High-speed broadband and wealthy IT workers arrive in an area hand in hand
Although everyday activities of Estonia's residents are becoming increasingly digital, high-speed cable internet has not reached everyone's doorstep. Settlements with fast internet access have a higher average income per person than elsewhere, according to a study by Estonian geographers.
"We live in a networked society and are all digital citizens. This means that the availability of digital infrastructure creates or reduces the opportunity to participate in society as a digital citizen," said Anto Aasa, an associate professor of human geography at University of Tartu. Today, a digital citizen does not need the internet only to read the news, use banking services or communicate with friends, but increasingly relies on it to carry out their entire job.
"In the European Union, including Estonia, regional differences are growing in this regard," Aasa pointed out, referring to the broader concern. He and his colleagues therefore examined how three indicators are connected across Estonia: the availability of high-speed fiber-optic cable internet, the locations of IT companies and the residential locations of IT sector employees.
The study was based on population data from Statistics Estonia, internet connection data from the Consumer Protection and Technical Regulatory Authority and company registration data from the Estonian Business Register. "We see a hierarchy in the settlement system where high-speed internet is more readily available in cities," Aasa said.
Tax revenue for IT workers bringing faster internet speeds
In the article, Anto Aasa and his colleagues focused specifically on the availability of cable internet, noting that mobile internet forms an entirely separate layer alongside it. "Some people think that if mobile internet is available, they do not need cable internet. But when we talk about the IT industry or working in cloud environments, data exchange must be fast, stable and secure," the associate professor explained.
All of this is provided by fiber-optic cable with a high-speed connection, though it is expensive to install. According to Aasa, cities and suburbs have an advantage here as there is no market failure: population density is higher and building a cable network is therefore cheaper. "The farther the cable has to be extended and the more sparsely populated the area, the more expensive and difficult the situation becomes," he said.
The study found large regional disparities in cable internet connections. Fast internet is clearly concentrated in cities and their immediate surroundings. More than 71,000 people, or 5.4 percent of the population, still live in settlements where cable internet is not available at all — such areas make up nearly half of Estonia's territory.
There is also a clear link between the availability of high-speed cable internet and the location of IT companies. "Companies operating strictly in the IT field are concentrated in Tallinn and Tartu. The farther we move from these centers, the smaller their share becomes," Aasa said. In settlements with fast internet, IT firms account for 7.8 percent of all companies, while in areas with slow or nonexistent connections they make up only about 2 percent.
White – no internet; light blue – slow internet; dark blue – high-speed internet; purple – state-sponsored internet. Urban areas outlined in bold.
A large share of IT sector employees also live in Tallinn and Tartu, but they are even more likely to cluster in the municipalities surrounding the two cities. "If you have a higher income, you do not have to live where you can, but where you want. Today many people want to live in the suburban belt — the golden ring outside the city limits of Tallinn and Tartu," explained Anto Aasa. The farther into rural areas one goes, the smaller the share of IT workers in the population.
The data also showed a clear difference in local incomes. "Where fast internet is available, the average income per person is 13 percent higher than in areas where cable internet is slow or entirely absent. When we put these factors together, it begins to affect local life," the associate professor said. Local governments receive revenue from the personal income tax paid by residents. The wealthier the local population, the higher the municipality's tax revenue. According to Aasa, this in turn enables municipalities to develop better infrastructure and provide improved services.
Four faces of the digital divide
Although the authors focused on IT workers in this article, according to Anto Aasa the need for fast internet connections is a much broader issue. As time goes on, more people and companies are working on digital platforms. "The problem is wider, but the IT world and IT professionals have had a certain aura associated with higher incomes and a more comfortable lifestyle," the associate professor explained.
Ten years ago, he said, the need for fast internet was much smaller, though connections were already faster in cities and the municipalities surrounding them than elsewhere. As a result, financially well-off workers from the IT sector and other fields gradually moved to live in those areas. This encouraged telecommunications companies operating in Estonia to develop cable networks there themselves. "Development first goes where the investment can be recovered the fastest — where paying customers are. After that, they look at whether there is time and willingness left for others," Aasa said.
As a result, Estonia can also be described as having a digital divide, where some are winners and others fall behind. According to the associate professor, this divide is here to stay. The digital divide itself consists of four aspects: first, physical access and the availability of a computer; second, the ability to pay for an internet connection; third, the necessary skills and knowledge. "Finally, we see groups that have the network, the computer and even the skills, but still do not use it because they lack motivation. If one of these links is missing, a digital citizen does not emerge," Aasa said.
Among these four aspects of the digital divide, the foundation is infrastructure. "Fortunately, Estonia has developed the backbone of its fiber-optic internet network with state support and this is now largely complete," he noted. In recent years, so-called last-mile connections have also been developed with state support as it is important that fiber-optic cables reach the end user's home rather than remaining an unused pipeline, Aasa said.
"In rural areas, it may not make sense to start laying cable everywhere immediately, but to look at the living environment more broadly," he suggested. It is worth considering whether a region can offer IT workers the desired quality of life, including fast internet. Alongside infrastructure development, he said, digital support measures for businesses are also needed to encourage companies to move beyond cities. "Likewise, people who gain the opportunity to connect to ultra-fast internet need to be shown why it is better than mobile internet," Aasa added.
The study also highlighted the impact of the coronavirus pandemic: afterward, new IT companies were increasingly established in areas with fast internet. "It is a kind of positive feedback loop where a better living environment and internet access attract more people and everything grows from there. Where something exists, more will follow," Aasa said.
Aasa and his colleagues describe their research in the journal Social Inclusion.
--
Editor: Marcus Turovski
