Tallinn Stories: Hi-tech life (and drunken Finns) in a fairytale town

The cobblestoned capital of Estonia is deceptive. The walled medieval town is so perfectly preserved that it can seem like a stage set, but it is all genuine - such that it is a Unesco world heritage site.

Tall Hermann, the highest of the walled town's many towers, is more than nine centuries old. An inhabitant of Tallinn in the Middle Ages would notice little difference if he were to return, especially on festival days, when you can't move in the central Raekoja square for knights in armour and costumed craftsmen selling replica antique amber.

One thing might confuse the visitor from the past, though: why does everyone carry a strange illuminated object at which they stare fixedly and on which they tap their fingers all the time? There is one on every café table, even at the Ye Olde Estonia restaurant, which has blonde waitresses dressed in something akin to burgundy sofa covers with puffed sleeves.

Tallinn is medieval on the outside, but the 800-year-old town is also the wi-fi - wireless internet - capital of the world. What remains a tech dream in London and New York has become a reality in this former Soviet republic, where notebook computers are as common as mobile phones. Hundreds of "hotspots" enable the 400,000 inhabitants to connect to the net wherever they happen to be.

The impact of the web revolution is felt throughout the city's life. Office hours are flexible and lunches long; you can do your work wherever the mood takes you. In Tallinn, everything from cameras to cars are purchased with a click.

The previous backwardness of this most Scandinavian of Baltic capitals has been turned to its advantage, enabling it to leapfrog a whole phase of technology. The fall of Communism brought retail banking, but Estonians have never seen a chequebook - they all bank on-line, and the idea of having to wait for your money until a cheque clears has them puzzled. The use of digital signatures also means that the tedium of entering credit card details is unknown.

Last week I watched as Estonia's answer to eBay claimed a European first: someone sold their helicopter online. A red Huey with one careful owner and not too many aeronautical miles on the clock went for £36,000.

The inhabitants of this fairytale town will feel as indignant if their browsing is interrupted as they would if their water was cut off or their rubbish went uncollected.

Sunday afternoon in Tallinn, and there is the usual trail of unmoving bodies in the streets leading down to the dock. Others seem in terminal straits, reeling and moaning. A return of the Black Death? Or an outbreak of Sars? No, just the regular crew of weekend visitors from Finland.

Helsinki lies 60 miles away across the Gulf of Finland. It is the most expensive city in the EU in any case, but the price of booze is absolutely stratospheric, thanks to the prudish Scandinavian attitude to drink. This sends three million Finns a year on the ferries to Tallinn in search of affordable alcohol. The worst are the young men, who seek to absorb a month's supply in 48 hours, but there are also giggling grannies clutching their supplies of duty-free.

But bear in mind that this is the up-market crowd. It is even cheaper to go overland to St Petersburg to drink yourself into insensibility.