July 2000

Update: Estonia

During the period April - June 2000 (inclusively) stable evolution in the quality and quantity of web pages continued. The biggest increase compared to data from March 2000 occurred in categories 'Regional and local authorities' (31,3% vs. 59,5%) and ' Primary and secondary schools' (24% vs. 31,6%).

1. Introduction

According to the results of the survey 26% of organisations under examination have web-pages and compared to data from the last quarter (March 2000) the increase has been 7%, as only 19% of examined organisations had web-pages in March.

The highest representation of the examined organisations in the Internet was in the category 'Ministries' (100%). There has been a rapid increase in the category 'Regional and local authorities' (31,3% vs. 59,5%), but one has to keep in mind that during the previous periods there was no special directory. Even local governments, which had web pages, did not necessarily register them in the leading search engines and directories.

Table 1. The number of web pages as of June 26, 2000.

*Hospitals only

** There were 599 public libraries and 103 specialised and scientific libraries in Estonia in 1998. The number does not include school libraries.

In one of the earlier reports (December 1999) the Estonian ESIS Team recognised problems in the development: 'At the present moment, most of the organisations do not have a clear vision how to manage their organisations more effectively and better satisfy the demands of their clients through the use of information systems…' (Estimation, Information Society Projects). Currently (summer 2000) the team is happy to note, the attitude has changed and WWW pages are becoming an important new tool in developing organisational information environments. One of the indicators of such trend is the stable growth in the number of homepages (Graph 1). The long process of offering pragmatic structure, content and user-friendliness is of course in the beginning.

Graph 1. The rate of organisations having web- sites out of total number of organisations

2. Additional information about Estonian developments

2.1. The number of Internet users

According to the surveys of the public opinion poll company BMF Gallup Media (please see ESIS II database) the rate of Internet users among the population aged 16-74 was 26% in May 2000. Consequently there are about 282,000 Internet users in Estonia. Compared to data dating from the end of 1999 (the number of Internet users was 168,000) the increase has been rapid and BMF Gallup Media's forecast the rate of Internet users to be 30% at the end of the year, is reasonable in the context of current trends. According to the estimation of ESIS expert team, the number of frequent Internet users is about 200,000 as of June 2000.

Internet is used mainly from workplaces, followed by school and home. Public Internet access points have ca 13,000 regular users in Estonia.

At home a computer is owned by 18% of 15-74 year old population and 53% of home computers were connected to the Internet as of March 2000. Compared to data from the fall of 1999 the indicator has increased 14%. According to the BMF survey from 1999 the main activities in the Internet were reading web pages (72%) and e-mail correspondence (64%).

2.2. DNS Hostcount

From the beginning of 1990's a very rapid technological development of the Internet has taken place leading to similar rapid growth of Internet services and high societal awareness level as well. Like in a lot of other countries the global data communication network was firstly used in academic circles, then by large (multinational) companies followed by homes and small offices. There are more than 32 000 computers permanently connected to the Internet in Estonia at the moment.

Graph 2. The number of computers connected to the Internet in Estonia. May 1992 - January 2000.

Source: http://www.ciesin.ee/ESTONIA/esto.html

In Estonia the number of computers permanently connected to the Internet rose from January to May by 2,290 units (Table 1) reaching the value of 32,300 at the end of the reference period. Compared to the beginning of the period the increase has been 14.1%.

Table 2. The number of computers connected to the Internet in Estonia. Changes from January - May 2000.

Source: Ripe Hostcount

2.3. Services offered

2.3.1. Internet banking

One of the most popular electronic services is Internet banking. At the end of May there were 186,000 clients of Internet banks, being 8,500 more compared to April (increase 5%).

Hansapank announced the number of their clients to be 130,000, Ühispank 48,000 and Optiva Pank 8,000. Considering the small number of Estonian population (1.4 million) one has to note that Internet banking has become a very popular service quite rapidly. However, the above mentioned statistics do not consider the separation of clients into individuals and enterprises, and possible overlapping of clients.

The rapid development of Estonian Internet banking is also discussed in Wall Street Journal (February 11, 2000). According to the article Estonia is the absolute leader among former Eastern Block Countries concerning Internet banking and beats a lot of Western European countries as well. Despite of the fact Estonia being a relatively poor country (average salary is about USD 300), every tenth person is doing transactions over the Internet. In the article the phenomenon is explained by simple-to-use software of two leading banks (Hansabank and Ühispank), and free transactions. Also, one of the factors mentioned is the possible impact of Nordic countries' IT culture on Estonia.

