Report: Mobile Internet is Affordable in Estonia, but Fixed Connection Prices are Expensive Compared to Neighboring Countries
Estonian telecommunications services have good coverage and speed in international comparison, and mobile internet is affordable and very competitive globally. However, cable connection prices are expensive compared to neighboring countries, especially for high speeds, according to a new report from the Development Monitoring Center titled "Trends and Competitiveness in the Electronic Communications Sector".
Uku Varblane, head of research at the Development Monitoring Center, explained that mobile internet affordability is supported by competition. "Mobile internet prices are relatively favorable thanks to intense competition between three major telecommunications companies. However, developing a fiber-optic network requires scale, and reaching lower prices is complicated because service providers often control both the end-user connection point and the cable, which restricts operator switching," Varblane explained, adding that the fixed-line market in Estonia is small and commercially unattractive outside densely populated areas.
In addition, Estonia has disproportionate and unjustified requirements for network construction, which make infrastructure investment expensive. "One example is the requirement to install fiber-optic cables at a depth of two meters or to add an additional protective tube around a cable already installed in a protection pipe," Varblane pointed out.
The Development Monitoring Center notes in its brief report that competitiveness in Estonian telecommunications services could be improved by making consideration of telecommunications infrastructure standard and legally mandatory in all construction projects, including road construction. The situation could also be changed by the spread of operator-neutral internet networks, if they are installed together with electrical cables.
Varblane highlighted that greater awareness of modern telecommunications among local authorities and landowners could also help avoid unjustified requirements for network construction. "Housing cooperatives and other landowners could build in-house fiber-optic networks themselves, and this would increase the ability of residents and businesses to choose between different service providers, which would help lower fixed-line prices," Varblane gave as an example.
Despite deliberate damage to telecommunications cables in the Baltic Sea, Estonia's number of external connections is good and has enabled uninterrupted telecommunications services for businesses and residents. For intercontinental connections, maritime routes remain the best solution, and their improvement is several times cheaper than laying new cables, according to the Development Monitoring Center.
Compared to the European average, fiber-optic network coverage in Estonia is high (86%), and most buildings not yet connected to fiber-optic networks are less than 10 kilometers from the backbone network. However, in terms of fixed-line internet speeds by location, Estonia ranks 66th out of 154 countries, falling below its potential, meaning the networks would allow faster connection speeds than actual usage.
In mobile internet speed comparisons, Estonia ranks 24th among 102 compared countries globally, and most European countries lag behind Estonia.
The brief report "Trends and Competitiveness in the Electronic Communications Sector" is based on the chapter "Electronic Communications as a Competitiveness Factor for the Estonian Economy" (author M. Vallimäe) from the competitiveness expert council report and has been prepared within the research direction "The Future of Economic Competitiveness". The research direction analyzes future prospects, opportunities and obstacles for the Estonian economy and presents forward-looking economic policy recommendations. The research direction is part of the work of the competitiveness expert council convened by the Riigikogu Economic Committee.
