The Icelandic National Broadcasting Service, RUY, was established in 1930. Public service radio broadcasting was launched with a programming policy characterized by cultural conservatism and a strong emphasis on cultural heritage. The radio monopoly was broken in 1951 when the American NATO forces stationed at the Keflavik military base started a radio service, mainly offering popular music. In 1955 a television broadcast was added to their service. Although the broadcast was intended for the service members and their families, Keflavik is situated close to the capital city and the signal could also be enjoyed by a considerable number of the Icelandic population outside the NATO base. Thus, Icelanders were introduced to the new medium of television by the American military and the programming consisted largely of popular American entertainment and children's programs. The existence of an American television station in Keflavik became a significant political issue and added to a debate focused both on the military presence in the country and the preservation and future of an independent national culture.

     Because of their geographical isolation and strong literary tradition, Icelanders have managed to preserve their language intact, and any threat to the purity of the language by a foreign mass media has been met with resistance, and an accompanying idealization of the national culture. By the mid-1960s, however, Ice­ landers had already been buying television sets for a decade, and the American broadcasts had become popular with a proportion of the public, who enjoyed watching shows such as / Love Lucy. Therefore, the decision to establish an Icelandic television service was prompted by a fierce debate about foreign cultural influences, and the Icelandic Broadcasting Company Service (RUV) began television broadcasting in 1966, partly as a response to what was considered a cultural invasion. In the beginning, RUY broadcast for a few hours a day, three days a week, but soon it increased its programming to six days a week. However, until 1983 the month of July was without television, and until 1987 there was no television on Thursdays. The television-free day was meant to protect the traditional social and cultural life of the nation.

     RUY is a national public broadcasting service formerly owned by the Icelandic state, but it is a financially independent organization. It is required to provide universal penetration and sees its role first and foremost as a public service television station. From the beginning RUV's sources of income have been license fees, as was the case in most other Northern and Western European countries. Some additional funds came from advertising revenue because license fees from such a small population base provide a limited financial foundation, but all incoming revenue may only be used for broadcasting. Since it is owned by the Icelandic state, decisions on policy and strategy are partly made in the political arena and RUY is subject to control by the Broadcasting Council appointed by Parliament. The Council's role is to make policy decisions on programming within the framework of RUV's budget.

     RUY is required by law to preserve and further Icelandic culture and the Icelandic language, as well as to promote awareness of Icelandic history and cultural heritage. It is also required to observe basic democratic rules and to uphold human rights and freedom of speech and opinion, to provide a general news service and act as a forum for diverse points of view, and to broadcast diverse entertainment suitable for individuals of all ages with particular emphasis placed on the needs of children. Further, RUY must offer a variety of material in the field of art, literature, science, history, and music as well as providing general education material. RUY has traditionally presented high-brow culture, but as a response to the current commercial market influences has also imported popular shows, such as (among the U.S. titles) The West Wing, The Sopranos, Sex and the City, Alias, Frasier, and ER.

     Until 1986, RUV held exclusive rights to both radio and television broadcasting in the country. The monopoly was ended in that year by a deregulation of the Broadcasting Act. A Broadcasting Committee elected by Parliament now regulates the private broadcasting sector and issues broadcasting licenses. The Icelandic broadcasting market is considered among the most deregulated in Europe, with almost no restrictions on ownership, and little regulation on programming in the private sector. Nevertheless, according to the Broadcasting Act, both private and public television are intended to play an important cultural role. All television stations in Iceland are required to uphold basic fundamental democratic principles and should ensure that diverging opinions and views of controversial matters are aired. They should strive to strengthen the Icelandic language, promote general cultural advancement, and make an effort to broadcast Icelandic and European material. Foreign language programs should in general be subtitled or dubbed with Icelandic dialogue.

     After the demise of RUV's monopoly, and despite a lack of a financial foundation for commercial television, Stod 2 (Channel 2) was launched in 1986 and has become a well-established major television channel with a full-fledged programming schedule, offering traditional commercial programming with a limited production of national news, current affairs and entertainment. The main part of the programming consists of Anglo-American series, films, sitcoms, and dramas, and the channel has remained popular for airing shows such as 60 Minutes, Friends, Seinfeld, and Oprah. Stod 2 is owned by the Icelandic Broadcasting Company Ltd., a subsidiary of the multi-media company Northern Lights Corporation Ltd. Stod 2 derives its income from a subscription fee, advertising revenue and sponsorship of individual shows. Since the mid-1990s, Stod 2 has had almost universal penetration and the number of subscribers has remained fairly stable, creating to a certain extent a duopoly between RUV and Stod 2. In 1990 the Northern Lights Corporation bought the rights to another television channel, Syn (Vision), the sole purpose of the transaction seeming to have been the elimination of competition. Syn is also funded by subscriptions and advertising revenue but the programming is limited to sports and American films.