Internet banking is also taking serious steps towards mobile banking. At the beginning of June Ühispank started a WAP-bank, where transfers of funds can be made. This is the first one in Baltics, and from Nordic countries Merita-Nordbanken is offering a similar product. Eesti Ühispank is co-operating with mobile operators (EMT and Q-GSM) to offer the service.

2.3.2. Electronic Commerce

Despite of the rapid penetration of Internet connections, relatively high level of users and extensive investments into Internet stores, the turnover of electronic commerce is insignificant. Even the turnover of the biggest Internet stores does not exceed one million EEK (63 kEUR) per month as of June 2000.

Factors impeding the development are sustainability of the buying habits, limited product range of Internet stores, inconveniences in paying for goods and deliveries, and security risks while using bankcards. Forming a new electronic commerce culture is a worldwide problem and in this light Estonian developments are in line with the most successful European countries. The problems are known and several organisations in Estonia are actively trying to solve them. According to estimations from the leading IT company Microlink the local e-commerce (B2C) turnover rises from 7-10 million EEK (0.5 million EUR) in 1999 to 100 million EEK (6.4 million EUR) in 2000. One of the strongest Estonian advantages in these developments is the widespread Internet banking (favours the rise of positive attitude towards e-commerce); the most important discouraging factors are the smallness of the potential market and conventional shopping habits.

Still, there are several successful B2B projects operational in Estonia, which is expectable in the light of above-mentioned aspects. One the examples is the wholesale company of medicals Magnum Medical which started to develop its Internet based ordering system in 1997 and currently the share of electronic commerce has raised to 200 million EEK (13 million EUR) per year; it counts for half of the whole turnover of the company.

2.3.3. Portals

According to the web-site visiting frequency report prepared by Tele2 Media Group in April 2000, in the category of Estonian newspapers Eesti Päevaleht is the leader, it is visited 379,000 times weekly. Postimees follows with 354,000, advertisement newspaper Kuldne Börs with 183,000, Sõnumileht with 64,000 and Äripäev with 54,000 hits.

In the category of directories the leader is Neti with 1.7 million weekly hits. Free e-mail server mail.ee had 1.69 million and portal Delfi 1.25 million hits.

During 2000 the portal www.delfi.ee has intensively entered the Estonian media market, it also has a homepage for speakers of Russian. The popularity of Delfi phenomenon has been under discussion in several high-level events (latest in the media seminar 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.

For example, Estonian foreign minister Toomas Hendrik Ilvese thinks information accessed and disseminated over the Internet encourages growth of democracy, however it also expands populism in the society. According to his opinion Delfi is environment that has no value-added production elements and frequent reviling is far from being intellectual. His opponents emphasise possibilities of quick reaction on and production of news, and the rise of a 'collective brain'. Popularity of Delfi has been risen also by the participation of several media persons in writing comments (please see the report 'Key Persons – Contacts and Organisations. What’s new over the last three months').

During the covered period several additional portals were opened:

• Eesti Ühispank opened the financial portal U- Plaza in June. All interested persons can find latest economic and financial news, including comments and analyses from the editors of the portal;

• Investment bank Lõhmus, Haavel & Viisemann (LHV) stared the financial portal LHV Direct in April;

• Estonian Air opened the virtual travel agency travelUp in June. Interested parties can book flight tickets, accommodation, and rent cars all over the world. For booking international booking system Amadeus is used.

2.3.4. Other services

Among other innovative services the authors of the report would like to highlight the following new solutions:

• Since April it is possible to access Tallinn Stock Exchange stock price information via WAP service;

• Since May it is possible to access Estonian Business Register via WAP service;

• Information broker Ekspress Hotline opened WAP service enabling finding information about Estonian organisations;

• Taking into account that one of the factors impeding the development of e-commerce is the small amount of credit cards and high transaction costs, the 'U-card' service of Ühispank is warmly welcomed. The Internet banking clients of Ühispank can open virtual debit cards, which can be used in paying for products and services in international Internet stores. The card is operational for 7 days and service fee is 10 EEK (0.64 EUR) independent of card limit;

• In March for the first time in Estonia the possibility to file income taxes electronically via Internet banking became real. Declarations, filled-in in electronic banks, were forwarded to the Tax Board. According to the Tax Board data 11,760 people used the service.

