Update July 2000: Estonia

During the period from April to June 2000 (inclusively) several changes occurred in key persons and main organisations in the context of information society developments. Contact details of persons and organisations can be found in corresponding ESIS II Database.

The most important changes to which the Estonian ESIS expert team wishes to draw attention are as follows:

• The co-ordination of state information systems was transferred from the administrative field of State Chancellery to the one of Ministry of Transport and Communications (see 2.1.1.);
• Several new enterprises were established which will be starting various new (mainly business oriented) information society projects (see 2.5.1., 2.5.2. and others);
• Same result will be reached through collaboration contracts in the Public Key Infrastructure domain (see 2.5.6.) and other domains of developing application (see 2.5.3, 2.5.4. and others).

The following report consists of two parts. In the first part persons and organisations currently in the ESIS Database are briefly overviewed and analysed in the context of wider developments. The second part covers changes over the last three months in private, public and non-profit sectors more thoroughly. One has to note that even if some changes seem not to have any impact on European level, are they still influencing Estonian developments via new information society projects or changing the overall attitude.

1. Overview of organisations and persons in the ESIS II Database

Estonian ESIS expert team has added 135 organisations (202 persons) that influence the Estonian information society developments the most to ESIS II Database as of 31 June 2000.

Although large amount of organisations is not directly involved in 'Information Society Projects', they have roles as support structures, whether providing technical infrastructure, organising promotional activities or participating in legislation preparation processes. Details on the roles of mentioned persons and organisations can be found in respective reports.

Attention is to be paid to following aspects:

• Despite of the extremely rapid development of the telecommunication market in 1990s, the question about services provided by telecommunication operators and tariffs is still in the air. Accordingly the number of telecommunication operators (24) is the highest one in the database. Most companies are data communication service providers or local cable distribution operators. Among those 8 organisations are of all-Estonian importance level;
• During 1999 and 2000 content service development has begun, i.e. enterprises for which IT is an important mean for organising offered services or organising own work more effectively have started more active usage of it. The situation is at its best in banking. Consultation firms arranging events on information society and relevant media companies belong also into this category. In the second half-year of 1999 and the first one of 2000 Estonian rapidly developing venture capital enterprises were added to the database;
• The IT usage in Estonian public sector is on a good level; accordingly the public sector has dealt with important undertakings in the area since the beginning of 1990s. The public sector has an essential part in directing development through legislation;
• Estonian IT companies sector is relatively moderate: hardware and software systems used are often developed in other countries and produced as well. The number of enterprises active with offering IT systems and services does not exceed 300, most companies are small businesses engaged with intermediation. Attention is to be drawn to the 18 enterprises having an impact on the wider development.

2. Changes in Key Persons and Organisations.

2.1. Government, Ministries, Agencies

2.1.1. National information systems will be co-ordinated by the Ministry of Transport and Communications

In June the Parliament altered the Government of the Republic Act according to which the co-ordination of state information systems will be moved into the governance of Ministry of Transport and Communications. With the modification the importance of the domain is increased through the determination of the responsibilities since a post of the official in charge of the domain will be established - vice-chancellor of the Ministry of Transport and Communications.

Up to now corresponding functions were carried out by the Department of State Information Systems of the State Chancellery and to sustain the coherence of co-ordination it is wished to transfer the personnel of the State Chancellery into the governance of the Ministry of Transport and Communications.

2.1.2. Establishment of the Technology Agency

In May the Estonian Ministry of Finance announced of the establishment of the Technology Agency with the purpose to promote and finance development and innovation. Establishment of the agency is a part of the Estonian research and development system re-construction.

2.1.3. Research and Development Council

In the Ministry of Education the development plan for re-organising the research and development activity is in preparation, according which Research and Development Council is to be re-arranged. Committees of specialists will be established to deal with concrete domains instead of the present advisory body by the Government which consists of 23 members and the work format of which are plenary meetings held according to the occasion.

The function of the RDC is to make proposals to the Government, to express opinions and to determine political national research and development goals. The Chairman of the RDC is ex officio Prime Minister, members of the Council are the Ministers of Education, Economic Affairs, Finance, Culture and Environment, the State Secretary, the Chairman of the Cultural Affairs Committee of the Parliament, representatives from Estonian Academy of Sciences, University of Tartu, Tallinn Technical University, Tallinn Pedagogical University, Estonian Agricultural University, Estonian Bank and eight government-appointed persons.

2.1.4. Foundations reform

During the session on June 20 when explicating the foundations reform the Government decided to establish two new relevant foundations (Ettevõtluse ja Elamumajanduse Laenude Tagamise Sihtasutus and Ettevõtluse Arendamise Sihtasutus).

With the creation of these two foundations the merger of activities of foundations subordinated to different ministries will take place. The aim of the action is to stop duplicating the work of the private sector and increase the transparency of business support schemes. The availability of information about business support schemes should also increase and management structure of the development of private enterprises should become simpler.

Under the jurisdiction of the Ministry of Economic Affairs the following Foundations will be restructured:

• Estonian Investment and Trade Development Foundation;
• Small Business Loan Foundation;
• Estonian Export and Credit Guarantee Agency;
• Estonian Housing Foundation;
• Estonian Innovation Foundation.

In addition the plan includes the reorganisation of:

• Rural Credit Guarantee Fund (Ministry of Agriculture);
• Agriculture and Rural Life Credit Fund (Ministry of Finances);
• Estonian Infrastructure and Transport Development Agency (Ministry of Transport and Communications);
• Estonian Regional Development Agency (Ministry of Internal Affairs).

2.1.5. Estonian Standardisation Centre

In January the Ministry of Economic Affairs, Chamber of Commerce and Industry and Confederation of Employers and Industry founded a non-profit organisation named Estonian Standardisation Centre. It started work on April 1 and is led by Vikor-Sven Kasemaa, members of the board are the Head of the Industry Department of Ministry of Economic Affairs Oleg Epner, the Director General of Chamber of Commerce and Industry Mart Relve and the Director General of Confederation of Employers and Industry Henn Pärn.

2.1.6. Ministry of Culture

During the next year data connection of public libraries to Internet is developed in frames of a corresponding national program. The total investment made by the State is 3.5 Million EEK (224 kEUR). At the moment 86 out of 557 public libraries are connected to Internet with help of local governments; more than 30 of these received financial help from the Open Estonia Foundation. The project is co-ordinated by the Ministry of Culture, which in turn has ordered the project management form the Estonian Informatics Centre.

2.1.7. Estonian Genome Project

At the end of May public was informed of the Estonian Genome Project. In the course of realisation of the project an unique database will be established, the use of which gives an opportunity to diagnose diseases, determine the risks to the health and to enhance the treatment more accurately and efficiently than before.

For the durability of the project five years are planned (most of the work should be completed with the first 3-4 years) and for the costs 1.5 Billion EEK (96 Million EUR). Project has two broader domains of action - to collect information about the health of the population and the process of genetic typification, also a set of supporting actions is foreseen what could be done in for example data protection or establishing a database.

2.1.8. Changes in key contacts

In April the Board of AS Andmevara decided to arrange a competition for appointment of members of the Board. It is wished to extend the hitherto existing one-member-board to three members for speeding up the development; the results of the competition should become known in July. AS Andmevara is a 100 per cent State owned company with main spheres of action in development, keeping and maintenance of registers, databases and information systems, elaboration of information technological integral solutions, forming information processing work environment and purveyance of the domain, information services from registers and education.

In the frames of national data communication services development program 'Village Road' ('Külatee', an information technological program brought in life in co-operation of county governments, State Chancellery and Estonian Informatics Centre) all local governments are connected into a joint data communications network. One of the co-ordinators of the program and Head of the Data Communication Department (DCD) of the Informatics Centre Riina Einberg started an employment in private sector as the Head of the Department of Infrastructures in AS MicroLink Süsteemid. Marko Männik started working as the new manager of the DCD. In March the head of the 'Külatee' was changed as well: Jüri Liiv entered the position held previously by Ivo Mehide.

The former Principal of the National Tax Board Ardo Ojasalu left the office of the Development Director of Optiva Pank and became an advisor of the Minister of Transport and Communications Toivo Jürganson starting March 1, 2000.

