litas8.9 % less Import from Finland : quantity value Share of all imported mobile phones 245,770 phones 80.992 mln. litas 37.9 % 2.6 times more 38.3 % more Import form Germany: quantity value Share of all imported mobile phones 172,964 phones 53.168 mln. litas 26.7 % 63.7 % more Twice more Exported mobile phones: quantity value 24,190 phones 8.42 mln. litas 22.5 % less 1.5% less

31. Market trends More active Lietuvos Telekomas role forecasted in market due to the end of 5 year monopoly in fixed telephony market Ambitious LT position during this period led to the loss of approximately 200 000 subscribers many of which become mobile Market goes to saturation level: 57 % Lithuanian citizens become mobile phone users by the end of 2003 Principle ‘last piece of pie is the most delicious’ will lead to higher competition between mobile operators

32. Market trends No significant talk price decrease foreseen excluding temporary actions (for example Bite GSM offers to cover 50% of phone talk expenses for new subscriber for 3 months period) Competition policy most likely include new subscribers attraction by the means of new services (Omnitel and Bite already offers more than 100 services) Tele 2 is going to become the first operator offering mobile and fixed line telephony in Lithuania and also become Internet provider parallel to other mobile operators

33. Market trends SMS bumming started in 2002 keep going next few years Averge of 35 messages monthly sent by every handset holder in Lithuania is close to European statistics Next 2-3 years income from SMS wll make 20-25 % from total operators income SMS games relation not only to entertainment of individual operator’s client but to other retails businesses makes interoperable ‘mobile B2C’<> ‘mobile B2B’ system Parking payment, bank account checking via SMS booming is also expected

34. Success factors Rational evaluation of business opportunities Development of adequate and convenient applications and services Training the users to exploit all the possibilities offered by mobile technologies

35. What about 3G? Statements from Omnitel presentation text: It seams that 3G will not make any significant changes With GPRS and MMS in place, m-business applications can already exploit multimedia advantages 3G seems not to offer anything completely new for m-business, just faster speed Observation: 3G adoption slow in Japan: DoCoMo has only about 134 000 FOMA subscribers, while plans where to have 1,34 million sobscribers by March 1, 2003

36. GPRS and HSCSD Technologies are in place and amount of users increases Applications still to be developed in terms of equipment, data transfer speed, stability and pricing GPRS roaming is offered or soon will be offered by operators in Baltic states, Austria, Denmark, Germany, Poland, Scandinavia

37. Increasing number of m-services M-entertaiment (logos, ringtones, mobile games) M-info (yellow pages, stock exchange, accounting information) M-office (mobile e-mail, mobile fax, reminders, group messaging) M-payment (for parking, vending, tickets) M-banking (major banks in Lithuania offer SMS and WAP banking services) M-self-services (info channel subscription, service configuration, etc.) M-security (mobile car tracking, house security, etc.)

38. Examples Bite GSM m-pay service: Subscribe receives SMS with indicated payment beneficiary, account No, terms of payment and payment confirmation code and has just to send it by SMS Omnitel language learning service: Subscribe can define his knowledge level passing the test in Internet, choose the theme and then receive desired quantity of SMS’s with English words; Bite GSM introduced the first information MMS service in Lithuania ‘MMS Maps‘. Customers using the service are able to send one of 160 maps of Lithuanian cities and towns to their own mobile by MMS message.

39. Examples Omnitel m-payment for parking by SMS It was 7 th in the world to launch the service Monthly growth – 1.5 – 2 times Already more than 7% of total park payments conducted via mobile channel in Lithuania Bite GSM implemented unique timing system in youth rowing championship First time measuring and monitoring system based on GPRS technology in FISA history Mobile technology reduced expences (was no need for expensive underwater wired communication network) Reduced ammont of manual data entering led to inacuracy reduction

40. Mobile applications for business Sales force automation Field service Operations monitoring Supply chain visibility Shipping and logistics

41. Mobile operators promote Information Society: Alliance Window to the Future In May 2002 Omnitel together with Fixed Telecom company Lietuvos telekomas and two largest Lithuanian banks Vilniaus Bankas and Hansa-LTB launched alliance Langas į Ateitį (Window to the Future) that later was joined by two IT sector leaders – Alna and Sonex. Main idea: business suport to Information society development in Lithuania Main goal: in three years to gain European average internet penetration Main activities: establish 65 public internet access points in 54 settlements in Lithuania

42. Mobile operators promote Information Society: Alliance Window to the Future According to the preliminary project citizens will be enabled to spend 1,5 million hours in the Internet Widely supported by public sector Close collaboration with the local governmental institutions is practiced while establishing public Internet access points. They grant the public Internet access points with premises, take care of their administration, and cover 50 per cent of a monthly subscription fee, while the alliance installs the Internet connection, donates computers, and provides technical servicing

43. Mobile operators promote Information Society Initiative Mobile Wave Bitė GSM together with Danish telecommunications company TDC Mobile International, Vilnius University and Kaunas University of Technology have signed a Letter of Intent to start an international initiative "Mobilioji banga" (Mobile Wave). The aim of the initiative is to promote open and mobile knowledge society in Lithuania. This initiative will be fulfilled by stimulating the creation and implementation of innovations through the international collaboration of Lithuanian, Danish and other EU countries' universities, mobile service and content providers.

44. Association INFOBALT Established in 1994. 146 members of Association INFOBALT include: Lithuanian information technologies, telecommunications and office equipment companies, universities coledges and research institutions, public organizations and concultancy firms. Members cover approximately 80 % of local ICT market Contact information: Vokiečių 28/17 – 16, 2001 Vilnius, Lithuania Tel: +370 5 262 26 23, fax: +370 5 262 26 29 e-mail: office@infobalt.lt URL: www.infobalt.ltoffice@infobalt.ltwww.infobalt.lt

45. INFOBALT Activities Representation of the members of INFOBALT in Lithuania and abroad Development of Lithuanian ITT market Services to the members of INFOBALT Development of information society (IS) of Lithuania:  Events  IS projects  International activities

46. TELEBALT project Teleworking as a Tool for information Society Technologies Programme Promotion to Baltic States To promote IST Programme to the three Baltic countries and encourage preparation and submission of new project proposals to IST Programme To introduce new methods of team work (teleworking, virtual collaborative teams, etc.) and to launch new educational, research, telemedicine and business projects To develop a system of Information Demonstration Centres (IDC) in the three Baltic countries

47. Association INFOBALT, Vokiečių str. 28/17 – 16, 2001 Vilnius, LITHUANIA Phone. +370 5 262 26 23, fax +370 5 262 26 29 e-mail: office@infobalt.lt www.infobalt.lt Contacts