Estonia topped the rankings in online public services and scored above the EU average in its population's digital skills and internet usage. The country scored well in mobile broadband as well, but fixed broadband coverage remains low as a result of which Estonia scored below the EU average on connectivity. The country's greatest challenge, however, is the digitization of business.

In terms of the integration of digital technology by businesses, Estonia placed 20th among EU countries. Even if numerous businesses are using e-invoicing and cloud services, the overall level of digitization falls short of the EU average. The primary reason for this is poor performance in electronic information sharing, social media and radio-frequency identifiation (RFID), where Estonia ranked 23rd, 23rd and 25th, respectively.

By connectivity, Estonia ranked 17th in the EU. The European Commissin observed that 4G is widely available in Estonia and the take-up of mobile broadband is very high, and while basic fixed broadband coverage has increased, it remains well below the EU average. With 91 percent of households having fixed broadband last year, Estonia placed 25th among EU countries. The availability of next-generation access is slightly above average, however, and high-speed broadband take-up is growing.

Internet usage high, STEM field graduate numbers low

Estonia ranked 10th by human capital indicators, down a notch from the previous year. The country scored well in terms of internet users, basic digital skills levels and the share of ICT specialists in the workforce. At the same time, however, the number of graduates in science, technology, engineering and mathematics (STEM) fields is low, the European Commission noted.

Estonians engage in online activities more than the average EU citizen and the country placed 6th in terms of internet usage. The take-up of e-banking is one of the highest in the EU, as is consumption of news via the internet.

Estonia is the European champion in the use of e-government, the European Commission said. In addition, it ranks 2nd on the quality of digital public sevices available. Estonia's performance in open data has improved significantly but still stands slightly below the EU average. In this area, the country jumped from 23rd to 17th position this year.

DESI measures the digital economy progress of 28 member states of the EU through five components: connectivity, human capital, use of the internet, integration of digital technology and digital public services.

"Europe is gradually becoming more digital, but many countries need to step up their efforts," European Commission Vice President for the Digital Single Market Andrus Ansip said when presenting the 2017 results of the index on Friday. "All member states should invest more in order to fully benefit from the digital single market. We do not want a two-speed digital Europe. We should work together to make the EU a digital world leader."