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New submarine cable to dramatically increase Iceland’s data transmission capacity

9 Feb 2004

The capacity of Iceland’s international telecoms links is set to increase by up to 1,000 times following the installation last week of a new 1,400km submarine cable linking the country to Northern Europe. Majority owned by the nation’s two main telecoms operators, (Siminn) Iceland Telecom and Og Vodafone, the FARICE transmission cable connects Iceland to Scotland via the Faroe Islands, and is initially equipped to transmit a capacity of 20Gbps, upgradeable to 720Gbps.. Prior to its implementation, the nation’s telecoms users had to rely on a single optical cable, CANTAT-3, which links Iceland to North America but has a capacity of just 2.5Gbps. Although it was backed up by satellite links, Iceland’s burgeoning use of data transmission applications would have seen CANTAT-3’s capacity fully utilised within three to five years. The introduction of FARICE also removes doubts surrounding the older technologies offered by CANTAT-3, and the future of its owner Teleglobe, which has been suffering from well-publicised operating and financial difficulties in the past two years. FARICE is expected to become the main transmission medium for all of Iceland’s international telecoms needs by the end of 2004, after which time FARICE’s owners will purchase CANTAT-3 and use it as the main back-up route. Aside from Siminn and Og Vodafone, the other main shareholders in FARICE are the Icelandic government and ForoyaTele, the principal telecoms operator on the Faroe Islands.

The pressing need for a new international telecoms link serving Iceland has been made increasingly apparent by the fact that the country’s internet use has doubled annually for the past three years. Although some 31 companies are currently licensed to offer services, the market remains dominated by Siminn and Og Vodafone, which enjoy something of a de facto duopoly in both the wireline and wireless segments. At the start of 2004 Siminn had around 88% of the country’s 185,600 wireline connections under its control, including 23,000 ADSL lines. Siminn’s domestic services are provided over an access network comprising more than 18,000km of copper wire and 3,000km of fibre-optic cable interconnected with several SDH rings. Its principal rival Og Vodafone was formed in April 2003 after what was then the country’s second largest fixed line and mobile communications player, Islandssimi, formed a partner network agreement with the world’s largest mobile operator, UK-based Vodafone. In 2002 Islandssimi itself had merged with two of Iceland’s smaller service providers, TAL and Halo (which were mainly active in the mobile sector), in a bid to provide a stiffer challenge to Siminn. As a result of the partner network deal, all services in Islandssimi’s fixed line and mobile portfolio have been rebranded Og Vodafone. The new operator had managed to sign-up around 11,000 ADSL customer by the end of 2003. At the same date it had 92,000 customers to its GSM-900 network, equal to 33% of the country’s mobile market.

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