Profile: Iceland

Situated quite literally between North America and Europe, Iceland is a low tax island with competitive costs and international connectivity into Europe that provides the country with significant advantages.

INTERNATIONAL CONNECTIVITY
Traffic is channelled through CANTAT 3, which passes via Germany, the United Kingdom and Denmark through the Faeroe Islands to Iceland and on to Canada.

FARICE Ltd also operates a submarine cable (FARICE 1) connecting Iceland and the Faroe Islands, and beyond that to Scotland. THUS was selected by FARICE to install and maintain an optical backhaul network between FARICE’s landing station in Castletown Northern Scotland and the company’ Point of Presence in Edinburgh. THUS also secured in mid-2004 a ten year contract to provide a “managed fibre solution” to supply network management to FARICE’s backhaul network in Scotland. The CIENA Metronet system used in the backhaul in Scotland is capable of delivering 33 x 2.5Gbps wavelengths.

FARICE offers bandwidth on 3 routes:
- Reykjavík - Edinburgh
- Tórshavn - Edinburgh
- Reykjavik - Tórshavn

Bandwith is provided within the technical frameworks of SDH with a minimum bitrate of 45 Mbps (DS-3), but the company aims at expanding its product portfolio to include other technical platforms such as Ethernet. Bandwidth is offered on a lease basis with one year as a minimum contract period.

REGULATORY
The current 5-year plan mentions as an objective to amend construction regulations so that property owners are obliged to ensure the laying of conduits for optical cables to new construction (1)

FIBRE AVAILABILITY
In Iceland fibre availability is high:

• Iceland Telecom owns a fibre optic network covering most urban areas
  
• Reykjavík Energy has laid an optical cable from Reykjavík to Akranes in West Iceland, and south to the Westman Islands
  
• An optical fibre network has been installed by Iceland Telecom encircling the island, and Fjarski (a subsidiary of the National Power Company – Landsvirkjun) has installed a link from Reykjavík to Akureyri in North Iceland. Ethernet VLAN connections are available at various locations around the country. Bandwidth is available at 2 Mbps, 10 Mbps, 100 Mbps and 1000 Mbps.

REAL ESTATE
Private individuals may purchase real property if they are either Icelandic citizens or have their legal residence in Iceland. Legal entities or businesses must be owned fully by Icelandic citizens or individuals domiciled in Iceland for at least 5 years in order to purchase a real property. However, the Minister of Justice grants exemptions to those that are permitted to run a business in Iceland and the property is to be used as business premises or a permanent residence. (2)

ENERGY PRICES
Wholesale prices offered by Landsvirkjun, The National Power Company and Rarik (The State Electric Power Works) and Geothermal space heating by Orkuveita Reykjavíkur (Reykjavík Energy) have remained relatively stable over the past few years. Rarik is the cheapest provider rated in ISK per kWh.

CHALLENGES
The island has heavy geothermal activity and has been the victim of a number of serious earthquakes and volcanic eruptions over its short history. Conversely, the geothermal activity is a major source of energy and electricity and hot water are available at very low cost.

CANTAT 3 no longer suffices as a back-up (1). A back-up satellite is available for voice traffic, but a significant increase in bandwidth across FARICE I could not be managed through CANTAT 3. As such Icelandic communications is vulnerable to unexpected events and has asked for preparation of a further submarine cable immediately, and have set a minimum requirement of 2 submarine cables to connect the country.

Sources
(1) PTA Iceland, (2005) New Telecom Policy Statement 2005-2010
(2) Invest in Iceland
(3) Srivastava, L (April, 2003) Promoting Broadband – The Case of Iceland, ITU

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