In the previous ESIS report dismissal of Ruth Martin, The Secretary General of the Ministry of Transport and Communication, due loss of confidence was announced. By a court judgement the dismissal was declared to be unlawful and Martin was reinstated in the service. In May the service relationship with Martin was suspended till the completion of the disciplinary procedure and a committee for hearing the matter of disciplinary procedure was formed. The committee proposed to the Government to dismiss Martin finally.

2.2. Education

2.2.1. Estonian Information Technology Foundation and IT College

In March the Government of the Republic decided to establish the Estonian Information Technology Foundation. The establishers of the Foundation were the University of Tartu, the Tallinn Technical University, Estonian Telecom and the Association of Estonian Computer Companies. The goal of the Foundation is organising the foundation of the Information Technology College, which will start work in autumn 2000. In the tuition charging school IT College up to 200 students will accepted each year, the studies will last for three years.

College is seen as a rapid and effective method to form a new generation of IT specialists in Estonia. In May the Ministry of Education issued the activity license for the IT College, the education will be given according to the diploma program of the higher education.

Tõnis Sildmäe, who previously had resigned from the biggest IT company in Baltics - Hansabank - as member of its Board and IT Manager, entered the position of the Chairman of the Board of the Estonian Information Technology Foundation. The second member of the Board is the Academic Director of the IT College Kalle Tammemäe.

2.2.2. Estonian Business School

Besides to the IT College starting work in autumn in the tuition charging Estonian Business School IT management discipline was established. It is possible to study both daily or during the weekends, also based on Internet.

2.3. Broadcasting

2.3.1. Broadcasting Council

In April the new 9-member Broadcasting Council became active. The members are politicians Tiit Sinisaar (Chairman of the Council, Isamaaliit), Ignar Fjuk (Reformierakond), Marju Lauristin (Mõõdukad), Peeter Kreitzberg (Keskerakond) and Villu Reljan (Rahvaliit).

According to the alteration of the Broadcasting Act there are 4 specialists included as well: the former Director General of TV3 Andres Jõesaare, auditor Andres Root, former Director General of ETV Hagi Shein and Silva Tomingas from the field of publishing.

2.3.2. Estonian Television (ETV)

On June 16 the Broadcasting Council chose the former Chairman of the Board of Eesti Ühispank Aarne Urm to become the new Chairman of Estonian Television.

In the ESIS report from December the dismissal of Toomas Lepp from the appointment of Director General of ETV by the Broadcasting Council was announced.

2.3.3. Estonian Radio (ER)

On June 16 the Broadcasting Council decided to support Ain Saarma to become the new Chairman of Estonian Radio.

2.3.4. Kuku Radio

The Chief Editor of the Kuku Radio belonging to the AS Trio was changed starting June 1. The new Chief Editor is Merlis Nõgene who up to now held the position of the Responsible News Editor in the same radio station. The former Chief Editor Harri Tiido entered a position in the Ministry of Foreign Affairs where his charge will be the co-ordination of Estonian strategic security policy and Estonian - NATO relations.

2.4. Telecommunication (inc. alternative communications networks)

2.4.1. Estonian Telecom (AS Eesti Telekom)

On May 31 Toomas Sõmera announced to the Estonian Telecom Council about leaving from his post as the Chairman of the Board beginning September 1, 2000. In a press release Sõmera declared the need for a new approach and new patterns of thinking for reinforcing the organisation in connection of Estonian telecommunications market opening for competition starting January 1, 2001.

2.4.2. Estonian Energy (AS Eesti Energia)

In May Estonian Energy announced of structure alternations according to which Siemens AG will take over all 350 employees of ‘Saarte ja Põhja-Eesti Elektrivõrgud’ construction company, constituting an unified tendance company AS Siemens Electroservices. In future EE will purchase reconstruction and maintenance services; with the step taken a remarkable decrease of maintenance and re-construction costs should occur.

EE also announced of the establishment of a new independent economic entity: Estonian Energy Telenetworks (Eesti Energia Televõrgud). It was created based on the former Communications Department of EE and it is active since April 1. At the moment the company operates telephony and data communications network with the purpose to offer telecommunication services to EE and its subsidiaries to enable them to perform the main activities.

On June 12 as the Director of EET Urmas Aiaste started work; he was employed as the Technical Director of TV3 before he took the position by EE.

