A new telecommunications company in Estonia, ComTrade, will start providing Internet access through the networks of two cable TV operators, Starman and STV.
ComTrade will provide cheap Internet access beginning in April and then offer a telephone connection in 2001, when the monopoly of Eesti Telefon ends. The company is planning also to serve those with no PCs. They can use the Internet and play computer games over the TV through special equipment, which will be brought on the market by ComTrade in a few months.
The company is wholly owned by an investment fund New Economy Venture, the majority of which in its turn belongs to an investment bank Lohmus, Haavel & Viiseman, the founder of the first Estonian Internet auction, Web site Osta.ee. ComTrade is planning to join with an international telecommunications company as soon as a strategic partner has been found. According to Rain Lohmus, chairman of the board at LHV, many international telecommunications companies have been interested in cooperating with ComTrade. The company is initially going to invest 5 million kroons ($33,000) in development and then invest more as the business grows. The company has 10 employees.
At the beginning, the service will be available in the central part of Tallinn; the customers of the cable television companies in Oismae, Mustamae and Lasnamae and in the city of Narva will be linked next. Through the existing clients of cable TV operators, Starman and STV, the newly born IT company will take over about 100,000 clients.
“By the end of the year we hope to have even more clients,” said Sten Nugis, manager at ComTrade. “People will start using our services not only because we can offer cheaper telephone connections in 2001, but also because we offer cheaper permanent Internet access. Those who do not have a PC can access the Internet via cable TV,” said Nugis.
“The TV screen will be controlled by a keyboard, which is controlling the TV by infrared radiation instead of wire,” said Nugis. “Our special TV settings are cheaper than a PC. We will provide our customers with games and we will come up with many additional services in the future.
“Our network, which is not related to the network of Estonian Telephone, enables us to offer a good connection for a better price because our cost of maintenance is small,” he said.
The price of a permanent Internet access at a speed 512 Kb/s for private clients costs 495 kroons ($30.10) a month and for business clients at a speed 2 Mbit/s will range from 2,000 kroons to 4,000 kroons. The prices for similar services at competing companies are about 1,000 kroons for private clients and starting from 10,000 kroons for business clients.
ComTrade is also taking over about 200 permanent Internet link clients of STV. The management of cable TV operator Starman is planning to start offering data network services as soon as Telia, a Swedish telecommunications company which is also one of the owners of the Estonian Telephone, sells its stake in Starman. Nugis said that ComTrade is open for negotiations with all companies in Estonia, which provide alternative networks.
ComTrade is at present negotiating with one of its biggest competitors TELE2, which is offering both Internet connections via cable TV and telephone lines. Peep Poldsamm, strategy planning director at TELE2 said that ComTrade has not fully developed its product. He also does not believe it is possible to operate with such low package prices on the international market.
“We are pleased to rent out our network, but it seems that ComTrade doesn�t have a clear vision about their business, so I cannot comment on it now,” said Peep Poldsamm.
Poldsamm said he had two visions of the future of the cable TV network. The negative vision was that no uniform standards would be created in the United States and Europe in terms of cable TV networks and as a result it would be very difficult to operate effectively. His positive vision was that the Internet connections via cable TV would become more popular than Internet connections via telephone lines. He said that TELE2 has both networks and thus does not fear the bleaker scenario.