The National Telecommunications act in the second period of Estonian independence granted a Monopoly on international and local fixed line telephony to Estonian Telecom (Eesti Telecom). In the process of privatization, a concession was granted to liberalize mobile, CATV and packet-switched telecommunications. This concession was critical for developing a competitive market. Three licensed mobile operators encouraged one of the highest rates of mobile telephony penetration. CATV licenses were granted at a local level, and while it was a more natural monopoly, pirate operators proliferated within populous cities in the 1990s.

Internet penetration blossomed. Beginning with a Satellite link and widerspread undersea leased line connectivity, Estonia connected with the rest of the world. The concession for packet communications, perhaps against the constraint of limited international telephony competition (with the global exceptions of callback, transit

Transit

-Transportation:* Ford Transit, a van made by the Ford Motor Company* Mass transit, public transport systems in which passengers are carried in large numbers* Navigational transit, when a navigator observes two fixed reference points in line...

 and re-file arbitrage) -- created conditions in which Skype

Skype

Skype is a software application that allows users to make voice and video calls and chat over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system...

was natively created.

With a population of about 1.3 million, Estonia has about 1.7 million cellular telephones, 0.5 million fixed phones, and 0.8 million internet users (as of 2006).