July 1999

Estonia Master Report

I - General background

Estonia regained its independence on 20 August 1991. 1940 – 1991 Estonia was a part of the Soviet Union and the national communications networks were part of the Soviet networks. As an extension of the USSR network, the Estonian telecommunications network suffered from a lack of direct international links and from a low level of modernisation and digitisation. Another problem was the huge disparity in telephone penetration between urban and rural areas.

After regaining its independence Estonian has paid much attention to the information society developments. The main issue is still insufficient technological and informational infrastructure. In order to support its development a concession agreement was signed which has resulted in the significant investments that have been made in extending and digitising the public telephone network.

1. General telecom policy

The overall developments of Estonian telecommunications policy are oriented towards liberalisation. This means the end of the Concession Agreement (http://www.telekom.ee/concession_agreement.htm) signed between the Government of the Republic of Estonia (http://www.riik.ee) and Estonian Telephone Company Limited (ETC Ltd., http://www.telekom.ee). The Concession Agreement signed in 1992 granted exclusive rights to ETC for eight years (until 01.01.2001) to provide basic services (local, national and international switched fixed voice telephony services, telex and telegraphic services, their installation and interconnection to them).

Telecommunications are regulated in Estonia at the moment by the Communications Act (State Gazette [Riigi Teataja], RT, 1991 [year], 3 [number], 49 [article] ) adopted in 1991, and according to the EU Commission Opinion ("Agenda 2000") it establishes the basis for liberalisation and licensing policy. There is also Cable Distribution Act to regulate the terms of deployment and conditions of operation of cable networks, and on the provision of cable television services and telecommunications services by cable operators.

The preparation of Estonian legal acts complying with the legislation of the European Union started in 1995. This process provides for the full adoption of the Union acquis for the year 2001. (National Programme for the Adoption of the Acquis, http://www.vm.ee/eng/policy/eu/NPAA/link.html).

Recent developments in telecommunications networks and services in Estonia have resulted in the following general improvements in quality and quantity:

• digital communications with the neighbouring countries;
• higher PSTN penetration;
• better coverage of the territory and of the population;
• rapid penetration of mobile services;
• penetration of advanced telecommunication services (ISDN, etc).

2. Institutional structures in charge of the regulatory issues

The main bodies in charge of the regulatory issues in the field of telecommunications are as follows:

• the Ministry of Transport and Communications (http://www.tsm.ee);
• Estonian National Communications Board (http://www.sa.ee/sa/);
• National Competition Board (http://www.konkurentsiamet.ee).

2.1 Ministries in charge of the telecommunication issues

The Ministry responsible for telecommunications is the Ministry of Transport and Communications with the Minister of Transport and Communications in the Estonian Government.

According to the Government of the Republic Act (RT1 1995, 94, 1628):

… The area of government of the Ministry of Transport and Communications shall include the management of railways, roads and streets, waterway and air traffic, shipping, telecommunications and postal services, the promotion of public transit, the improvement of traffic safety, the reduction of environmental damage caused by vehicles, and the preparation of corresponding draft legislation. (§68)

The following executive agencies and inspectorates shall be within the area of government of the Ministry of Transport and Communications: Civil Aviation Administration; Road Administration; Railway Administration; Estonian National Communications Board; Maritime Administration; (RT I 1999, 27, 391)

2.2 National regulatory authority and frequencies allocation authority

The national regulatory authority responsible for telecommunications is the Ministry of Transport and Communications.

According to the by-law of the Ministry of Transport and Communications (RTI 1997, 4, 12) one of the departments of the ministry is communications department, which regulates the matters concerning the functioning and development of the international and local electric and postal communications network and broadcasting. The department also prepares the drafts of laws in the field of communications and issues licences.

So, amongst other functions, the ministry is also responsible for the development of telecommunications policy, drafting regulations, regulation of tariffs for basic services, control and management of licences, approval of national radio frequency allocation, approval of national numbering plans and supervising the compliance of ETC with its concession agreement.

The Estonian National Communications Board (NCB, http://www.sa.ee/sa/), which was founded on August 1, 1998, deals with frequency management, standards and type approval of radio communications equipment. The NCB will replace the Ministry of Transport and Communications as the national regulatory authority when the new Telecommunications Law, which has still to be adopted by the Parliament, enters into force (probably in 1999)

According to the by-law of the Estonian National Communications Board (Regulation of the Minister of Transport and Communications, 13. July 1998, regulation no 42), Estonian National Communications Board is a governmental institution under the governance of the Ministry of Transport and Communications, which carries out national monitoring and uses force in the limits prescribed by the law and manages the fulfilment of the duties of the state taken on by international treaties in the communications field.

