Company Strategy

DATA CENTRE SPECIAL: Farice brings connectivity to Iceland

Iceland is fast emerging as one of Europe’s most attractive data centre markets. And Farice, which operates two subsea cables between Iceland and mainland Europe, is supporting the nation every step of the way, says the company’s VP of sales and business development, Örn Orrason.



There is simple but sound logic behind Iceland’s hopes to position itself as a global data centre hub. For one it boasts a cheap and plentiful supply of hydro and geothermal energy to keep electricity costs down, while the cold climate helps keeps servers cool. 

Perched out in the Atlantic Ocean, the nation is also conveniently able to tap into the busiest subsea cable market in the world.

It is why the Icelandic government has been so proactive in its attempts to entice multinational corporations and data centre companies to set up shop there, and has so far successfully attracted the likes of Opera Software, Datapipe and BMW.

Playing an essential role in this plan is Farice. Founded in November 2002 by a consortium of telecoms operators from Iceland and the Faroe Islands as well as the Icelandic government, the Farice subsea cable initially linked Iceland to the Faroe Islands and Scotland when it went live in November 2002. To illustrate how underserved the Icelandic market was at the time, it became only the nation’s second subsea cable. By September 2009, however, it had added another subsea cable to its network, called Danice, which connects Iceland directly to Denmark.

As a result, the Farice network has grown impressively over the course of the last decade, and presently offers services to Amsterdam, London, Torshavn and Copenhagen.

Örn Orrason, the company’s VP of sales and business development, has been with the company every step of the way on its journey. Originally working as a CTO for Vodafone Iceland, a member of the Farice consortium, Orrason was brought on as a consultant as the operations became increasingly more complex.

He took a permanent role in 2010, heading up sales and business development. “It is an exciting opportunity in the market which I wanted to be a part of,” he says. “The emerging data centre market in Iceland is attracting foreign companies to locate their IT services, and so they require networking services. Demand started slowly, but it has since grown fast and we are getting more and more customers.”

Growing customer base

Shortly after Orrason took his permanent role at the company, it secured its first multinational organisation; Opera Software, a software manufacturer of mini browsers for smartphones with over 100 million users worldwide. “The company is a major customer and uses a lot of traffic. What we gained from that was a deeper understanding of the scale and volumes of traffic required by these types of organisations,” says Orrason.

More were to follow. BMW became one of its wholesale customers, so too did two academic high-performance computing (HPC) organisations, one of which is a joint effort between the national HPC organisations of Denmark, Norway, Sweden and Iceland. In fact, the company’s customer base covers a diverse range of industry verticals. “I find this an interesting part of the job, although where we should focus our sales doesn’t always make my life easy,” says Orrason.

Moving forward, Orrason sees strong potential for Farice in serving the needs of renewable energy firms and carbon free energy. “Germany has adopted a strong focus on renewable energy, and there’s a similar thing happening in the UK as well,” he says. “From a latency and cost point of view, we are an attractive option for these two markets.”

Lowering latency across the Atlantic

Farice claims to operate one of the lowest latency routes between northern Europe and the US/Canada, and Iceland is therefore strategically positioned to act as a gateway between Scandinavia, Western Europe and the US.

Aware of this, the cable operator has been establishing a number of PoPs over the last few years. It started by rolling out PoPs in its domestic capital Reykavik, Ballerup in Denmark, London in the UK and Torshavn in the Faroe Islands. In 2011, it strengthened its position in Iceland further by establishing a PoP at the Verne data centre, which is located near Keflavik International Airport. It then went onto establish a PoP in Telecity’s carrier hotel in Amsterdam in 2012.

At the same time, Farice has extended its range of services. To serve the needs of its international data centre customers and smaller service providers, the company launched its IP/MPLS network in 2012. As a result it was able to introduce new products such as global internet transit and layer 2 Ethernet services.

Targeting new service areas and PoPs

Moving forward, Orrason sees the growth of the company being more about exploring new service areas or establishing more PoPs, rather than adding new subsea cable routes.

“We do have the future option of expanding our cable infrastructure directly to the Netherlands, but we don’t have any immediate plans to expand the cable infrastructure. We do, however, want to offer more services on top of the cable,” he says.

“For example last year we added MPLS services on top of our networks, so we could offer Ethernet over MPLS and IP transist services for the needs of our data centre customers.”

Orrason says that the company has been looking at establishing more PoPs, in particular to Frankfurt in Germany. He says Farice is able to expand directly into new markets as its customers demand it.

“Our customers are also bandwidth service providers such as Colt, which has a presence in Iceland. With its dense network, Colt really complements our network very well. We welcome partners such as Colt to locate their service PoPs in Iceland. It is a very natural role for us to be the supporting wholesalers in this market.”

Keeping pace with Iceland’s future capacity needs

However, the company has put plans in place to ensure its subsea cables will be able to keep up with Iceland’s future demand for international capacity.

The company estimates that the average annual traffic growth on each of its cables between 2004 and 2012 has been around 80%. With an increasing number of international data centre customers in Iceland, demand is only set to grow further.

As a result, Farice has already completed a 100G upgrade to the Danice cable and has selected Ciena to also upgrade its Farice cable to 100G in May. The total maximum capacity of the cables after the upgrades will be around 30Tbps.According to Orrason this will again help the route standout in an increasingly competitive subsea cable market.

“Price wise, the market has been steadily spiralling downwards for some time, but it seems that we are reaching a more stable period now. There are certain routes where competition is extremely high and prices keep going down. I expect to see some consolidation in the market,” he says.

“We are not alone in Iceland – we are competing with these markets, and therefore have to offer attractive prices and routes. We are being benchmarked against other others and so we are trying our best to push down costs.”

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree