1. FOCUS - KNOWLEDGE SOCIETY Do we need more “STRONG REGULATION” or “CLEVER GARDENING”?

2. Why focus Knowledge Society? Why now?

3. From Lisbon Declaration “EU in 2010 - most dynamic and competitive Economy in the World” towards National Agreement “to ensure that Lithuania's economy becomes a competitive knowledge-based economy, providing an abundance of knowledge- consuming jobs” and long term economic strategy “The Goal – high tech as 25% share of GDP in 2015” Future VISION - KNOWLEDGE ECONOMY for Europe and for Lithuania

4. What is most important today when focusing on Knowledge Society?

5. INFORMATION SOCIETY – the Basis of Knowledge Economy Information Society (Ability to acquire and exchange knowledge) Knowledge Economy (Productivity via Innovation) In less developed Information society Knowledge Economy cannot become the major contributor to national economy. If the majority of population is behind the ‘Digital Divide’ only small islands of Knowledge Economy could survive.

6. Result: more wealthy and prosper society Information Society Knowledge Economy Knowledge Society Higher productivity, Faster income growth and stronger social protection New possibilities for cultural development, GROWING PROSPERITY OF THE WHALL SOCIETY

7. STRONG TELECOMMUNICATION INFRASTRUCTURE – THE MOST SIGNIFICANT PART IN “KNOWLEDGE SOCIETY” Access is key to Knowledge Society Telecommunications provide access to Knowledge ICTICT ICTICT KNOWLEDGE

8. Do we have strong Telecommunications Infrastructure?

9. Fixed and Mobile Penetration Mobile voice is booming 2002 Mobile voice telephony penetration overcome fixed Mobile messaging is rapidly gaining momentum Omnitel mobile data messaging exceeds Eastern Europe average by more than 200% and Western Europe average by 30%

10. Omnitel is one of the first in Europe to implement a wide range of integrated services, One of the first in the world to start implementing GPRS technology One of the first in the world implementing faster GPRS transmission using new coding schemas First I the world to trial new generation Horizon II BTS. Not only Penetration but also Technology Leadership and variety of Services “Omnitel” is the first to introduce GPRS Roaming Service BSA – “Omnitel” was the first in the country to provide an opportunity to receive incoming roaming calls in the Baltic States free of charge; installed a wireless introduced the “SIM Plius” card offering particularly broad possibilities for each subscriber to personalize the services received. Internet network (WLAN) in 2002. MMS service is launced in the end of September 2002. June, 2002 – parking by SMS solutions in Vilnius and Kaunas. January, 2002 - the first in Lithuania prepaid refill service via internet banking together with Hansa-LTB bank. December, 2001 - service “Work&Leisure” for business customers. It allows to separate business and personal calls by account limit, work time and VPN calls. November, 2001 - TV chat via SMS with TV3 - SMS text is displayed on TV screen online. October, 2001 - joint portal OMNI.LT, which is accessed both via internet and mobile network. August, 2001 - the first in Lithuania mobile GIS & GPS based vehicle tracking system. June, 2001 - Omnitel was the first in the Baltics to introduce GPRS applications for business - applications for brokers’ network and data collection from electricity objects. March, 2001- Omnitel introduced VPN service “Your team”, which enabled to provide short numbers for the customer’s mobile subscribers and connect them into the unanimous system.

