Fast Internet may not get to every home from the information superhighway

Toomas Mattson | 3/17/2015 | 10:00 AM

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TALLINN, 17 March 2015 - The audit of the National Audit Office indicates that although the Government is planning to guarantee everyone in Estonia access to a fast Internet connection by 2020 via the development of a basic broadband network, this may not be achieved to the extent intended because no thought has been given to how to make fast Internet connections accessible outside of the areas of larger apartment buildings and in places where the number of consumers is small.

The Information Society Development Plan initially stated in 2009 that 100% of homes, companies and organisations should have the option to join the new generation broadband network and to use a 100 Mbit/s Internet speed. The present version, prepared in 2013, is less ambitious and sets the goal that a fast Internet of 30 Mbit/s should be accessible to all people in Estonia by 2020 and that 60% of the population will be using superfast Internet of over 100 Mbit/s – the share of the latter being 3.6% in 2012.

The basic broadband network established with European Union support is planned in such a manner that it would be no further than 1.5 kilometres from 98% of homes. According to the initial plan, the whole of Estonia was to be covered with the broadband network by 2015. 2800 km has been built so far and the plan is to build 6600 km of fast network.

The plan, which has already received 28 million euros in support from the state and which stands to receive another 41 million euros, was based on the assumption that communications companies would build the necessary connections from the basic network to the consumers, invest in cables and equipment which connect Internet service consumers to the basic broadband network or install the equipment required for the provision of fast Internet to mobile masts.

However, the people who prepared and approved the Information Society Development Plan failed to notice that communications companies have no clear economic interest in building a modern access network based on fibre optic cables even in regions of private homes in towns and cities, let alone in sparsely populated locations. The estimated number of such homes in Estonia is 160,000.

The state has not planned any extensive support for investments aimed at making the Internet accessible to consumers, but rather consumers must organise and pay to have their homes connected to the Internet themselves. This is why the only way people in sparsely populated regions and areas of private homes can use fast or superfast Internet is if they make all of the required investments themselves or establish so-called network associations via which they can request money to cover the investments.
According to the study carried out by the Estonian Association of Information Technology and Telecommunications, the monetary contribution of a household in the construction of the network would range from 2500 to 11,000 euros, depending on the model. However, most Estonian households cannot afford to pay this much and it’s necessary to support the construction of access networks or to lend households money for this purpose.

There are also examples of successful network associations. For example, the village of Rääka in Suure-Jaani municipality in Viljandi County joined the basic broadband network that had been established 2.5 kilometres from the village at the beginning of 2013, which gave five households access to fast internet, cable TV and telephone via fibre optic cables. Communications operator Elion prepared the design, the villagers bought the cable, the village society dug it into the ground, the local government sorted out the planning permission and offered as much support as it could. Each household had to invest over 1000 euros. If the villagers had not done the excavation works and installed the cables themselves, the amount would have been twice as much.

The initiative of village residents has also moved on to the broader level of local authorities – in 2014 Suure-Jaani Municipality organised a public procurement which resulted in the construction of fibre optic cable connections for 29 households in three villages in cooperation with communications companies, and a similar new procurement is being prepared for the establishment of an access network for ca 100 households in another six villages.
To date, communications companies that develop mobile Internet have benefited the most from the development of the basic broadband network, because they are now able to offer 4G Internet to people. Mobile operators are currently the biggest users of the basic broadband network, and 4G Internet has become accessible to many due to the development of the basic broadband network. Mobile Internet is also an option for providing fast and superfast Internet, but at the moment the quality of 4G mobile Internet is not equivalent to the fast and superfast Internet provided via a fixed network due to limited volume, fluctuating speed and higher price.
Mobile Internet users must keep in mind that every new person who enters the mobile mast area may reduce the connection quality of existing users and that consumption of several services provided online may be expensive (e.g. video streaming and uploading and downloading large files). These are the reasons why mobile Internet does not meet the fast and superfast Internet access goals set by the state. Improving the quality of mobile Internet connections requires additional investments by communications operators.

The National Audit Office advised the Minister of Economic Affairs and Infrastructure to develop and implement an action plan to make quality fast and superfast Internet connection accessible for all homes and organisations for a reasonable price by 2020.

Remarks by the Auditor General Mr. Alar Karis about the audit report "Effectiveness of the development of a broadband network or high-speed Internet":

"People who have no water at home because the supply network does not reach their house find no consolation in the fact that a hundred metres from their home there is a nice big pipe supplying others with water that meets all European quality requirements. As people often cannot afford to build utility lines, those not connected to the water supply system have to get their water from a well in the yard, which sometimes dries out and where the quality of water fluctuates.

At present, we are in a somewhat similar situation with the national plan, which is very much necessary and right for Estonia and aimed at guaranteeing almost every home with access to superfast Internet.

This is where the state should try to find a suitable solution to the market failure with an emphasis on the needs of people in the regions of Estonia whose stability and development should be given more attention. This would mean that the absence of a proper Internet connection would cease to be a reason why jobs that require a fast Internet connection cannot be created in certain places or why people leave their present places of residence."

Background

The Information Society Development Plan prepared by the state sets out that fast Internet of 30 Mbit/s should be accessible to all people in Estonia by 2020 and that 60% of the population will be using superfast Internet of over 100 Mbit/s.
The ca 6600 km basic broadband network was initially supposed to be completed by 2015. Approximately 2800 km of the network has been completed to date. The deadline for the completion of the entire network has been put back to 2020.

The state invested ca 28 million euros of EU support in the development of the basic broadband network from 2009-2014 and the plan is to grant another 41 million euros of support for the same purpose from 2015-2020.

The National Audit Office also audited whether the state has made every effort to ensure that everyone can have unlimited access to a fast Internet connection by 2020. The National Audit Office likewise analysed whether the network of fibre optic cables or the basic broadband network, which is being built with European Union support and should guarantee a fast Internet connection, has helped to achieve this goal.

Toomas Mattson
Communication Manager, National Audit Office
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  • Posted: 3/17/2015 10:00 AM
  • Last Update: 8/15/2015 11:08 PM
  • Last Review: 8/15/2015 11:08 PM

The Information Society Development Plan initially stated in 2009 that 100% of homes, companies and organisations should have the option to join the new generation broadband Network.

Caro/Klaus Westermann/Scanpix Baltics

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