An effective innovation system, which would encourage the growth of an innovative economy, is seen by the Lithuanian government as a strategic objective. Lithuania is focused on the development of high-level scientific knowledge, scientific research, experimental development, as well as fostering innovative business, intersectoral business cooperation and technology transfer.
Lithuania is particularly strong in the health and biotechnology area (worth about 1 per cent of the GDP),2 where the government is continuously committed to provide support. Photonics is another advanced area in Lithuania, where 700 specialists are employed in the laser industry.3 In fintech, with the support of the Lithuanian Bank, Lithuania is experiencing the emergence of many new pilot projects, such as the Fintech Sandbox, Blockchain Sandbox, Open Banking Sandbox and Energy Sandbox.4
Advancement in the aero cosmic field, particularly driven by the successful launch of the first Lithuanian nano satellites, inspired the government to adopt the Aerocosmos development programme for 2016–2020.5
Information technology sector production in Lithuania is close to €2 billion, which to a large extent is driven by software engineering, programming and consulting services, where over 31,000 IT specialists (18,100 software developers) are employed (about 2.3 per cent of the total workforce in Lithuania).6 Business service centres established by Barclays, Daskebank, WesternUnion, SEB, skandia, Paroc, Swedbank and Euromonitor international account for a large portion of the IT workforce in Lithuania.
Electronic communication market revenue grew by 0.5 per cent in 2018.7 At the end of 2017 there were 4.3 million active mobile communication subscribers (149 per cent of the total Lithuanian population). The internet is used by almost 80 per cent of the population, and average broadband speeds are 50MB/s with fast public WiFi.
The use of electronic governance services in Lithuania grew to 48 per cent of the total residents. In the area of electronic governance Lithuania ranked in 11th place in Europe in 2017.8
i The regulators
Electronic communications is one of the most regulated technology areas in Lithuania. The Law on Electronic Communications (LEC)9 transposes the EU regulatory framework for electronic communications. On the basis of the LEC further government regulations have been adopted to regulate certain more technical or more detailed issues of the framework.
The Communications Regulatory Authority10 is the main regulator in the electronic communications area, and is also responsible for adoption of a number of delegated legal acts, as well as supervisory measures (market review, imposition of measures for entities with significant market power, etc.).
The LEC applies to electronic communication services, the definition of which is equivalent to the EU Framework Directive, public communication networks, universal services, as well as governance of electronic communication resources (frequencies, numbering plan). The law also contains provisions on privacy in electronic communications, transposing the e-Privacy Directive.
Information society services are regulated by the Law on Information Society Services,11 transposing the Directive on electronic commerce, which is based on non-discrimination, technological neutrality, functional equivalency and other principles. Liability exemptions for transmission service, caching service, and hosting service providers are established, without imposing a general obligation for providers to monitor stored or transmitted information.
Media services are regulated by the Law on Provision of Information to the Public (LPIP).12 The law establishes the procedure for collecting, producing, publishing and disseminating public information and the rights, duties and liability of producers and disseminators of public information, their participants, journalists and institutions regulating their activities. The law establishes licensing and notification requirements for broadcasting (TV, radio) organisations, limitations on ownership, requirements for media content, programme composition, language, advertising restrictions, ethics, etc.
The media area is supervised by an independent regulatory authority – the Radio and Television Commission (RTC).13 The RTC is responsible for licensing of radio and television broadcasting and rebroadcasting activities, notification procedures, approval of ownership transfers, monitoring and supervision of content control, and advertising requirements.
Other regulatory bodies that may exercise supervision over ECS providers pursuant to their competence include (not exhaustively) the State Consumer Rights Protection Authority, the State Data Protection Inspectorate, the Competition Council, and the Inspector of Journalist Ethics.
ii Main sources of law
The main sources of law in the field of electronic communications are the Law on Electronic Communications, the Law on Information Society Services and the Law on Provision of Information to the Public.