11. Changes in Fixed Telecommunications after privatization of Lietuvos Telekomas LT has invested more than 500 million Euros into the state-of-the art technologies and network digitization. LT network digitilization rate increased from 12% to 90%. Digital broadband ADSL infrastructure reached majority of district centers and is available for 80% of LT subscribers. Today Lithuania has most advanced fixed network infrastructure in Baltic States. This year Omnitel celebrates the 10th anniversary of its activities. The company made its first steps together with the newly-independent state. One of the founding members of Omnitel, Juozas Kazickas, was actively involved in the preparation of state programmes to transform the Lithuanian economy from the model of planned economy to a market economy. The founding of Omnitel was one of his personal contributions to the development of the Lithuanian economy. The importance of independent communications with the world was one of the most important issues to the state which at that time got involved in information wars with Russia The idea of Mr Kazickas to found a telecommunications company which would be independent from the Russian dictatorship was approved and encouraged in 1991 by the Lithuanian Government of that time. Following the establishment of Omnitel, Lithuania opened its door to the world. We did this before Latvia, Estonia, Byelorussia, Ukraine and many other neighbouring countries. Furthermore, the establishment of a telecommunications company meant the influx of huge private capital to Lithuania. The first major investments into the newly-independent Lithuanian economy gave this country a real opportunity to get on its feet. From the very start, Omnitel became one of the largest investors into the Lithuanian economy and one of the largest Lithuanian companies. The founders of Omnitel set a goal to bring the latest telecommunications technologies to Lithuania and provide the broadest possible range of services. The successfully chosen operational strategy and the philosophy of a company striving for leadership allowed fast development of activities and formed a basis for securing a leadership position for this company working in the field of telecommunications. This year Omnitel celebrates the 10th anniversary of its activities. The company made its first steps together with the newly-independent state. One of the founding members of Omnitel, Juozas Kazickas, was actively involved in the preparation of state programmes to transform the Lithuanian economy from the model of planned economy to a market economy. The founding of Omnitel was one of his personal contributions to the development of the Lithuanian economy. The importance of independent communications with the world was one of the most important issues to the state which at that time got involved in information wars with Russia The idea of Mr Kazickas to found a telecommunications company which would be independent from the Russian dictatorship was approved and encouraged in 1991 by the Lithuanian Government of that time. Following the establishment of Omnitel, Lithuania opened its door to the world. We did this before Latvia, Estonia, Byelorussia, Ukraine and many other neighbouring countries. Furthermore, the establishment of a telecommunications company meant the influx of huge private capital to Lithuania. The first major investments into the newly-independent Lithuanian economy gave this country a real opportunity to get on its feet. From the very start, Omnitel became one of the largest investors into the Lithuanian economy and one of the largest Lithuanian companies. The founders of Omnitel set a goal to bring the latest telecommunications technologies to Lithuania and provide the broadest possible range of services. The successfully chosen operational strategy and the philosophy of a company striving for leadership allowed fast development of activities and formed a basis for securing a leadership position for this company working in the field of telecommunications.

12. TELECOMMUNICATIONS SIGNIFICANT PLAYER IN NATIONAL ECONOMY: Contribution to 2002 GDP: 4.2%

13. Do we have effective competition?

14. MARKET WITH EFFICIENT COMPETITION: - WHAT THE REGULATION SHOULD BE Regulation should be more forward looking and preventive against abuse of dominance in a pursuit of a fully competitive environment; New commercial models and services must be allowed to develop to meet changing consumers’ demand without regulatory intervention; Sector-specific regulation should be applied only for the markets which are not effectively competitive;

15. Consumers Opinion SPINTER 2003

16. IS TELECOMMUNICATIONS’ MARKET THE MARKET WITH EFFECTIVE COMPETITION? Market is effectively competitive, if there is : Differentiation in costs structure; Competitive differentiation in products and services; Continuous decrease in wholesale and retail prices; Aggressive customer acquisition; Rapid technological evolution; Increasing demand from the customers.

17. COMPETITIVENESS FACTORS IN 1998 FIXED MARKET MOBILE MARKET Competitive differentiation in products and services NOYES Differentiation in costs structure NOYES Continuous decrease in wholesale and retail prices NOYES Aggressive customer acquisition NOYES Rapid technological evolution YES Increasing demand from the customers NOYES Before Fixed Incumbent Privatization and Fixed Market Liberalization Fixed market was not competitive. Mobile market – effectively competitive.

18. FIXED MARKET MOBILE MARKET Competitive differentiation in products and services Emerging YES Differentiation in costs structureEmerging YES Continuous decrease in wholesale and retail prices Emerging YES Aggressive customer acquisitionEmerging YES Rapid technological evolution YES Increasing demand from the customers (Voice) NOYES Increasing demand from the customers (Data) YES COMPETITIVENESS FACTORS IN 2003 After Fixed Market Liberalization there are first signs of competition in Fixed market. Competition in Mobile market is still highly effective.

