The state is building in the rural areas the most expensive possible Internet connection, but people do not access it because the price is too high and the already existing network is therefore underused, says the National Audit Office report published last week.
People cannot pay for expensive Internet offered by the state
“Despite the 35 million euros allocated by the Ministry of Economic Affairs and Infrastructure and various measures, accessibility of fast Internet in the market failure areas has not significantly improved when compared with the ambitions of the established goals,” the report stated. “The set targets have been largely missed and the deadline of high-speed Internet reaching all customers has been delayed from the initial 2015 to 2020 and by now to 2030.”
The National Audit Office also estimates that the number of clients joining the broadband network has been very low: as of November 2021, out of all people having potential access only 28 percent had joined the access network and 21 percent had begun to use the Internet service. There were several reasons but the end users generally consider it either too expensive or simply feel no need for the service.
According to telecom enterprises, the end users do not want to start using the high-speed Internet via the new access network due to the accompanying high user fees. They say that many fond users find the 199 euro access fee to Enefit Connect OÜ and the one-time and monthly payments to service providers too high, the National Audit Office report states.
No market research
The state has no information about how much would rural residents be willing to pay for fast Internet connection, because no specific studies have been carried out to determine it and the plans are based on estimates made six years ago.
Discussions with telecom enterprises in 2016 showed that they estimated the so-called pain threshold at approximately 300-euro accession fee, said Raigo Iling, advisor of the Ministry of Economic Affairs and Communications (MKM) communication department. The number of those interested in access declined starting from 300 euros.
The actual price limit is apparently lower, because at the present 199-euro fee requested by Enefit Connect only one third of those having potential access are willing to join the established network.
The MKM set the price limit for 2018, 2020 and the new measure currently being coordinated at 200 euros maximum which could be requested for access to the network built for subsidies.
“Those joining the network immediately during its construction will have the optical cable brought into the house for the up to 200 euro fee, but this does not include the installation of cables within the building,” said Iling. “The client can do it on his own or order the service separately.”
In order to have network service the client has to select a suitable operator which provides service in the area. But Enefit Connect OÜ says that the complicated process which involves numerous parties is inconvenient for the clients: the end user has to select separately the builder of the access network and the internet operator and conclude contracts with them. It would be easier for the client to communicate with a single party, who would conclude all the contracts for the end user and will later provide the internet service.
The National Audit Office criticized that the MKM and the Consumer Protection and Technical Regulatory Authority (TTJA) have no idea about the number of households without fast internet cable connection but have good mobile internet availability and therefore do not need the construction of a state-subsidized fast cable network.
The reason is that the rules of defining the so-called white areas in the whole of Europe have been so far based only on cable networks and have not considered the mobile alternative, because it need not always ensure equal quality, explained Oliver Gailan, head of TTJA communications department.
But would there be less costly alternatives to the expensive optical cable? Iling said that broadband connection ensuring stable internet speed could be created via cable or wireless networks. However, the use of a wireless network would require the installation of more aerials and the use of additional network configurations. To sum it up, the result need not be cheaper.
Mobile coverage in Estonia is quite good, but this cannot guarantee stable internet speed to every end user all the time, since it would be influenced by terrain, weather and the number of users in the area.
TTJA believes that the development of state-subsidized fast internet in the future should use the radio link (including mobile connection) as well as cable technologies. Internet connection via satellite, which covers large areas, is also developing very quickly.
“A model relying on various technologies would ensure the best cost efficiency because it is not realistic to lay cables to every single farmhouse,” Gailan said. “Every technology differs as to the amount of its initial investment, later monthly fees and the quality indicators. Discussions are going on about which solutions would be optimal for us in various situations.”
The prime minister is angry
Prime Minister Kaja Kallas said during the parliament briefing last Wednesday that she is worried about the failure to complete the broadband connections. The EU recovery fund has allocated 70 million for the purpose during the next period.
“We are making great efforts but we cannot accomplish within one year what has not been done so far,” Kallas said. “The network must be built; it is another matter who will use it to provide service”.