Estonia is a EU member that was added to the euro zone since 2011, it has a modern market-based economy and one of the higher per capita income levels in the Baltic region, but its economy is highly dependent on trade, leaving it vulnerable to external shocks. Estonia’s successive governments have pursued a free market, pro-business economic agenda, and sound fiscal policies that have resulted in balanced budgets and the lowest debt-to-GDP ratio in the EU.
The internet penetration rate was almost 98% by December, 2018. Fixed-line infrastructure has been upgraded and is geared towards offering broadband services and bundled offerings, with ADSL2+ and FttP networks deployed in urban areas and wireless technologies such as WiMAX used to deploy either competing infrastructure or access into rural areas.
The Estonian telecoms market is one of the most developed in Eastern Europe after being fully deregulated in 2001. This early liberalization with intense competition helped to get a well developed communications network. Foreign investment greatly improved the internet services available in the country as well as the telephone service. The telecommunication revenue as a percentage of GDP was of 5,2% in 2010, being the highest in the OECD region.
A joint initiative from several Estonian telecoms companies aim to develop the EstWIN plan, with the objective of developing a superfast broadband infrastructure by 2015 in two phases. First developing a new fiber optics network, and then upgrading the existing network to improve its quality and capacity. The objective is to connect every household and business to network capable of reaching 100Mb speeds.
Since 2008, The regulatory tasks of the electronic communications sector are now divided between two authorities: the Estonian Competition Authority (Konkurentsiamet, ECA) and the Estonian Technical Surveillance Authority (Tehnilise Järelevalve Amet, ETSA). ECA is responsible for economic regulatory issues of non-competitive markets, whereas ETSA is responsible for issues of technical safety, use of radio frequencies, numbering and electronic communications networks.
The Estonian economy benefits from strong electronics and telecommunications sectors and strong trade ties with Finland, Sweden, Germany, and Russia. The economy’s 4.9% GDP growth in 2017 was the fastest in the past six years, leaving the Estonian economy in its best position since the financial crisis 10 years ago. For the first time in many years, labor productivity increased faster than labor costs in 2017. Inflation also rose in 2017 to 3.5% alongside increased global prices for food and energy, which make up a large share of Estonia’s consumption.
Estonia is challenged by a shortage of labor, both skilled and unskilled, although the government has amended its immigration law to allow easier hiring of highly qualified foreign workers, and wage growth that outpaces productivity gains. The government is also pursuing efforts to boost productivity growth with a focus on innovations that emphasize technology start-ups and e-commerce.
TeliaSonera was the result of the merging of two incumbent operators in two different EU countries and is now the leading supplier of telecom services in the Baltic countries. The first investment in Estonia was made in 1991, where TeliaSonera is now the majority shareholder in the mobile operator EMT, and in Elion, which was the previous Estonian incumbent and is now the fixed network operator for TeliaSonera. These two companies are both leaders in their respective markets. TeliaSonera is the fifth largest telecom operator in Europe today.