The functions of the Estonian National Communications Board include:

• Guaranteeing the effective usage of radio frequency modulation;
• Preparing the national radio frequencies allocation plan and assuring that it is followed by all;
• Performing national monitoring over the usage of radio frequencies;
• Approving the types of radio transmitters;
• Organising the development, co-ordination and establishment of the standards and technical norms in the field of radio communications;
• Co-operating with the similar international institutions and those in other countries;
• Overseeing the complaints of juridical and physical entities in the limits of its competence in the field of radio communications, consumer protection and competition, and taking the appropriate measures.

According to the regulation (RTL 1999, 22, 256) of the Minister of Transport and Communications from 28 January 1998, regulation no 6, there should be 113 people working at the NCB.

2.3 Office for the protection of economic competition

The protection of economic competition is ensured by the Estonian Competition Board, which is a government institution under the governance of the Ministry of Finance, that protects economic competition to develop fair business activities and carries out surveillance in the limits prescribed by the law (RTL 1997, 125, 731). The main act regulating the field is Competition Act. (RT I 1998, 30, 410)

As the Ministry of Finance has no department dealing specifically with telecommunications, The Competition Board handles telecommunications issues in co-operation with the Ministry of Transport and Communications, and especially with the National Communications Board of Telecommunications.

The functions of the Competition Board include:

• monitoring and analysing the situation regarding competition in Estonia.
• preparing means to encourage competition, giving recommendations to improve the situation and evaluating the correspondence of the actions of enterprises to the Competition Act.
• giving recommendations to pass and change laws and regulations.
• co-operating with the similar institutions in other countries. (RTL 1997, 125, 731)

There are 47 people employed at the Competition Board in 1999. (RTL 1999, 40, 515)

2.4 Public telecommunication operators

2.4.1 Estonian Telecom Limited (ET)

ET (http://www.telekom.ee) is a holding company operating in the administrative field of the Ministry of Transport and Communications. Estonian Telecom holds the shares of Estonian Telephone Company Limited (100%) and Estonian Mobile Telephone Company Limited (100%).

The shares of ET are distributed as following:

• Estonian Government (27.3%);
• Telia AB (Sweden) and Sonera Holding B.V. (Finland) - (49%);
• Public investors (23,7%).

2.4.2 Estonian Telephone Company Ltd (ETC).

Estonia’s incumbent public fixed telephony telecommunications operator is Eesti Telefon - Estonian Telephone Company Ltd (ETC). It is 100% owned by Estonian Telecom Company.

The Concession Agreement granted exclusive rights to ETC for eight years (until 01.01.2001) to provide basic services and to own, establish, install and operate the telecommunications facilities required to provide basic services (local, national and international switched fixed voice telephony services, telex and telegraphic services, their installation and interconnection to them). The Concession Agreement also granted ETC a general 25-year licence to offer telecommunications services.

The Ministry of Transport and Communications (Communications Department) supervises the activities of ETC to ensure:

• respect for ETC’s concession obligations, including the continuous and efficient provision of basic services;
• compliance with established legal and technical standards.

2.4.3 Mobile operators

Three mobile companies are operating in Estonia:

• Estonian Mobile Telephone Ltd (EMT, http://www.emt.ee) 100% owned by Estonian Telecom Company. EMT operates an analogue NMT 450 network and 900/1800 MHz GSM network.
• Radiolinja Eesti (http://www.radiolinja.ee) is 100% owned by Finnet Group, Finland. It is operating in 900 MHz GSM market.
• Ritabell is mainly (94.8%) owned by NetCom Systems AB, Sweden. It is operating in 900 MHz GSM market.

The GSM licences awarded to these three operators also cover the use of DCS 1800 frequencies.

2.4.4 Paging companies

There are three paging companies operating in Estonian market:

• Baltcom, a joint venture between Metromedia International (USA, 85%) and local partners (15%) with 10,000 subscribers and a territory coverage of around 60%;
• Estonian Paging Company, 100% owned by EE Investment Group, Estonia.
• Jiusheng, a paging company belonging to Chinese investors owns a licence but is not active in providing services.