2.4.3. Estonian Railway Company (AS Eesti Raudtee)

The former Head of the Public Relations Department of the Estonian Bank Andrus Kuusmann started working as the Communication Manager of the Estonian Railway Company. Communication Manager is responsible for development and realisation of the communication strategy of the company, organising harmonious inner and external intercourse and socio-political intercourse.

2.4.4. NRG Energy

The long-term Chairman of the Board of the Estonian Mobile Telephone Company Tõnu Tee started working as the Commerce Director in the Estonian representation of NRG Energy, the privatisor of Narva Elektrijaamad.

2.5. Solution elaboration

2.5.1. Joint enterprise of Eesti Ühispank and Estonian Telephone Company

Eesti Ühispank and ETC decided to establish a joint enterprise improving Internet solutions. According to the parties concerned an explosive increase in e-commerce it to be expected and therefore the development of Internet will essentially affect the traditional values in both production and purveyance process. With the foundation Eesti Ühispank as one of the leading banks and the biggest fixed telephone operator in Estonia wish to obtain a synergy effect elaborating a safe, high-quality and trustworthy environment for electronic business.

The joint enterprise plans to offer portal services, intermediation services by different trading environments and customer mediation systems. The joint enterprise will be formed on the equal shares principle and the value of the share capital is planned to be 30 Million EEK (1.9 Million EUR).

2.5.2. SEB IT Partner

Besides the main shareholder of Ühispank Skandinaviska Enskilda Banken (SEB) and Ühispank established a subsidiary SEB IT Partner which will be bound with information technology development. SEB owns 65 and Ühispank 35 per cent of SEB IT Partner. Altogether 2.6 Million EEK (166 kEUR) were invested and a rapid growth of the enterprise is foreseen. SEB IT Partner will mainly deliver for the entire SEB group but orders from outside are to be accepted as well.

2.5.3. Project WAY

Ericsson Eesti, the Tallinn Technical University and the Estonian Mobile Telephone Company are establishing a science centre in co-operation with Swedish-Estonian fund Baltic Sea IT Fund for developing telecommunications related software employment in which 9.4 Million EEK (600 kEUR) are to be invested. With a tripartite framework agreement the new joint software development program WAY (Wireless Application Odyssey) for testing and developing new mobile communication technologies is started. Attention will be paid to both WAP-mobile communication technology-based software and to the new mobile communication standard GPRS.

2.5.4. Elcoteq Estonia and the Tallinn Technical University

Subsidiary of the Elcoteq Network Elcoteq Estonia and the Tallinn Technical University started co-operation in order to train specialists for Elcoteq more quickly. The Director General of the Elcoteq Tallinn branch Ilmar Peterson (Elcoteq with its more than 3000 employees is the biggest exporter in Estonia) and the Rector of the Tallinn Technical University Andres Keevallik signed the co-operation agreement aimed to employment of the potential of the university in the development of Elcoteq.

2.5.5. Investment funds

In addition to two venture capital funds (AS New Economy Ventures and Trigon Capital) investing aggressively in information technology projects since the beginning of 2000 the IT incubator AS zero2hero.ee joined the market for selecting and financing business projects.

To the business committee of AS zero2hero.ee, which will be selecting perspective projects for investments, belong Jukka Makinen from the largest Finnish venture capital fund, Chairman of the Board of AS MicroLink, the largest IT company in Estonia, Allan Martinson, Technical Director of Estonian Mobile Telephone Company Tõnu Günberg, Founder Director of the Tallinn Technical University Innovation Centre Raivo Tamikivi and formerly in Nokia venture capital fund employed Klaus Oesch from PCA Infocom Finance OY. Chairman of the Board of AS zero2hero.ee is the leader of Trigon Capital Joakim Helenius and the President is Rector of the University of Tartu Jaak Aaviksoo.

Also AS New Economy Ventures (NEV) hold by the investment bank Lõhmus, Haavel and Viisemann has been active. It:

• Invested in IT management and support service provider Itera Süsteemid which has grown out of the IT sub-unit of Estonian Telephone Company. The investment made in Itera Süsteemid is 8 Million EEK (0.5 Million EUR);
• Invested 3 Million EEK (190 kEUR) in IT Meedia to develop and expand the original Internet based document and project management software Amphora;
• Invested in telecommunication service provider AS Comtrade in March (see also the Alternative Networks report);
• Expanded the geographical scope by investing 8 Million EEK (0.5 Million EUR) in the Latvian software company Dati active in programming and system management;
• At the end of May acquired 40 per cent of the Latvian Internet company Vide Infra Grupa active in elaborating e-commerce solutions as its first foreign investment.

2.5.6. Creation of Public Key Infrastructure

Through Public Key Infrastructure, which by passing the 'Digital Signature Act' was given legislative power (the law will enter into force on December 15, 2000), several new electronic services will become accessible, also wide usage of electronic documents and digital signatures.

Hansabank, Eesti Ühispank, Estonian Telephone Company and Estonian Mobile Telephone Company signed a collaboration contract for elaborating the Public Key Infrastructure. The goal of the parties is to create commonly the PKI infrastructure in Estonia, which would enable exploitation of electronic operations in all areas.

Previously Estonian Telephone Company, Estonian Mobile Telephone Company and Privador AS announced of the intention to work out a public key infrastructure which would enable ordering and using the services of ETC and EMT safely via Internet, the structure will be based on clientele of ETC and EMT. The supplier of technical solutions will be AS Privador.

2.5.7. Others

Merita Nordbanken and IT company TietoEnator announced of the entering into an agreement for expanding co-operation in IT field to Baltics and Poland.

As a media project Internet portal Delfi under the lead of Hans H. Luik created an opinion column, which in short time became very popular. The popularity of Delfi phenomenon has been under discussion in several high-level events (latest in the media seminar 'New media and business' organised by newspaper 'Eesti Päevaleht', please see corresponding ESIS II database) and contradictory groups have raised on the base of having different opinions about the importance of the portal (see also 'WWW sites indicators' report).

2.6. Associations

In March the establishment of the new Association of Information Technology and Communication Companies took place, it was formed based on Association of Estonian IT Companies and the Union of Telecommunication Companies. The purpose of the Association is the representation of common interests, participation in the process of legislation elaboration and therefore quickening the formation of fair competition environment in Estonia. Also the codes of inner business and ethic will be elaborated with employment of the court of honour.

As of today, Association of Information Technology and Communication Companies has 40 members, biggest of which are MicroLink, Estonian Telecom, Estonian Telephone Company, Estonian Mobile Telephone Company, Levicom, Radiolinja Eesti, Uninet, Baltic Computer Systems and Assert.

2.7. Mergers and take-overs

2.7.1. NetCom AB wishes to buy AS Starman

In May the Swedish telecommunication company NetCom AB announced of its interest to obtain majority of the stocks of the Estonian biggest cable operator Starman. As the result NetCom with its subsidiaries would become the main competitor to the Estonian Telephone Company. By 60 per cent telecommunication company Telia AB owned Starman announced the sale to take place at end of June or beginning of July, the reason is a plan to start providing data connection and after termination of the exclusive rights granted to the Estonian Telephone Company telephony services.

2.7.2. Possible distribution of Estonian Telecom

Experts have speculated Toomas Sõmera's departure from the Chairman of the Board of Estonian Telecom is related to the possible distribution of Estonian Telecom between two foreign major investors. Opinion has been expressed, Estonian Mobile Telephone Company will be taken over by Finnish company Sonera and Estonian Telephone Company by Swedish company Telia. Neither Supervisory Board of Estonian Telecom nor Management Board of Estonian Telephone Company has confirmed the rumours.

2.7.3. Co-operation agreement between Estonian Media (Eesti Meedia) and Express Group (Ekspress Grupp)

Estonian Media owned by Norwegian Schibsted and Ekspress Grupp partially owned by Swedish Marieberg signed a co-operation agreement lately for publishing tabloid newspapers and magazines together. According to the agreement two new public limited companies are to be established - SL Õhtuleht and Ajakirjade Kirjastus, shares of both enterprises will be divided equally 50:50 between Eesti Meedia and Ekspress Grupp. As result of the agreement newspaper SL Õhtuleht will be published instead of former Sõnumileht and Õhtuleht.

