||This article needs additional citations for verification. (September 2010)|
|Founded||Original 1906; Merger of Iceland Telecom, Íslenska sjónvarpsfélagið and Skipti in 2005|
|Key people||Brynjólfur Bjarnason, Chairman
Sævar Freyr Þráinsson, President & CEO
|Products||Fixed line, Mobile, Internet, xDSL, IPnetwork, Television|
|Revenue||~$320 million USD (2004)|
Telecommunications play a vital role in Iceland. Although the country's population is relatively small (~320,000), 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 Reykjavík. 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 Reykjavík 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 online, 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.
A watershed in Iceland's telecommunications occurred when the FARICE submarine cable, running between Iceland and Scotland via the Faeroe 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 fibre optic 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 fibre optic 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.
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.
Síminn operates Skjárinn, a service provider in Iceland. The service provides a number of key local and international television services along with an on demand service providing viewers with the latest movies, sports and news.
In July 2005, the Icelandic government privatized Landssími Íslands and sold its 98.8% share to Skipti ehf. In December 2005, three companies, Landssími Íslands, Íslenska sjónvarpsfélagið (The Icelandic Television Company) and the parent company, Skipti ehf., merged and the name was subsequently changed to Síminn hf. In March 2007 the following proposals of Siminn's board were approved: A new parent company called Skipti hf. was introduced and Síminn was split into three companies: Síminn hf. the main operating company; Fasteignafélagið Jörfi ehf, a real estate company, and Míla ehf which owns and operates the national trunk and access networks in Iceland. The new structural change took effect from 31 October 2006.
Póstur og sími had a monopoly on most telecommunications services until 1998. That year a new law came into effect and the market opened for competition. The first competitor was TAL, offering mobile services on reduced prices. Others followed, the biggest one being Íslandssími. In the Internet (ISP) market the competition was a lot tougher, with names like Íslandssími, Halló!, Margmiðlun, Skíma, Skrín, Snerpa, Íslandía and Miðheimar. In 2003 TAL, Íslandssími and Halló! merged under the name Og Vodafone. Og Vodafone has since then bought a few Icelandic Internet Service Providers. On October 6 Og Vodafone changed it name to Vodafone