More detailed regulations are contained in the specific regulations issued by the Communications Regulatory Authority or the government, for example, Order No. 1V-340 of the Communications Regulatory Authority regarding General Terms on Engaging in Electronic Communication Activities and Order No. 1V-125 of the Communications Regulatory Authority on Allocation of Spectrum for Broadcasting Radio and Television Programmes.
iii Regulated activities
Under the LEC, the provision of public communication (fixed, mobile and over electricity networks) networks or services, as well as public satellite communication networks and services is subject to a prior notification obligation. The notification form is publicly available on the website of the Communications Regulatory Authority (CRA).14
All public communication service providers who engage in the provision of public communication networks and services, dedicated lines, internet access, data transfer services, television (satellite, cable, multi-channel microwave, digital terrestrial, IPTV) services, cable radio services, optical fibre network services, and TV and radio transmission services are subject to quarterly reporting obligations. The reporting form is publicly available on the website of the CRA,15 which can be submitted electronically.
There is no requirement for communication service providers to be established or registered locally.
RFs are assigned by the CRA in accordance with the approved national plans. They can be assigned directly to the applicant, or by way of a public auction (e.g., in case of mobile communications networks). Telephone numbers are distributed according to the national numbering plan.
The RTC is responsible for licensing of radio and TV broadcasting and rebroadcasting activities. Licences are required for radio and TV broadcasting via terrestrial stations or networks, cable networks, multi-channel microwave networks, and networks the main purpose of which is not radio or TV broadcasting. Broadcasting via websites or web portals is not subject to licensing. Other broadcasters or subscription media service providers are subject to notification requirements.
iv Ownership and market access restrictions
In Lithuania, there are no general ownership restrictions for communication services providers. However, where national radio spectrum is allocated via public auction, participants usually are required by the CRA to comply with European and transatlantic integration criteria (i.e., entities must be established in countries of the EEA, EFTA, OECD or NATO).
The Law on Companies having Strategic Importance for National Security16 recognises information technology and telecommunications and other high technologies as economy sectors having strategic importance for national security. When an investor in this sector acquires ownership of more than one-quarter of the entity of the strategic sector, this acquisition must be notified to the Commission on Coordination of Security for Objects of Importance for National Security.
Radio and TV broadcasting licence holders may be owned by entities, who comply with certain restrictions. Licence holders cannot be owned by state or municipal institutions, governmental organisations, companies owned by the government or municipalities, banks, and political parties. Licence holders must also comply with reputation requirements (i.e., absence of criminal convictions for management or owners). Licence holders can be owned only by entities established in the EU or NATO, and which had no relations with entities or governments outside the EU or NATO that would pose a threat to national security.
Local and regional public information disseminators (newspapers, journals) must report their ownership to the RTC.
The telecommunication, media and technology sectors are also subject to general concentration controls from the perspective of competition law. In certain cases, an acquisition transaction may require notification and approval from the Competition Council.
In general, Lithuanian law does not limit market access, except for the limitations specified above.
v Transfers of control and assignments
Telecommunication service providers are usually not subject to ownership change notifications or approvals.
A change in the ownership of at least 10 per cent in the radio or TV broadcasting licence holder requires prior consent from the RTC. Prior to the ownership change, the licence holder has to apply to the RTC for consent and provide all information required to prove the reputation and origin of the new owner. Consent is granted usually within one month. In the event a concentration permit is required from the Competition Council, the consent is only issued after the permit is granted by the Competition Council.
The Commission on Coordination of Security for Objects of Importance for National Security reviews notifications regarding compliance of the investors with the restrictions of the Law on Objects having Strategic Importance for National Security and must adopt its conclusions within 15 days after receipt of notification.
