Reykjavik, Iceland, likes to set records. In April 2003, the world's first public hydrogen fuel station opened. The world's largest geothermal system heats houses and even streets. Now Reykjavik is trying to become the first city in the world that delivers fiber to every home.

Since installing a fiber-optic backbone network four years ago, Reykjavik Energy, a city-owned utility, has connected 500 electricity substations with fiber and has begun running fiber from substations to homes. After a 100-home trial that began last year, the utility's goal is to connect 4,000 homes this year, 15,000 homes in 2005, and all 65,000 Reykjavik homes within five years.

"We have a very short connection point to customers," says Thorleifur Finnsson, Reykjavik energy's director of business development. "It's not a last mile. It's a last quarter mile."

While universal residential fiber connectivity sounds daunting, Finnsson says his company has an extensive network of underground water pipes and electrical cables running to homes. As the utility performs scheduled maintenance on those cables, workers will lay underground fiber. This will substantially reduce the need to dig up the ground strictly for fiber installation.

During the trial last year, Reykjavik Energy provided 100M bit/sec connections by installing a customer premises switch from Swedish company PacketFront in each participating home. The wall-mounted switch connects to the fiber on one end and provides eight Ethernet ports on the other end. Four of the ports are used for an IP set-top box, two for Internet access and two for "general purpose."

While the trial has used several brands of set-top box, Reykjavik Energy is considering standardizing on a box from Amino Communications that uses one IBM Vulcan chip. A Reykjavik consulting company called Industria is providing the Self-service Portal user interface. The software displays services available on the network, including video on demand, IP telephony, networked security systems and Internet services.

While Reykjavik Energy is reluctant to discuss cost projections, Industria estimates that running fiber to every home will cost a minimum of about $1,250 per installation. This figure includes about $475 for "active" costs, including switches, routers and premises equipment, plus another $775 per customer for "passive" costs that include pipes, cables and labor. Reykjavik Energy pays for the installation costs.