Today the study “Preparation of EstWin 2: the market and market failures”, conducted by Praxis at the request of the Ministry of Economic Affairs and Communications and the Estonian Broadband Development Foundation, is being revealed. The said study shows that over half of the population does not have access to an internet connection the speed of which is at least 40 Mbit/s.
The aim of the study is to map areas in Estonia where there is no access to high-speed internet and where communications undertakings are not interested, largely due to economic reasons, of developing the system, i.e. where market failures exist.
“We analyse the extent of areas where market failures exist and enlist areas where there is need for broadband access points but where the market conditions would not allow it and therefore certain interference, incl. state interference, is needed,” said one of the authors of the study, Risto Kaarna, analyst at Praxis.
The results of the study show that high-speed internet (40 Mbit/s and more) is not available for ca 55% of the entire population. A total of 70 local governments are entirely out of reach of high-speed internet connectivity, i.e. the number of people suffering from market failure is estimated at 92 000. The majority of such local governments are located at Saaremaa, Tartumaa, Pärnumaa and Ida-Virumaa.
“Fixed internet service providers do not foresee the possibility of providing broadband connection for every household in Estonia by 2017 without the development of a basic network. For them it is economically reasonable to provide such services mostly in apartment blocks,” Kaarna explains.
The study reveals that mobile network operators have however promised to develop a 4G network by 2017 and provide high-speed internet in the whole of Estonia. The development of 4G networks presupposes the existence of a fibre-optic basic network.
“The 4G mobile network developed by service providers does not meet the current expectations regarding the speed of the connection (40 Mbit/s and more) and hence there is no foreseeable alternative in areas which are devoid of such an internet connection in the next 5 years,” Kaarna adds.
Marika Priske, secretary general at the Ministry of Economic Affairs and Communications says that the present study shows a clear bottleneck in the development of information society. “High-speed internet offers a possibility to engage in everyday activities while staying at home and in rural areas, where distances are inevitably long, the use of e-solutions can provide much more benefit than in urban areas,â€ Priske added.
The need for access to high-speed internet in rural as well as urban areas is also emphasized by Olav Harjo, head of the Estonian Broadband Development Foundation, who adds that if the state really wishes that the 30% of the population who live outside of urban areas, would also be a part of the information society, then we must strive to eliminate the market failures.
“First and foremost we have to find funds to complete the development of the EstWin basic network as without it the gap between rural and urban areas increases. Ensuring high-speed connection for every household can only be achieved via cooperation between communications undertakings, consumers and local governments and be carried out with the help of different European Union funds,” Harjo explains.
The study confirms that consumers value the quality of the internet connection service, its speed and affordable price. Two thirds of people living in market failure areas see internet connection with a speed up to 100 MBit/s as being important. At the same time 55% of the population, the majority of whom live in low-density areas, do not have access to a faster 40 MBit/s fixed-speed connection. 85% of persons living in market failure areas only have access to a low-speed internet connection.