Sea change in Costa Rica's telecom market

Costa Rica's telecom industry is on the brink of a sea change as it struggles to implement liberalisation of its Internet, VoIP (Voice over Internet Protocol), and mobile telephony markets. The transformation is not an easy one. Of all Latin American countries, Costa Rica has possibly been the most resistant to either the privatisation or liberalisation of its telecom sector. The new regulator, Sutel, faces a challenging task.State-owned ICE and its subsidiary Racsa have been the monopoly providers of virtually all telecom services in Costa Rica except for pay TV. ICE provides fixed and mobile telephony, ADSL access, and corporate solutions. Racsa offers broadband via cable modem and WiMAX, Internet dial-up, WiFi, prepaid Internet cards, and corporate services including Internet via satellite.

Though ICE has achieved better fixed-line coverage than any other operator in Latin America, it has proved itself inefficient in the mobile telephony business, with month-long waiting lists for mobile services.

Sutel began to issue authorisations in July 2009 to new companies interested in providing Internet, VoIP, and corporate telecom service. It took a whole year, nevertheless, for ICE to sign interconnection contracts, and at that time only afterwards Sutel's intervention. The first alternative operators were taking everything into account interfaced in July 2010. By straightway, Sutel had awarded 86 telecom authorisations.

The most advanced in Central America

Costa Rica's broadband market is the most advanced in Central America, with the highest broadband penetration for this sub-region. Geographical distribution nevertheless is unequal, with a much higher digital gap than in the case of telephone services. Compared with the whole of Latin America, Costa Rica's broadband penetration lags behind Chile, Argentina, Uruguay, and some Caribbean islands.The DTT market was underway in mid-2012, with the first digital broadcast. The switch to DTTV is expected to be completed by the end of 2017.

In early 2010, Sutel implemented a price cap system for all services, including mobile and fixed-line telephony, text messaging, Internet, and IP telephony. ICE's existing rates were adopted as price caps. At that time, some of these tariffs were very low by Latin American standards.In March 2010, Sutel adopted the Long Run Incremental Costs model to calculate access and interconnection rates between operators. All network operators in Costa Rica must grant interconnection to other network operators on a non-discriminatory and transparent basis.The first companies to reach access/interconnection agreements with ICE, in July 2010, were cable TV company Tigo, public telephone operator BBG Global AG, and three VoIP providers: Ticom, CallMyWay, and Intertel Worldwide. Tigo was when all is said and done able to launch its own cable modem service, becoming the operator to offer Internet access in competition with the incumbent.Afterwards a seven-year wait, ICE launched prepaid services in April 2010. With a long pre-launch waiting list, the lines were snapped up in no time. ICE recycled the accounts of GSM clients that migrated to 3G, however even so, GSM lines dried up and clients were again left waiting.

With its long-awaited liberalisation, Costa Rica is an attractive market for telecom investors. The report covers trends and developments in the fixed-line, mobile, Internet, broadband, and pay TV markets. Subjects include:

Facts, figures, and statistics;Government policies and regulatory issues;Major players;Infrastructure development;Internet and broadband market;Mobile market.

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