Margus Nõlvak: Affordable high-speed broadband needs competition in Estonia

To ensure Estonians can access ultra-fast internet at affordable prices, the market needs greater competition. The prices at which a dominant market player allows competitors access must be fairly regulated and audited by the Consumer Protection and Technical Regulatory Authority (TTJA), writes Margus Nõlvak.
The widely discussed Telia broadband campaign has once again brought the competitive situation among Estonia's home internet providers into the spotlight. On Monday's "Terevisioon," Justice and Digital Minister Liisa Pakosta (Eesti 200) stated that competition in the market appears to be functioning well. Much like in France, Estonia has three major service providers and while Telia controls a significant portion of the infrastructure, it is required to allow others to use it. Furthermore, she noted that the cost of accessing Telia's cable network has continuously decreased.
What's the reality behind the scenes?
Thanks to significant investments in the telecommunications sector, wireless internet has improved every year. Currently, all three operators have extended 5G coverage to more than half of the population and efforts are ongoing daily. For example, as Estonia's third-largest telecom provider, Tele2 invested the highest share of its revenue — nearly 20 percent — into network development last year, doubling its 5G coverage.
The problem lies with wired internet, or fixed-line connections, which are more stable and faster than wireless internet. Due to historical reasons, almost all cable ducts and most of the transmission and access networks covering Estonia are owned by Telia.
The minister is correct in noting that even if a Telia fiber-optic cable reaches a building, Telia must offer access to others. However, I would argue against the competitiveness of its wholesale pricing. The cost of using Telia's cable is so high that we would have to offer internet services below our production cost.
For example, consider Tele2's fixed-line internet package with speeds of 500/500 Mbps, available in new developments connected to Tele2's own cable network. The regular price of the package is €30 per month (currently on sale for €15 per month).
If we wanted to offer this service using a competitor's infrastructure, we would need to pay Telia a monthly fee of €21.83 (including VAT) for cable use. While this might not seem exorbitant compared to the package price, additional costs apply. These include the connection fee of €142.19 and peak-hour capacity charges, which vary depending on usage.
In her interview, the minister suggested consumers request offers from operators twice a year. Assuming a more conservative scenario, let's say a customer sticks with one package for a year. Dividing the total costs over 12 months, the production cost of offering internet would be €11.85 + €21.83 + dynamic capacity charges, totaling nearly €40 per month.
Therefore, to provide our €30 internet package via Telia's wholesale pricing and cover other necessary business expenses, the same package would cost consumers approximately 66 percent more — around €50 per month.
Tele2 has raised this issue for years. To ensure Estonians can access ultra-fast internet at affordable prices, the market needs more competition. Specifically, the wholesale prices charged by a dominant market player must be fairly regulated and audited by the Consumer Protection and Technical Regulatory Authority (TTJA).
One of TTJA's tasks is to regulate wholesale access and pricing for companies with significant market power. This has a direct impact on retail prices. Easy access to broadband wholesale connections and lower wholesale service costs create the conditions for increased competition and, consequently, lower prices for end consumers.
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Editor: Marcus Turovski