     In 1993, amendments were made to the Broadcasting Act allowing the programs of foreign television channels to be aired without having to translate the text into Icelandic, thus paving the way for redistribution of international satellite channels. In 1994 the Northern Lights Corporation added a redistribution service of international satellite channels and now offers a package of 14 channels that are predominantly in English. In 1998 they added yet another television channel to their service, Biorasin (The Movie Channel), which offers feature films 24 hours a day. Subscription to all these services is offered as a part of a package deal including the Icelandic channels Stod 2 and Syn. Also, in 1998 Icelandic Telecom Ltd. Began to distribute, via fiber optic broadband network, international satellite channels offered in subscription package deals. However, international television channels play an insignificant role on the Icelandic television market and have never been met with real enthusiasm from the Icelandic public. Other minor private television channels also exist but are not significant in Icelandic broadcasting. In 2003 ten television stations were on the air, most of them aiming toward local or niche markets, such as a religious channel and a music video channel.

     In 1999 a new independent commercial television station, owned by the Icelandic Television Corporation, was launched under the name of Skjar I (Screen 1). It is the first Icelandic channel to be entirely financed from advertising revenue and became a real financial challenger to Stod 2 and RUV, who all compete for the same small market of advertisers. Today the signal reaches close to 90 percent of the population. Skjar 1 is heavily entertainment oriented prime-time television aimed at the younger audience. The programming consists of, on the one hand, popular American series, sitcoms, and reality-shows such as Will & Grace, Malcolm in the Middle, The Practice, Jay Leno, Survivor, and The Bachelor, and on the other hand, domestic in-house production of talk shows, lifestyle programs, a dating show, and current affairs analysis. The original agenda of Skjar 1 was to increase the production of national programming and create Icelandic television for Icelanders; however, Skjar 1 has had to lessen the emphasis on original programming due to costs. In 2003 the owners of Skjar 1 launched a new subscription channel, Skjar 2 (Screen 2), delivered through broadband. The programming is limited to American films and entertainment.

     A characteristic feature of Icelandic television is the remarkably small proportion of Icelandic programming. Iceland has the lowest proportion of nationally produced programs in Europe. The reason is simply due to the low population and the small size of the market, which financially hinders original Icelandic programming. RUV has consistently devoted approximately one third of the schedule to Icelandic material, but had gradually increased the proportion to 50 percent of its programming by 2002. RUV is ambitious about national production and offers diverse material including Icelandic documentaries, movies, dramas, plays, and talk shows on various subjects. Stod 2 offers 10-20 percent national programming but has found it important to build a serious news service and also provides an extensive supply of children's programs dubbed with Icelandic voices. National production makes up about 30 percent of Skjar 1 programming, mainly consisting of low budget in-house productions. The imported programs on the channels are almost entirely of British and American origin. The exception is RUY, which offers approximately one third of their programming from other language areas, mostly European.

     The Icelandic television market is highly concentrated, and largely dominated by RUY and Stod 2, although in a short time Skjar 1 has carved out an impressive share of the market. In 2003, RUY was the obvious market leader with 46 percent share of ratings, while Stod 2 holds a strong position of 32 percent share and Skjar 1 has won over 13 percent of the market. The introduction of Skjar 1 in 1999 has intensified the competition on the tiny market and has subjected Stod 2 to a loss of subscribers and advertising revenue, while RUY has been able to hold on to its role as the primary television service in the country. In this small society any attempt at setting up a broadcasting service is burdened with financial difficulties. Even considering RUV's license fees and Stod 2's subscription fees and the added income of commercials it is difficult to maintain three fully fledged television services in such a small market.

     Penetration of television sets is universal and the supply of television channels and hours broadcast seems already to outweigh the demand of the Icelandic audience. As a response to increased competition RUY has more than doubled the transmission of hours since 1986 and broadcasts approximately 9 hours a day. Stod 2 provides 19 hours of programming daily, and Skjar 1 broadcasts 9 hours of programming daily, and non-stop music videos at other hours. Viewing habits have remained relatively consistent in recent years despite the increase in supply of television broadcasting. Television viewing in Iceland is a daily activity and the reach is among the highest in Europe, but when televi­ sion consumption is considered in terms of viewing time per person, Iceland ranks among the lowest in Europe. Viewers usually tune into prime time, and the evening news remains the most popular programming with the highest ratings. In terms of financial turnover, the broadcasting industry is the second most important media and cultural industry in the country, next to newspapers and the printing press, which holds its top position owing to the strong literary tradition.

     The television environment has become increasingly commercialized, and at the political level there is an ongoing discussion regarding RUV's public service role and the future of public broadcasting. However, RUY takes its role as a national institution seriously and strives to offer diverse programming. How the turmoil on the present Icelandic television market will play out remains to be seen and will depend upon technical, political, and economic factors.