2.7.4. Others

In the biggest information technology enterprise of Baltics intra-company structural changes took place: subsidiaries of MicroLink MicroLink Astrodata known under the trademark OK Arvutid and MicroLink Services were joined.

In April AS Helmes active in software and hardware business found an agreement to sell 25 per cent of holdings in AS Helmes to Baltic Republics Fund (BRF). According to Trigon Capital consulting AS Helmes by the sale BRF is one of the biggest investment companies in Baltics. BRF is also a shareholder of MicroLink, on of the biggest information technological companies in Baltics.

Shareholder of 51 per cent of Data Telecom shares, all-European data connection provision company KPNQwest NV obtained from 6 Estonian private investors 49 per cent of Data Telecom shares. Consequently the name of the enterprise is to be changed to KPNQwest Estonia.

The world's leading producer and service provider of data recording systems and software EMC Corporation opened an office in Estonia on May 1. Clients of the company are the Estonian Telephone Company, the Estonian Mobile Telephone Company and Hansabank.

2.9. Ranks of honour

2.9.1. Fair Contact 2000, " IT Actor of 1999"

The Prime Minister of the Republic Mart Laar was entitled the 'IT Actor of 1999' in information technology domain on the IT fair Contact 2000 in April. Laar was nominated to be the 'IT Actor of 1999' considering his various declarations supportive of information technology and telecommunications.

Establishment of the IT College was nominated the ‘Idea of the Year’; the award will be presented to the Information Technology Foundation.

In 'IT Act of 1999' category introduction of free dial-up Internet connection won; the award will be presented to TELE2, the first provider of the service.

2.9.2. Estonian Business School, "Businessman of the Year"

The Council of Estonian Business School (EBS) nominated the Chairman of the Management Board of AS MicroLink Allan Martinson to be the Businessman of the Year. EBS's 'Businessman of the Year' is a leader who has succeeded in establishing a prosperous company or group of companies remarkable for its economic activities inc. large-scale investments and creation of new jobs. Nomination of the Businessman of the Year is one of the traditions of the university; notoriety and positive reputation of the nominee in the society are considered as nomination criteria.

2.9.3. Elcoteq Tallinn, Ilmar Petersen

The Director General of the biggest exporter in Estonia Elcoteq Tallinn Ilmar Peterson will start co-ordinating Elcoteq's Six Sigma project on August 1, when he will also continue as the Chairman of the Board of AS Elcoteq Tallinn. Six Sigma is an analytical administration and management model approved by the world's leading enterprises the objective of which is attainment of faultless operations in every work process.

3. Summary

Following trends characterise the first and second quarters of 2000:

Significant changes in the private sector: numerous top-level specialists have started new employment. Changes of this kind concern in first place banking and telecommunication companies. In the same time there has occurred some underemployment in information and communication technology sector. Also people whose previous experience comes from other areas have started work in ICT sector.

Estonian companies are expanding to foreign markets. Already in the beginning of 1990s some Estonian enterprises have taken over some companies in Latvia and Lithuania and the increase in direct investments made out of the country is highest in Central and Eastern Europe. According to Financial Times Estonian Telecom (market capitalisation 1,1 Billion USD) and Hansabank (561.4 Million USD) belong to the biggest companies of Eastern Europe concerning the market capitalisation and are the biggest ones in Baltic area. Among other companies in context of information society projects are to educe:

• The activities of Estonian leading Internet based personnel mediation company CV-Online Estonia OY which is a SME that started similar actions in Latvia, Lithuania and Czech Republic;
• The Lithuanian subsidiary of mobile communication operator Levicom Cellular Levi & Kuto, which since the end of 1999 is attempting to activate a third mobile communications network in Lithuania. Operating has not begun entirely because of the court impediment raised by Omnitel and Bite GSM;
• The leading information technology enterprise of Baltics MicroLink has been active on Baltic markets. In January the enterprise joined with Latvian company Fortech;
• Small business B2Boffer.com opened in March is planning during the year 2000 to expand first to Scandinavia and later to other Baltic counties.

Contact information of mentioned organisations and persons can be found in the ESIS II database of contact persons.

The present survey has been compiled based on the materials of news agencies BNS and ETA as well as newspapers "Postimees", "Päevaleht" and "Äripäev" and the opinions expressed by various experts.