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Iceland - Telecoms, IP Networks, Digital Media and Forecasts
Paul Budde Communication Pty Ltd., Aug 2010, Pages: 33
Executive summary
Iceland’s future economic recovery rests on resilient broadband
BuddeComm’s annual publication, Iceland - Telecoms, IP Networks and Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications market in Iceland.
Iceland has one of Europe’s smallest telecom markets, and consequently there is little room for significant growth. Nevertheless, there is effective competition in all sectors: the country is open to all companies seeking licences or licence-based agreements, and boasts more than a dozen operators for fixed and Internet services and four operators in the mobile sector. The two leading players, Síminn and Vodafone Iceland, essentially operated a duopoly until 2008 when the new entrants Nova and Tal launched fixed-line services, complementing their existing presence in the mobile phone market.
In common with all other sectors of the economy, Iceland’s telecom market will continue to suffer from the grim effects of the recent economic downturn for the next few years at least. Iceland has perhaps recorded Europe’s worst economic collapse, while its performance in the medium term looks bleak. The economy shrank by up to 10% in 2009 and is expected to have shrunk by a further 4% in 2010 – leading to lower overall telecom investments – while interest rates will remain crippling for the foreseeable future, and rising inflation will challenge the government’s ability to manage the economy.
The economic turmoil has translated into cautious spending among consumers, many of whom have lost their savings following the collapse and subsequent nationalisation of the banking sector. Across the board, there is little cash available for discretionary spend, and so consumers have reigned in their outgoings to the essential telecom services. As a result, operators which have had difficulty funding network upgrades are unlikely to see revenue growth in the short term. Services on which they had hoped to realise significant returns, such as high-end mobile data applications, are expected to generate only moderate income during the next few years. Telecom revenue increased by only 1.2% in 2009 though investment crashed 93%.
The incumbent Síminn faces difficulties from the continuing economic disruption as well as from the banks which have thus far failed to honour their currency swap agreements as Síminn hedged against the fall of the króna (part of Síminn’s borrowings are in foreign currencies). The company is under increased pressure to pay its creditor banks using its available cash, which has obliged it to adopt efficiency measures and streamline its operations through 2010.
Iceland – key telecom parameters – 2009; 2011
Sector20092011 (e)
Broadband:
Fixed broadband subscribers (million)104,000109,000
Fixed broadband penetration rate35%36%
Mobile broadband subscribers (million)77,000120,000
Subscribers to telecoms services:
Fixed-line telephony (million)136,000133,000
SIM cards in service (million)330,000335,000
SIM penetration (population)110%112%
(Source: BuddeComm based on industry data)
Market highlights:
Broadband adoption in Iceland is among the highest in the world. FttH networks have been stimulated by government policies to deepen the fibre footprint in the capital and major outlying towns. Fibre is laid as standard in new-build zones and redevelopments, providing an important stimulus for high-end IP-delivered services.
The government ITC policy to 2012 also aims to enable public services including health, education, government procurement, telecommuting and teleconferencing to be available online via a coordinated network.
Síminn and Vodafone Iceland have a largely uncontested duopoly of the DSL market, though other ISPs operate on the margins. The DSL subscriber base has shrunk as customers in the capital have migrated to fibre options, so some vitality remains in smaller towns as the two main players upgrade their networks with ADSL2+ technology. Reykjavik Energy owns an open FttH network which connects all 65,000 homes in Reykjavik and will be extended to most other settlements by 2012.
The mobile sector offers genuine competition for Siminn and Vodafone Iceland, with the two smaller players having secured 23% market share within the two years since launching services. This trend is set to continue during the next few years as they capitalise on their ability to offer 3G services on their 900MHz spectrum.This annual report provides a comprehensive overview of trends and developments in Iceland’s telecommunications market. The report analyses trends and developments in telecommunications, mobile, Internet, broadband, and converging media including VoIP, VoD and IPTV developments.
Subjects include:
Key statistics;
Market and industry overviews;
Industry and regulatory issues;
Major players (fixed, mobile and broadband);
Mobile voice and data markets;
Internet and broadband development;
Convergence (voice/data, fixed/wireless/mobile);
Telecom market forecasts for selective years to 2015 or 2020.For those needing high level strategic information and objective analysis on the telecommunications sector in Iceland, this report is essential reading and gives further information on:
Market liberalisation and regulatory issues;
The impact of the global economic crisis;
Internet and broadband development and growth;
Historical and current subscriber statistics.
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