3. International relationship and agreements

The EU and Estonia signed a Free Trade Agreement on July 18, 1994 and it came into force on January 1, 1995. It contains provisions on competition and the economy, including harmonisation of legislation.

The contractual relationship between the EU and Estonia is the Europe Agreement signed on June 12, 1995, which entered into force on February 1, 1998. Estonia presented its application for membership of the European Union on November 1995 and is now in the first wave of five countries negotiating entry. The Europe Agreement was accompanied by a Joint Declaration legitimising the exclusive rights for Estonian Telephone Company Ltd (ETC) until January 1, 2001.

Estonia has had observer status in the World Trade Organisation since June 1992, and since 1994 a working group has been set up to prepare Estonia for the full membership.

Estonia has also reached free trade agreements with the European Free Trade Association (EFTA) countries and has applied for membership to the Central European Free Trade Agreement (CEFTA). Since April 1996 a Free Trade Agreement with Latvia and Lithuania has been in force and with Ukraine since 1995.

Estonia is a also member of:

• the International Telecommunications Union (since 1992);
• the European Telecommunications Standardisation Institute (starting March 1998);
• Conference of Postal and Telecommunication Administration (CEPT, since 1994)

Estonia has also joined the following international conventions and agreements:

• Convention of the International Telecommunication Union, Nairobi 1982 (22.04.92)
• Constitution, Convention and Optional Protocol on the Compulsory Settlement of Disputes Relating to the Constitution, Convention and Administrative Regulations of the International Telecommunication Union adopted at ITU Extraordinary Conference in Geneva on 1992 (26.09.95)
• Instrument Amending the Constitution and the Convention of the International Telecommunication Union (26.09.95)

4. Regulatory framework

4.1 Historical overview and present general legislation

The area of telecommunications is currently regulated by the Communications Law of the Republic of Estonia (RT 1991, 3, 49), passed in 1991 and the Cable Distribution Act (RTI 1999, 25, 364). Communications Law of the Republic of Estonia determines the rights and duties of juridical and physical persons in establishing and operating telecommunications networks in Estonia and the main principles of responsibility in case of breaking those laws. The Cable Distribution Act regulates the terms of deployment and conditions of operation of cable networks, and the provision of cable television services and telecommunications services by cable operators. Starting June 1999 the Cable Distribution Act (RTI 1999, 25, 364) that is completely harmonised with the Council Directive 96/19/EC concerning liberalisation of the provision of telecommunication service per cable-TV network is being enforced.

The provision of basic telecommunication services (local, national and international switched fixed voice telephony services, telex and telegraphic services, their installation and interconnection to them) is granted to Estonian Telephone Company Limited with the Concession Agreement until December 2000.

The medium-term activity priorities of the Estonian Government includes: With the expiry of the exclusive rights of the main telecommunications operator Eesti Telefon Ltd. on 31 December, 2000, the implementation of all principles enacted in the Telecommunications Act will be finished. Thus, by 2001 the acquis of the European Union in this field in Estonia will be fully applied. (The Activity Plan of the Estonian Government in European Integration, http://www.vm.ee/eng/policy/eu/NPAA/link.html).

Starting August 1998 there is also an Estonian National Communications Board acting as a national regulatory and frequency allocation authority. The NCB will replace the Ministry of Transport and Communications as the national regulatory authority when the new Telecommunications Law, which has still to be adopted by the Parliament, enters into force.

4.2 Key legislative measures

4.3 Issues

4.3.1 Liberalisation

Under the Concession Agreement signed between the Government and Estonian Telephone Company Ltd (ETC) on December 16, 1992, ETC has exclusive rights on basic services and the infrastructure required to provide them.

Under article 65 of the Europe agreement, Estonia is required to have abolished since January 1, 1998 the exclusive rights granted to ETC. But by a Joint Declaration attached to this Agreement in March 1998, the Concession Agreement is deemed compatible with the article 65 provided that two conditions are respected by January 1, 1998:

• Leased lines are made available on request, within a reasonable time limit, for corporate networks and closed user groups for their use, which includes voice telephony and data services;
• The regulatory functions are entrusted in a body independent from ETC.

The paragraph in the concession agreement related to the first condition reads as follows:
"The concession holder shall, on terms and conditions to be agreed between the concession holder and the party interested in interconnection, allow, facilitate and effect the interconnection to its network of the Basic Services and systems of other telecommunications operators, according to the Telecommunications Act of the Republic of Estonia, and established international standards". (§4.12)

Telecommunications services other than basic services (such as mobile, data communications including voice telephony over the Internet, paging, satellites, or value-added services) can be offered freely but a licence is required for building and operating networks and/or if there is interconnection to the PSTN. There is competition in all of these liberalised markets.

