• Dunnet-Bay-Landing-01
  • Cable-Station-Dunnet-Bay
  • FARICE-1-2004

Company History

The origins

The company Farice ehf was founded in November 2002 by several telecommunications companies in Iceland and Faroe Islands as well as the Icelandic State in order to build and operate the FARICE-1 submarine cable that was put into service in January 2004.  The second cable DANICE was put into service in September 2009.  The company is now the main provider of wholesale capacity in and out of Iceland to Europe.

The FARICE-1 submarine cable

Iceland was served by only one optical submarine cable Cantat-3 in the year 2002 when the company Farice was launched.   Cantat-3 was put into operation in the year 1994 and was the last cross Atlantic  electrically amplified SDH cable laid before the new generation of erbium doped amplifiers using DWDM  started to appear by 1999 in submarine cables providing superior performance.  The backup routes for Iceland were via satellite and frequent outages in the Cantat-3 system had caused some reliability and performance problems for International Internet and data services in Iceland.  A need for a second submarine cable was obvious and Síminn started the preparation work in the year 2000. In order to get more stakeholders on board the company PWC Consulting (PriceWaterHouseCoopers) took over the project management and introduced the general idea in a meeting in June 28th 2002.  The Farice-1 cable was laid a year later between Seyðisfjörður Iceland to Dunnet Bay Scotland with a branch unit into Funningsfjörður in Faroe Islands.   This was the first submarine cable wholly owned by local parties despite being the fourth generation of a cable to be laid between Iceland and neighbour countries since 1906. The FARICE-1 cable was put into commercial operation in January 2004 with a design capacity of 720 Gb/s and lit capacity of 20 Gb/s. The FARICE-1 cable was upgraded in August 2013 to a design capacity of 8000 Gb/s and a lit capacity of 200 Gb/s.  Point to point services were offered between Reykjavík, Torshavn and Edinburgh. Later the service was extended into London with redundant routes. The direct length of FARICE-1 in the wet section is 1205 km and the supplier was Pirelli  using TYCO (now SUBCOM) terminal equipment.  In August 2013 the terminal equipment was replaced with CIENA DWDM system that offers much higher performance through the use of coherent optical technology and 100 Gb/s wavelengths.

The second cable DANICE

Early in the year 2007 the preparation for the second privately owned cable to Iceland commenced. The project was now initated by the Icelandic state as  a need to secure enough capacity and reliability for Icelandic international electronic telecommuniciations.   The operating life of Cantat-3 which provided 2x2,5 Gb/s into Iceland would eventually end and Cantat-3 would be too small by 2009 according to the yearly 40%-50% growth of the Internet traffic.   The preparation project was later on taken over by the Icelandic ownership of Farice ehf.  The design of the cable considered the needs of a large data center industry which Iceland is well positioned to serve and being built up. A  route bypassing UK was laid directly to mainland Europe through Denmark.  The cable now called DANICE was put into commercial operation in September 2009.  The submarine cable length is 2304 Km and there are 4 fiber pairs with the original design capacity of 5120 Gb/s (5,1 Terabits/s) in total (in the system was upgraded for a design capacity of at least 16 terabits/s and a lit capacity of 200 Gb/s).  The supplier was TYCO now SUBCOM. The DANICE cable is entering Iceland on the south side into to a purpose built landingLandeyjar station whereas FARICE-1 enters Iceland from the east.  This leads to a highly distributed risk against natural hazards. In January 2013 the terminal equipment was replaced with CIENA DWDM system that offers much higher performance through the use of coherent optical technology and 100 Gb/s wavelengths.

During the installation of DANICE in the year 2009 a third cable Greenland Connect was laid between Iceland, Greenland and Nova Scotia using the same landing station as DANICE.  Greenland Connect is wholly owned by Tele Greenland. Greenland.

Development of the company

During the years the company has been extending the services with a wider footprint, more diversity and extended product  portfolio.   In the UK the reliability of the network has been much improved by having diverse routes from Scotland down to London Telehouse with optional automatic switchover in the case of a fiber cut. This has led to a 0% downtime for terrestrially protected routes in UK. Farice does also offer diverse routes In Iceland and Denmark for those customers seeking the highest security level.    Footprint of the network has been extended in Iceland with new service POPs at the Verne Data Center location near Keflavík International Airport in 2011 as well as a new POP in the Telecity carrier hotel in Amsterdam Netherlands in 2012. This was an extension to the current POPs in Reykjavík, Ballerup Denmark, London UK and Torshavn Faroe Islands.   Farice has traditionally been a wholesale carrier to the local service providers offering Layer 1 circuits in the form of STM-1 to STM-64 (10G) or equivalent Ethernet over SDH.  To serve the needs of the various international data center customers and smaller service providers the company extended the services with a new IP/MPLS network in the year 2012.  New products such as Global Internet Transit and Layer 2 burstable Ethernet services are now offered.

Explosion in traffic growth and improved service level

During the years 2004-2012 the bandwidth delivered to customers has grown from 930 Mb/s to 180 Gb/s which is an accumulated  growth factor of around x200.  This is an annual average growth of 80%  per cable (one cable in 2004) but an overall annual growth of 96% for the company. The traffic is due to the needs of the local Icelandic domestic market and the new International foreign data center customers.  The new international data center customers are now contributing a lot to the high growth of the bandwidth delivered and have overtaken the domestic needs in the total bandwidth sold. Since 2012 the growth continues but the internet domestic growth has slowed down as in other developed markes especially for long distance links which can be attributed partly to growing use of distributed caching systems and saturation in the growth of connected homes.  The main growth for Farice can be attributed  to external data center customers.  From 2010 to 2015 over a five year period the domestic growth is equivalent to 40% a year (CAGR). for the Data Center sector 97% a year an overall 60%.

Price decreases as volume grows

The domestic unit prices for an STM-1 (155 Mb/s) have dropped by 96% from 2004 to 2012 or in other words the STM-1 unit prices were about 17 times higher in 2004 compared to 2012.  This is equivalent to an average annual  decrease in the STM-1 unit price of 30%. The average annual price decrease for an STM-64 (10 Gb/s) which is more aligned with current needs of our key customers is even more or 32,6%.  The price drops have continued since 2012.

To put this into more perspective,  for the annual average expected domestic growth of 50% of traffic  (mainly because of Internet data traffic growth) the company Farice has been able to offer bandwidth to meet the needs of the domestic market at a constant or even less total cost in 2012 than in 2004.

All these calculations are based on the currency EURO  without inflation adjustments.

Higher reliability then ever

Prior to 2004 there was only one submarine cable (Cantat-3) connection Iceland and Cantat-3 had a rather high failure rate history.  The restoration was only through expensive bandwidth limited and unreliable satellite services. After 2004 this changed to the better with FARICE-1 and satellite services ceased as a backup service.  With DANICE in 2009 Iceland has never been better served and during the lifespan of FARICE-1 and DANICE cables there has not been a single outage in the ocean (the wet section) which is a huge improvement on Cantat-3.  For those seeking 99,999%  or more theoretical uptime the third cable Greenland Connect offers services from Iceland to Halifax Canada.