III TELECOMMUNICATIONS AND INTERNET ACCESS
i Internet and internet protocol regulation
The LEC does not contain rules dedicated specifically to internet or IP-based services. Certain electronic communication services, which are based on IP technology (e.g., VoIP), are subject to the same regulatory regime as other public access telecommunication services. For example, services that include inbound and outbound call services qualify as equivalent to public access telecommunication service, and the same legal and regulatory regime applies to such services. Call services provided via PSTN, ISDN based on IP, coaxial based on IP, STP or UTP based on IP, FTTP based on IP, GSM technology based fixed line services all qualify as substitute services by the CRA.
The CRA is supervising the implementation of Regulation (EU) 2015/2120 on open internet access and the BEREC Guidelines on the Implementation by National Regulators of European Net Neutrality Rules.17
Information society services (other than electronic communication services) are subject to the regulation of the Law on Information Society Services, which is based on the principles of technological neutrality and non-discrimination. Information society service providers are required to provide the following directly and permanently accessible information to the recipients of the service:
- the name of the service provider;
- the service provider's registered address;
- contact details, including the electronic mail address;
- the register, where the service provider is registered, and registration number;
- supervisory authority; and
- VAT payer code.
If reference is made to the fee charged for the service, information on whether the fee includes taxes and delivery charges must be provided.
Information society service providers who engage in information transmission (mere conduit), caching and hosting service provision are exempt from liability for the information transmitted. Additionally, such information society service providers are not required to monitor information upon the mere transmission thereof or provision of access thereto, temporary storage thereof in cache memory or storage thereof at the request of the recipient of the service, nor is the service provider obligated to actively seek facts or circumstances indicating illegal activity. However, these information society service providers are required to remove illegal content once they are notified by the right holders or those affected by the illegal information.
ii Universal service
In Lithuania, universal electronic communication services include provision of a subscriber line, internal calls and foreign calls, and call-box stations. Universal services are provided by Telia Lietuva, AB, a fixed-line communication service provider.
iii Restrictions on the provision of service
In Lithuania, the CRA has imposed price limitations to certain providers for universal services, for call termination in public access telephone services, wholesale line rental services, wholesale local fixed access services, wholesale central access for massive market products, mobile call termination services, and broadcasting transmission services.
Communication network service providers have to provide access to their infrastructure in cases where the user of infrastructure cannot implement its right to electronic communication infrastructure, or where the costs of such implementation would be disproportionately high. The network operator is required to conclude the agreement with the user of the infrastructure following the principles of non-discrimination and transparency.
Contracts with consumers
The Lithuanian Civil Code (Article 6.161) qualifies public communication service contracts as public contracts (i.e., public communication service contracts have to be concluded with any customer who applies for the services, where it is technically possible to provide the service). Service providers may not refuse to conclude contracts or to provide discriminatory terms to certain groups of customers. Standard terms on electronic service contracts are controlled by the general contract law provisions as well as specific terms in the LEC.
Regulation (EU) 2015/2120 laying down measures concerning open internet access is directly applicable in Lithuania. Thus all communications service providers in Lithuania are under the obligation to treat all traffic equally, when providing internet access services, without discrimination, restriction or interference, and irrespective of the sender and receiver, the content accessed or distributed, the applications or services used or provided, or the terminal equipment used.18 Observance of net neutrality and open internet access is supervised by the CRA.
Unsolicited phone calls, faxes, emails and texts
Lithuania has implemented the e-Privacy Directive 2002/58/EC19 in the LEC. The LEC provides the same requirements regarding marketing communications for natural as well as legal persons. Under the LEC, the use of electronic contact details of a natural or legal person for direct marketing is allowed only with the person's prior consent (opt-in).
If a communications service provider obtains the electronic contact details (email, phone number) of a customer, who is a natural or legal person, in connection with selling a product or providing a service, such contact details may still be used for direct marketing of its similar products to the customer if the customer is given, upon the initial collection of electronic contact details and each time when the buyer's electronic contact details are used for direct marketing, a clear and distinct opt-out opportunity free of charge and in an easy manner; and the customer is allowed to exercise its right to refuse over an ECN.