4.3.2 Licensing

Under article 7 of the Communication Law, a licence is required to construct and operate common communication networks in accordance with the law and with a licence obtained from the Ministry of Transport and Communications.

4.3.3 Universal Service

Although universal service is not explicitly defined, the concept is to some extent introduced by the obligation in the Concession Agreement for ETC to provide "basic services", subscriber assistance and directory services. According to the Concession Agreement the Concession Holder has to submit to the Government annually updated development plan about expansion strategy in rural areas and remote population centres and for residential subscribes.

4.3.4 Tariffs policies

Tariffs for "basic services" are approved by the Ministry of Transport and Communications in accordance with the Price Law. They will be rebalanced by the year 2001. Tariffs for services provided by ETC are published in the State Gazette before coming into effect.

4.3.5. Quality of Service

According to the Concession Agreement the Concession Holder has to submit to the Government annually updated service quality plan.

4.3.6 Interconnection

Under article 9 (4 & 5) of the Communication Law, the legal entity which has made the technical requirements for interconnection - ETC - is obliged to connect to its network the communication network of another legal entity which meets the established technical requirements. Article 14 of the Law requires ETC to present the technical requirements. The Concession Agreement states that the concession holder shall, on terms and conditions to be agreed between the concession holder and the party interested in interconnection, allow, facilitate and effect the interconnection to its network of the Basic Services and systems of other telecommunications operators. The interconnection charge for each type of service requiring connection with the network for the Basic Services shall be such that is ensures the concession holder a reasonable profit margin and may also include a monetary contribution for basic residential service. This contribution shall be of the same proportions as that the concession holder would have given, rendering the same service in free competition.

5. Freedom and protection

5.1 Copyright and intellectual property rights

Copyright Act (RT 1992, 49, 615) came into force on 15 February 1992. The act establishes a right for copyright protection for the outcome of the creation of the authors of literal, artistic and scientific works; the persons who might obtain rights for aforementioned works, their rights etc.

The other main acts regulating the field are:

• Layout Designs of Integrated Circuits Act (1999)
• Industrial Design Protection Act (1997)
• Patent Law (1994)
• Useful Model/ Inventions Act (1994)
• Trade Marks Act (1992)

In 1993 (RT II 1993, 25) Estonia ratified the "Convention Establishing the World Intellectual Property Organisation" signed on 14 July 1967 in Stockholm.

5.2 Privacy, data protection, consumer protection, electronic protection

The goal of the Personal Data Protection Act (RT1 1996, 48, 944), which came into force in 1996, is to protect the basic rights and liberties in processing personal data, in accordance with persons’ rights to get public data. Personal data is divided into sensitive and non-sensitive.

Databases Act, which came into force in 1997, provides for the procedure for possession, use and disposal of state and local government databases, for the general principles of maintenance of databases belonging to the state, local governments and persons in private law, and for release and use of their data.

Consumer Protection Act, which came into force in 1994, defines the rights of the consumer in relation with the seller in purchasing and using the good, as well as the obligations of the seller, producer and mediator in protecting consumer rights, the liability for violating them and the organisation of consumer protection.

The Communication Law, which came into force in 1991, states that all related to the message transmitted via mail or communications network is the secret of the sender and the receiver, which is protected by the laws of the Republic of Estonia. (§ 6)

5.3 Freedom of expression and information

The main principles of freedom of expression and information are laid down in the Constitution of the Republic of Estonia (http://www.rk.ee/rkogu/eng/epseng.html):

• § 44. Everyone has the right to freely obtain information disseminated for public use. All state agencies, local governments, and their officials have a duty to provide information about their activities, pursuant to procedure provided by law, to an Estonian citizen at his or her request, except information the disclosure of which is prohibited by law, and information intended exclusively for internal use..
• § 45. Everyone has the right to freely disseminate ideas, opinions, beliefs and other information by word, print, picture or other means. This right may be restricted by law to protect public order, morals, and the rights and freedoms, health, honour and good name of others... There is no censorship.

Yet there are no laws regulating the area.