19. IS THE REGULATION ALLWAYS EFFICIENT? Least objectively required - Requirement to compensate invoice payment costs; - Requirement to combine statement&invoice into one document. Enhancing - Limited possibility for credit check; Balanced - Outdated ‘invented here’ metrology requirements;

20. TELECOMMUNICATIONS IN LITHUANIA Telecommunications sector is vital to the development of Knowledge Societyc and thus the Lithuanian Economy, although it’s role – not realised.

21. TELECOMMUNICATIONS IN LITHUANIA Effective development of telecommunication services and effective competition is possible only under the conditions of the least objectively required. Mobile market – is the market with the effective competition

22. Do we need something more then regulation?

23. The need to think Different “Liberalization and Modernization Mindset is not longer enough. Building Knowledge Economy Advantages means adopting new type of Mindset – Knowledge Economy Mindset.” J-F Richard, Vice-President, Europe, World Bank

24. Modernization Mindset Economic, Social Become a good regulator Productivity catch-up Did you modernize too slowly? Building things Modern institutions Rule of law Good basic business environment Economy Liberalization Mindset Get out of the way Stop being an operator Stability, incentives Did you liberalize too fast? Freedom Fluidity Even playing field Undoing things Domain Govern- ment Role: Main Focus: Anxiety: Creates: Is about: Societal Become a challenger Become an integrator Becoming globally competitive Did others leave you in the dust? Vision A winning mentality Clusters Building winning opportunities Knowledge-based Economy Mindset J-F Richard, Vice-President, Europe, World Bank The need to think Different

25. Building a KBE advantage means Think Fast moving today, not tomorrow… especially for accession countries 1.Leapfrogging is best done in times of extreme change like these 2.Hurry to create a stable middle class of knowledge technologists 3.Your agriculture + manufacturing  services labour force redeployment will be major, so start early DRUCKER’s POINTS AT WB KE PARIS CONFERENCE: 1.You have little time to tilt your accession strategies towards KBE 2.Use e-Europe + and Intl. Organizations for help 3.But don’t wait: begin your own actions, support your first movers MORE DOWN- TO-EARTH’S POINTS:

26. The Role of the Government “Government should act the Gardener: to seed, fertilize, protect and grow the Champions. Champions will make new Champions.” Bruce Arthur, Economist,Professor, Santa Fe University

27. Do we have new KE “Gardener” mindset?

28. WINDOW TO THE FUTURE Omnitel pioneered Knowledge Society Development Initiative joining leading ITT companies and Banks

29. ROLLING SNOWBALL Model: From Idea to the Massive Movement More Partners Joined Enthusiastically welcomed by Local Governments and Communities Lithuanian Government joined Today it evolved into National Public/Private Knowledge Society program with central and local Governments and leading ITT Business acting together Unique Internet penetration growth from 10% up to 21% was achieved only in three quarters!

30. Result of national wide commitment to Information Society Development - Business and Private investment into ITT One billion Euros is very impressive amount for such small countlry like Lithuania! (for example 2002 Lithuania total GDP is estimated about 14,7 billion Euros)

31. Why we need even more “Gardening”

32. When regulation is reactive the “gardening” is proactive The talk you hear today about adapting to change is not only stupid, it’s terribly dangerous. The only way you can manage change is to create it. By the time you catch up to change, the competition is already ahead of you. – Peter Drucker

33. Our experience show that sometimes it is possible to do! NEW EUROPE needs Exponential Growth! Future welfare of New Europe heavily depends of how successful new EU entrants will transform their National Competitiveness from “Cheaper Labor” to “Higher Productiveness and Innovativeness”. Lithuania was very successful in Liberalization and Modernization. Today is the time to make another step forward – adopt new KNOWLEDGE ECONOMY GARDENER MINDSET

34. Focus on Knowledge Society the only Way to Long Term Nation Prosperity Government plays a Key Role The FIGHT time is over We are already liberated and modernizing fast! It’s TIME TO GARDEN!!!

35. THANK YOU! a.zabulis@omnitel.net d.maikstenas@omnitel.lt