Iceland has invested heavily in a wide telecommunications infrastructure.  Although the majority of the population resides in concentrated pockets of the country, the country is still well wired. Iceland enjoys advanced connectivity, a flexible GSM cellular network, low prices for telecommunications, and a one of the highest mobile usage rates in the world. In addition, telecommunications companies are experiencing strong growth since the deregulation of the industry in 1998. This increased competition is further expanding Iceland’s already solid telecommunications infrastructure, and providing better service and choice to customers.

Connectivity

Iceland houses some of the most sophisticated transmission mediums in Europe including fiber optic cables and ISDN. International connections are by both sea cable and satellite. The island is linked up to CANTAT, the first fiber-optic link between north America and Europe to use synchronous digital hierarchy technology - this means it has the capacity to carry B-ISDN and asynchronous transfer mode (ATM) traffic. This should give the country excess capacity for some time. 

 Telecom Statistics for Iceland in 1998
 

Main telephone lines in operation	178,428
Main lines per 100 Inhabitants	64.6
% of residential main lines	75%
Telephone connection charge	$150 (U.S. dollars)
Residential monthly telephone subscription	$7.50
Business monthly telephone subscription	$15
Cost of 3 minute local call	$0.10
Cellular mobile subscribers	91,468
Analog cellular subscribers	26,056
Digital cellular subscribers	65,412
ISDN subscribers	7,724
Number of Internet Hosts	24,794
Number of Personal Computers	90,000
Total telecom service revenue	$11,948,632,064

Cellular Systems

There is also an extensive cellular mobile phone system. In 1995, Iceland became the first country in the world to have a completely digital public telephone system and telephone charges are the lowest in the OECD.  According to Eurodata, Iceland has the cheapest calls because the size of the country enables local call rates to be offered nationwide. As a result of the accessibility and affordability of mobile phones, the usage rate Iceland is 70% today, second only to Finland (see bar chart from 1999).

Along with the rest of Europe, Iceland employs a Global System for Mobile Telecommunications (GSM) digital wireless system. GSM allows users to roam with a single cell phone from Eastern Europe to Iceland. This means that all European cell carriers act as a single wireless network.40 The GSM network also supports advanced data technologies allowing wireless browsing of the Web or equivalent services. This system differs from the United States where you must choose a single incompatible vendor, such as Sprint, AT&T, or Verizon.

GSM covers an area where 96% of Iceland’s population is living. In the capital area, substantial investments are being made in new and larger base stations to accommodate increasing traffic, especially during peak hours. In the rural areas, new base stations are being set up to cover some of the more densely populated areas and popular tourist areas. 

Major Telecom Players

Unlike many European countries, Iceland is receptive to all companies wanting licenses or license-based agreements. It already boosts 17 operators; one per 17,500 people.2 According to the Post and Telecom Administration, the three major telecom players in Iceland are Iceland Telecom, TAL, and Islandssimi.
 

Simmin (Iceland Telecom) 26
Iceland Telecom is the state owned telecom group and still dominates the market, although it has started to face increased competition from domestic carriers on both fixed and mobile services over the last two years. Government officials plan to offer some 30-40% of the company to foreign investors in March 2001. Iceland Telecom’s privatization will be the largest sell-off ever carried out in the country. Since its founding in 1906, Iceland Telecom has become one of the largest companies in Iceland and makes use of all the latest innovations in the world of telecommunications to establish and maintain a complete telephone network and service around the country.
 

TAL 27
TAL was founded in March 1997. In May, the same year, the company (at that time named Icelandic Mobile Phone Company) applied for a GSM license in Iceland. One year later, the 5th of May 1998, the TAL network was taken into commercial service.  This was a historical day for Icelandic consumers as TAL is the first company to break the monopoly of Iceland Telecom in the area of telecommunication.  On the 30th of April 1999 TAL bought Islandia, an Icelandic Internet company. TAL is a limited company. Presently, there are three major shareholders:

• Western Wireless International (“WWI”), a subsidiary of Western Wireless Corporation, is a leading provider of wireless communications services worldwide. 

• Northern Lights Communications is the largest integrated media and entertainment group in Iceland. 

• The Walter Group is situated in Seattle, US. The company is specialized in consulting in the area of telecommunications.

Islandssimi (Iceland Telephone) 28
Islandssimi was founded in August of 1998 and became fully licensed to operate in Iceland in September of 1999. The company is one of the first in Iceland to provide a total communications service package, consisting of voice, data, mobile, Internet and value added services. Initially, the company is building a customer base of medium to large companies in Iceland. In its first year of operation, Islandssimi already has over 30 of Iceland's top 100 companies as its customers and runs more than 60% of Iceland's Internet traffic through its network. It was the first to offer free Internet services to its customers and has been a leader in offering affordable international rates to Icelanders.
The company will be entering the mobile market later this year.