6. Information Society Policies

Estonian Parliament (Riigikogu, http://www.riigikogu.ee) has approved the Principles of Estonian Information Policy ( http://www.eik.ee/english/policy/princip.htm) on May 13, 1998. The principles serve as a basis for an action plan for establishing an information society through Information Policy defined as following: Information policy is an integral part of public policy. It reflects the principles of the actions of the state in the creation of an information society – areas of interest and regulation mechanisms - in an era of rapid technological change. Government information policy takes into account the goals set up in regulating different spheres of social life and introduces opportunities for presenting innovative solutions.

The Information Policy Action Plan (http://www.eik.ee/english/policy/plan.htm) in its turn is the basis for all Government agencies to make specific proposals to the Government, proposals with schedules, sources of finances, and responsibilities for implementation of information policy programmes every year.

II - On-going developments

1. On-going changes in the institutional structures

The Estonian National Communications Board (NCB, http://www.sa.ee/sa/), which was founded on August 1, 1998, deals with frequency management, standards and type approval of radio communications equipment. The NCB will replace the Ministry of Transport and Communications as the national regulatory authority when the new Telecommunications Law, which has still to be adopted by the Parliament, enters into force.

The other major change is related to the joining of the Ministry of Economic Affairs and the Ministry of Transport and Communications. For that purpose the interministerial commission has been established in the beginning of 1999 (RTI 1999, 4, 61) that will prepare legal documents and will solve managerial issues.

2. On-going changes in the regulatory framework

2.1 Telecommunication liberalisation

The Concession Agreement granted exclusive rights to Estonian Telephone Company for eight years (until December 2000) to provide basic services and to own, establish, install and operate the telecommunications facilities required to provide basic services (local, national and international switched fixed voice telephony services, telex and telegraphic services, their installation and interconnection to them). The Concession Agreement also granted ETC a general 25-year licence to offer telecommunications services.
The Government is preparing for liberalisation and proposed Telecommunications Act will regulate the activities in liberalised environment.

The liberalisation topic will come up also in the Estonian judiciary system, as:

• In October the Tallinn City Court is going to deal with the appeal of a law student to testify an order, by which the Minister of Transport and Communications could vote as a representative of the state for the expanding of stock capital and changing of the statute at the irregular meeting of the shareholders of Estonian Telecom to be against the law.

• Supertel Eesti OY started to offer international phone calls through the Internet starting June 1999. According to ETC this is violation of the Concession Agreement, but Supertel Eesti OY considers the service as a data transmission not as a telephone service.

• AS Ritabell (one of the mobile operators) filed a lawsuit to invalidate the Concession Agreement on grounds that it limits the free competition of enterprises and gave monopoly rights to a company that did not exist at the time of signing the agreement. The hearing of the case was postponed and not given an exact date.

2.2 New laws/measures under preparation

The following laws are in preparation:

• Freedom of Information Act, which regulates what information and how should be provided to the citizens about the administrative apparatus and its actions. The act regulates the nature of internal information and the rules for accessing it. It establishes passive and active information provision and the latter is supposed to take place also via the Internet. The draft is supposed to be ready for June 1999.

• The Draft Telecommunications Act (DTA) was presented to the Parliament at the end of 1998, in line with proposals made by the Estonian government and discussions at screening meetings with the European Union. Parliamentary discussions are still going on. The DTA proposes to terminate the exclusive Concession Agreement between ETC and the government and introduce full liberalisation of the telecommunications sector on January 1, 2001. The DTA also proposes to develop the Inspectorate of Telecommunications into an independent national regulatory authority, the Estonian National Communications Board (NCB). It will replace the Ministry of Transport and Communications as a regulator when the new Telecommunications Law enters into force.

• The Law about digital documents and digital signature is also in preparation. In the April 29, 1997 the special commission was established. The main duties of the commission are to define the conditions when digital info can be termed "a document", to give it a legal power equal to a conventional signature. The commission is also supposed to create the principles to develop an infrastructure required for digital signature and time stamp services. The draft of the act should go to Riigikogu this autumn.

3. On-going changes in IS policies

There is continuos development of the Estonian Information Policy Action Plan going on. The Government of Estonia decided to approve on June 1, 1999 the changes proposed by the Estonian Informatics Council.

Also, it was decided to give priority in 2000 and 2001 to the following initiatives:

1. counties’ data communications target program "Village Road";
2. document management target program of government institutions;
3. actions in the field of the necessary regulations, organisational structure and technological environment to establish digital signature;
4. the program of informatising high schools.