History

Telecommunications play a vital role in Iceland. Although the country's population is relatively small (300,000), its penetration rates for network-related products and services are among the highest in the world. Approximately 90 percent of Iceland's households are equipped with a computer, and more than 80 percent are connected to the Internet. Demand is high and continuous.

Isolation Ended

The year 1906 marked a milestone in Iceland's history of telecommunications. That year, a submarine telegraph cable was laid from Scotland through the Faeroe Islands to Iceland, where it came ashore on the east coast. A telegraph and telephone line, which ended Iceland's internal isolation, was laid to Reykjavik. Many years passed, however, before all Icelanders got access to the telephone system. The laying of telephone lines in rural areas was finished around 1960. The Iceland State Telephone Service was founded the same year as telephone technology arrived in Iceland, 1906. In 1935, the telephone and postal services were consolidated. In 1998 they were again separated, and Iceland Telecom Ltd. was founded.

Automatic Telephony

The people of Reykjavik were quick to adopt the telephone. In 1912, the total number of telephone users in the town was 300. In 1932, the first automatic telephone exchanges in Iceland were opened, and in 1986, all telephones in the country were connected to automatic telephone exchanges. The laying of fibreoptic cable around the country began in 1985. The first digital telephone exchanges were opened in 1984, and this technology extended to all telephone exchanges 11 years later.

Direct International Dialling

Short-wave telephone communications with other countries were opened in 1935. The submarine cable, Scotice, between Scotland and Iceland was opened in 1962. In connection with the cable, telex services were established in Iceland. A year later, the Icecan cable between Iceland and Canada was formally opened. In 1980, the Skyggnir Earth Station came on-line, and telephone calls to other countries then went via satellite. Direct dialling to other countries became possible for the first time. In 1994, a new submarine cable, Cantat-3, was opened. Most of Iceland's international telephone calls now go via this cable along with a great volume of data, such as for the Internet.

Going mobile

Icelanders are quick to adapt to innovations, and this was especially true of mobile telephones. The NMT system went into operation in 1986, and the GSM system in 1994. In 1998, the broadband was put into operation. Iceland Telecom serves both residential and corporate clients in this small, but technologically advanced, country. Given its customers enthusiastic adoption of information and communications technologies, the company continually seeks ways to maximize its network assets and add more value for consumers. It is not alone; increasing customer demands and fierce competition from cable and satellite service providers are compelling telecommunications companies everywhere to channel additional, high-value services including broadcast entertainment through their existing networks.

Farice

A watershed in Iceland's telecommunications occurred when the FARICE submarine cable, running between Iceland and Scotland via the Faroe Islands, was taken into use. Farice hf. is the owner and operator of the cable, but the company's organisers are Síminn, the Icelandic State, FøroyaTele and other parties. Iceland therefore has redundant connections via separate fibreoptic cables stretching east and west across the ocean. This means more security than before when telephone and computer users had to rely on only one fibreoptic cable, CANTAT-3, and a backup connection via satellite for all its communications with other countries. Telecommunications companies can now utilise both the cables in parallel so that if the connection is broken on one cable, there will be nearly no disruption of services.

IPTV

In early 2004, Iceland Telecom decided to expand its services to include Live TV and, now, Video on Demand a move to answer customers requests for bundled television, broadband and telephony services, which would signal Iceland Telecom's entry into the world of triple-play (integrated telephone, television and broadband offerings). By distributing digital television content via the ADSL system, Iceland Telecom is utilising its large investment in telecommunications systems and facilitating the general build-up of the distribution system all over the country, beyond what had previously been viable.

Privatization

In July 2005 the Icelandic government sold its 98.8% share in Síminn and had the company privatized. Skipti ehf. was the buyer of Iceland Telecom, and the amount was ISK 66.7 billion. In December 2005 Síminn, Skipti and Íslenska sjónvarpsfélagið* merged. The merger was done under the name and ID No. of Síminn and took effect as of 30 June 2005. Following the merger, the shareholders in Síminn are: Exista B.V. 43.6%, Kaupthing Bank hf. 29.1%, The Pension Fund of Commerce 8%, Gildi Pension Fund 8%, The United Pension Fund 2.2%, The Co-operative Pension Fund of Iceland 2.2%, MP Investment Bank 1.9%, Imis ehf. 1.9%, other shareholders 2.4%, shareholders in IS 0.6%.

*Íslenska sjónvarpsfélagið operates Skjáinn,Síminn's television service.