Estonia Communication Profile 2012

Estonia’s ambitious EstWin national fibre network opens for customers

Economic conditions

The Estonian economy has undergone major reforms following independence in 1989 to develop competition and free-market business models. The introduction of regulations and legislation providing for private ownership of businesses and property, reduce inflation, establish exchange rate stability and fasten international investment resulted in considerable economic increase – albeit from a relatively low base – through the 19990s and into the new century. The recent financial crisis saw GDP contract in both 2008 and in 2009, mainly due to the collapse in request for exported goods. However, a second tranch of regulatory measures and fiscal tightening since 2008 has led to solid economic recovery, with GDP increase estimated at 6.5% in 2011 and at a similar level anticipated for 2012.

Digital Economy and Broadband Market

Estonia has the highest broadband penetration rate of all the Eastern European countries. Broadband access is available via ADSL2+, FttH, cable, WiFi, WiMAX and mobile networks. The telecoms incumbent Elion is the dominant provider of ADSL services, with cable broadband the main competing platform. Widespread broadband usage has underpinned Estonia’s emerging internet economy, with various e-commerce, e-government, e-education and e-health services available and widely used. The cable TV market is well developed and hence cable TV operators have been well-positioned to offer bundled play services. IPTV has been launched by Elion, with considerable success. This report provides statistics and an overview of broadband market developments and trends in Estonia, as well as forecasts to 2020. It also includes major market developments in the country’s converging media and digital economy.

Key developments: Analogue cable to cease by September 2012; EstWin NGN opens in several counties; operator data to end-2011; Statistics Estonia data to end-2011; regulator’s 2010 market data report; ETSA market updates for end-2011; market developments into 2012.

Telecom Market and Regulatory

Estonia’s telecom market is benefitting from regulatory measures encouraging competition as alternative operators chip away at the fixed-line market share of the incumbent Elion. Fixed-line telecoms infrastructure has been upgraded and geared towards offering broadband and triple-play services, with ADSL2+ and FttH networks deployed in urban areas and wireless technologies such as WiMAX used to deploy either competing infrastructure or access into rural areas. The government has also promoted a public-private partnership to build a national fibre-based next-generation network providing 100Mb/s to all premises. The first counties have been connected to the network. This report provides an overview of Estonia’s fixed-line and IT markets, assessing the economic condition of the country in recent years and its influence on the performance of the largely international players in the market, recent regulatory developments, and the status of fixed-line networks and the NGN. It also includes a range of performance and financial data and estimates.

Key developments: Tele2 buys the telco Televörgu; number portability procedures updated; ICT revenue broaches €3 billion; operator data to end-2011; Statistics Estonia data to end-2011; regulator’s 2010 market data report; ETSA market updates for end-2011; market developments into 2012.

Telecom revenue overview

The Estonian telecoms market is of the majority developed in Eastern Europe. Joining the EU in mid-2004, its regulatory regime has been determined by the EU’s revised regulatory framework. The first of the Baltic States to liberalise its telecom market, competition in amount sectors has led to falling consumer prices. In general revenue has fallen steadily since 2008, a trend which is likely to continue during the next few years as further regulatory measures affecting interconnection and mobile termination rates offset increases in voice traffic and the growing broadband and mobile subscriber base.

Broadband market

Estonia adopted the internet rapidly, supported by government policies which ensured broadband availability through free WiFi in a lot of areas. The market is dominated by Elion, Starman and STV. Widespread broadband availability has underpinned Estonia’s emerging internet economy, with various e-commerce, e-government, e-education and e-health services available and widely used. The cable-TV market is well developed and hence cable-TV operators have been well-positioned to offer bundled play services.

Mobile market

Estonia’s mobile market is one of the more mature in Eastern Europe, with SIM card penetration exceeding 100%. Services are offered by mobile network operators EMT, Elisa and Tele2 as well as a small number of MVNOs. WCDMA-based (3G) and HSPA networks serve as the basis for the growing mobile broadband sector, supporting a range of mobile content and applications. These developments are expected to underpin future revenue growth. This report provides a concise overview of Estonia’s small and growing mobile market as players further develop the data sector. It covers major players, regulatory developments, services offered and a variety of financial and operating statistics.

Estonia’s SIM card penetration is on a par with most Western European nations, though actual mobile user penetration is lower due to multiple SIM card ownership. The three MNOs are divisions of the Scandinavian operators TeliaSonera, Elisa and Tele2, while services are as well available from a small number of MVNOs. 3G and HSPA are widely available while LTE, launched in late 2010, should be available from EMT nationally by 2014. LTE has been deployed cost-entirely since the 790-862MHz band was made available in mid-2011.

Key telecom parameters – 2009; 2013

(Source: BuddeComm)

Market Highlights

• The number of PSTN lines continues to fall as consumers migrate to VoIP and mobile solutions. The incumbent Eesti Telekom, facing falling revenue, has shifted its focus to selling broadband subscriptions and providing IT infrastructure on which services can develop.
• LTE was launched by EMT in 2010 and its network should provide national coverage by 2014. Current average download speeds are 40Mb/s, with a maximum speed at 70Mb/s. Tele2 and Elisa have adopted a less aggressive LTE rollout, relying on customer satisfaction with their existing HSPA capabilities. Tele2 is obliged to provide 700 LTE base stations by 2016.
• The government’s support of a nationwide FttX network, providing 100Mb/s broadband access for 90% of the people by 2012 and 100% by 2015, is being developed by an independent entity comprised of amount major telcos. The National’s EEK1 billion contribution to the project in rural and underserved areas is part the additional ambitious, proportionately, in the EU. Parts of the EstWin network were switched on at the end of 2011.