The exemption described above does not apply to voice calls, or calls placed with automated calling machines.
Lithuania adopted the Law on Cyber Security in 2014,20 which was recently amended to implement EU Directive 2016/1148 (the NIS Directive). The law provides for the requirements for the maintenance of network and information systems essential for the functioning of society and state and local authorities' network and information systems, liability and supervision as well as the bases for the prevention and resolution of cyber incidents.
The LEC provides the obligation for network service providers to retain certain electronic communication data for at least six months, for the purpose of investigation of serious crimes.
As of 25 May 2018, the General Data Protection Regulation (GDPR) has been applicable in Lithuania. This was also of extreme importance in the communications sector, as the general rules set out in the GDPR are also applicable in the communications sector. In addition to the GDPR, Lithuania still has the Law on Legal Protection of Personal Data21 as amended to comply with the GDPR.
In addition to the GDPR and the Law on Legal Protection of Personal Data, some data protection requirements are also set out in the LEC, in particular related to e-Privacy Directive implementation.
Minors are protected by the Law on Protection of the Underaged from Negative Impact of Public Information, which applies to TV, radio content, as well as advertising, trademarks, computer games and other public information.
IV SPECTRUM POLICY
The CRA has approved a number of plans for development of radio spectrums (3,410–3,600GHz, 380–385MHz, 390–395MHz, 220–2,300MHz, 2,500–2,690MHz, 2,300–2,400MHz, 3,600–3,800MHz and 790–862MHz).
There is a list of spectrum approved by the CRA, which can be used without authorisation.
Recently the government decided to open the spectrum at 700MHz, which will be used for 5G communication.
The 4G network was developed in Lithuania from 2014.
ii Flexible spectrum use
There is a list of spectrum approved by the CRA, which can be used without authorisation.
iii Broadband and next-generation mobile spectrum use
Spectrum for mobile networks is traditionally made available by auction to three operators.
Recently the government decided to open the spectrum at 700MHz, which will be used for 5G communication. It is expected to be launched by 2020.
iv Spectrum auctions and fees
The latest spectrum auction was held in 2015 for 880–915MHz, 925–960MHz, 1,710–1,785MHz and 1,805–1,880MHz, where the frequencies were assigned to three MNOs in Lithuania.
The next auctions for developing 5G are likely to be for spectrum around 700MHz.
i Restrictions on the provision of service
Censorship of public information is prohibited in Lithuania. In order to ensure freedom of information, the LPIP prohibits exerting pressure on the producer or disseminator of public information, their participant or a journalist, compelling them to present information in the media in an incorrect and biased manner. The producer, disseminator of public information, their participant or a journalist shall have the right to keep the confidentiality of the source of information and not to disclose it, except where a court orders such disclosure.
The LPIP prohibits publication in the media of information that:
- incites to change the constitutional order of the Republic of Lithuania through the use of force;
- instigates attempts against the sovereignty of the Republic of Lithuania, its territorial integrity and political independence;
- spreads war propaganda, instigates war or hatred, ridicule, humiliation, instigates discrimination, violence, physical violent treatment of a group of people or a person belonging thereto on grounds of age, sex, sexual orientation, ethnic origin, race, nationality, citizenship, language, origin, social status, belief, convictions, views or religion;
- disseminates, promotes or advertises pornography or propagates or advertises sexual services and paraphilias;
- promotes or advertises addictions and narcotic or psychotropic substances;
- is slanderous and offensive to a person or degrades his or her honour and dignity; or
- violates the presumption of innocence and impedes the impartiality of judicial authorities.