• Estonian leading hardware and software wholesale company CHS Eesti AS came out with an e-commerce B2B solution at the end of 1999. The service is meant for retailers of computers and related equipment, and it enables CHS' customers to check the availability of products, prices, and current balance, make orders, etc. During the reporting period advanced version was prepared. In total e-commerce makes up 15% of the total turnover of the company.

• Mobile operator Radiolinja Eesti and company Maksekeskus which is dealing with posting of invoices opened an Internet web-site that enables companies to send invoices in electronic form. Several other companies (Estonian Energy, Estonian Telephone Company, and others) have announced about initiation of similar services.

2.4. Surveys concerning homepages

2.4.1. Survey 'Estonian Tiger Leap into the 21st Century'

A comprehensive survey in the field "Estonian Tiger Leap into the 21st Century" (1998) which among the rest analysis Estonian web pages, was carried out by BMF Gallup Media on the commissioning and financing of the Estonian branch office of United Nations Organisation.

Amongst other conclusions it is stated, the number of working unique institutional homepages in Estonia is 1,755 and as there are 37,688 registered institutions and enterprises it leads to conclusion 5% of the Estonian enterprises and institutions have their own homepages.

Attention is paid to the fact that the institutions of non-profit nature are better represented in the Internet compared to for-profit enterprises. The highest representation of the organisations is of ones operating in the following sectors:

• Government-related institutions (88% of the total number);
• Computer-related industry (77%);
• Institutions of higher and profession education (40%).

More than 10% of the registered enterprises and institutions of the following sectors are represented in the Internet:

• Secondary education 24%;
• Accommodation 19%;
• State and local governmental institutions (in general) 16%;
• Travel agencies 15%;
• Publishing 14%;
• Advertising 13%;
• Financial services 12%.

As the result of the survey it is admitted that the best performance of public administration organisations is shown by state institutions, followed by cities and other local governments.

Despite of the fact the survey was carried out in 1998, according to the ESIS expert team the distribution between categories and development trends have remained similar in June 2000 as well. The best representation in the Internet is among government institutions and ICT companies. However the representation rate has grown in all categories, updated data on some categories can be found in table 1 (Table 1. The number of web pages as of June 26, 2000).

2.4.2. Survey by NetEntrance

In the first quarter of 2000 the company NetEntrance carried out another survey among the representatives of 70 enterprises and concluded that 32% of Estonian enterprises have not benefited from owning a web page. One of the explanatory factors could be inconsistency in updating and developing of web pages, as 44% of web pages have not been updated during the last six months.

2.5. Possible developments

Considering the overall developments (please see other reports about Estonian developments), ESIS expert team highlights the following possible development trends in the area of www-pages:

• Open Estonia Foundation, which has been the biggest financier and organiser of competitions of non-profit web pages, has decreased its direct support. Consequently, the growth rate of web pages supporting directly the development of civil society is about to slow down, however, this could be compensated by the increasing awareness and the increasing number of Internet users. This deepens the understanding that www is becoming an ordinary media channel next to traditional audio-visual media.

• With the data communication development program Village Road ("Külatee", joint information technology target program of county governments, State Chancellery and Estonian Informatics Centre) all local governments will be connected to the common data communication network by the end of 2000. Thus the increase of the representation of local governments in the Internet during 2000 is expected;

• State is also developing Internet connections of public libraries next year. Altogether 3.5 Million EEK (224 kEUR) will be invested; the project is part of data communication development program of counties. Currently 86 out of 577 public libraries are connected to the Internet with the help of local governments, more then 30 of them received financial help from Open Estonia Foundation. Concerning this the number of web pages of libraries should increase, at the present moment only 3.9% of libraries have their own web pages.

• The government approved the draft of Freedom of Information Act (Avaliku teabe seaduseelnõu) on May 30. If it enters into force, state institutions and local governments are obliged to provide access to document registers and documents over the Internet. With the enforcement of the law the number of web pages in the category 'Regional and local authorities' increases remarkably and more content will be added.

• Development of different electronic services and e-commerce will be catalysed by the following steps:

• In May Hansabank, Ühispank, Estonian Telephone Company and Estonian Mobile Telephone Company signed a contract concerning the development of the public key infrastructure (PKI) in co-operation. The objective of all parties is to establish a common PKI which enables electronic operations in all realms;

• Digital signature act enforcing on December 15 creates a good environment for the development of personalised content services.

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