The LPIP requires public information to be produced and disseminated in the state language. Radio or television programmes that are broadcast in a language other than Lithuanian must be translated into Lithuanian or shown with Lithuanian subtitles, except for educational, occasional, special, music and rebroadcast foreign radio or television programmes or parts of programmes as well as programmes produced by broadcasters of radio or television programmes intended for the ethnic minorities of Lithuania. Broadcasters of television programmes are prohibited from showing audiovisual works that have been translated from an official EU language into a non-EU language. When rebroadcasting television programmes, rebroadcasters or other persons providing services of dissemination of television programmes or individual programmes via the internet for Lithuanian users must give priority to the official EU languages.
Broadcasters of television programmes must, where possible, reserve more than half of the television programme time remaining after deducting the time allocated for news, sports events, games and advertising programmes, teletext services and teleshopping for European works. Broadcasters of television programmes must, where possible, reserve at least 10 per cent of the television programme time remaining after deducting the time allocated for news, sports events, games, advertising programmes, teletext services and teleshopping for European works created by independent producers not earlier than within the past five years.
Advertising and audiovisual commercial communications must be decent, correct and readily recognisable. It is prohibited to publish in advertising and audiovisual commercial communications information that degrades human dignity, promotes any discrimination based on race, sex or ethnic origin, nationality, citizenship, religion or belief, disability or age, or contains manifestations or promotion of sexual orientation, is offensive to religious or political convictions or promotes behaviour prejudicial to health or safety or behaviour grossly prejudicial to the protection of the environment.
Advertising of tobacco and alcohol products and audiovisual commercial communications intended for advertising of tobacco and alcohol products is prohibited.
The total time of television advertising spots and teleshopping spots within a given hour must not exceed 20 per cent.
ii Internet-delivered video content
Besides television services, on-demand audiovisual media services are becoming increasingly popular. On-demand audiovisual media services do not require a licence, but do require a notification to be submitted to the RTC.
Most of the biggest TV channels in Lithuania have started their own video distribution services. Internet news portals are also including video publications as part of their service.
VI THE YEAR IN REVIEW
The most important changes in the legislation concerning the ICT sector in 2017 and 2018 are the GDPR and the Law on Cyber Security.
The GDPR became applicable on 25 May 2018, and required companies to adjust their data processing and gave people a greater control over the use of their personal data.
The Law on Cyber Security was updated to implement the Networks and Information Security Directive 2016/1148.
Significant recent transactions include the acquisition of previously Viasat-owned TV channels (TV3, TV8).
In March 2017, it was also announced that the Swedish media holding Modern Times Group had signed an agreement to sell its Baltic businesses to the US Providence Equity Partners. The value of the transaction was approximately €115 million. The transaction concerned the sale of three TV channels in Lithuania (TV3, TV8 and TV6), five TV channels in Latvia and three in Estonia. The sold entities form the third-largest commercial television operator in the Baltic region, nationwide commercial radio stations, digital assets and an online advertising consultancy operating across the Baltic region.
VII CONCLUSIONS AND OUTLOOK
Generally, Lithuania follows the European policies and has successfully implemented the various pieces of EU legislation into national law.
It is likely that the government will continue its policy of supporting key technology areas.
In the telecommunications sector, the most important development in the upcoming year should be the development of the 5G network.
1 Stasys Drazdauskas is a counsel at Sorainen.
6 https://osp.stat.gov.lt/statistikos-leidiniu-katalogas?p_p_id=101&p_p_lifecycle=0&p_p_state=maximized&p_p_mode=view&_101_struts_action=%2Fasset_publisher%2Fview_content&_101_assetEntryId=4756134&_101_type=content&_101_urlTitle=informacines-technologijos-lietuvoje-2016-leidinio-pristatymas-&inheritRedirect=true https://investlithuania.com/lt/prioritetiniai-sektoriai/technologijos/.
9 Latest English version: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/05cd4e020f0a11e7b6c9f69dc4ecf19f?jfwid=-502q00eth.
12 Latest English version: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/c4a1511305c611e8802fc9918087744d?jfwid=-502pzze92.
18 Articles 3 and 4 of Regulation (EU) 2015/2120.
19 Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (the Directive on privacy and electronic communications), as amended.