Costa Rica’s took a first step at opening the market for Internet services by allowing the company Amnet to have direct access to the submarine cable “Maya 1.”  Maya 1 one of Costa Rica’s main international connections.  Amnet is the first company that Sutel (or the government body that regulates telecommunications in the country) has allowed to have such access.  Amnet has actually been operating in the country for some time, but it formerly had to offer its services in connection with an agreement with Racsa, which is the government run arm that up until now has enjoyed sole access to Maya 1.  Customers of Amnet were thus treated with two bills each month, one from Amnet and another from Racsa.  Raúl Ibáñex, Amnet director, stated that the authorization to connect to Maya 1 marks a new era in Internet access in Costa Rica.  In addition, Sutel authorized seven cable companies in various areas of the country to begin offering television access in competition with Amnet.  However, so far Amnet only has access to Maya 1.

Link to Article in La Nación

Talk about a “divorce” made in heaven.  I have for a long time denounced having to pay two different companies every month for my internet service.  I and my company are customers of Amnet cable internet and television services, but I have to pay Racsa every month as well. And what’s worse, you cannot pay both in just one payment.  Oh no, you have to pay them completely separately as they are two completely separate entities.  Now this alliance that has lasted ten years will finally come to an end.  Amnet will be the first private company in Costa Rica to be authorized to offer internet connection services independently.  Racsa, you see is the internet connectivity arm of the telecommunications monopoly ICE.  In dispute as a result of the breakup is the issue of who gets the some 55,000 subscribers that now receive services under the joint agreement between the two.  Another issue is that in order for Amnet to actually be able to offer services apart from Racsa, ICE must agree to the terms of renting space on the oceanic cables that connect Costa Rica with the rest of the world.  Those cables are located in Limón and Parrita.  The way things have worked since 1999, the year the two joined forces, is that Racsa provides the internet signal via these cables and Amnet carries the service to homes and businesses through its cable modems.  Under this setup each company has been entitled to 50% of the income generated by the services.  Racsa works in similar fashion with other local companies such as Cabletica, Cablevisión, Coopelesca and Supercable.  Amnet is owned by the firm Millicom, which is also one of the companies that will compete for cellular phone service under the brand name Tigo (11 other companies have been authorized to compete with ICE as well).  George Miley, president of Sutel (Superintendencia de Telecommnicaciones) made it clear that the separation must protect the right of customers to choose which service they want. Also, if the two firms cannot agree on prices to charge each other for access to their respective networks, then Sutel will step in to fix the prices. 

Link to Article in La Nación

The Ministry of Environment, Electricity and Telecommunications (Minaet) announced this week that the Costa Rica telecom market will be opened for entry by thee competitors.  Historically the market has been closed to competitors and only ICE, the government monopoly, is allowed to offer such services.  The firms that will bid for the right to enter the market initially will be Tigo-Amnet, Telefónica, Cable and Wireless, and Digicel.  Minaet plans to offer bandwidth to bidders in the form of an auction.  However, it is yet to be determined exactly what form of auction that this will be, i.e., a “pure” auction where the highest bidder wins, or some hybrid that requires a pre-qualification prior to auction.  It is expected that the first competitors will be open for business by the middle of next year.  ICE’s top executive, Pablo Quirós, stated in the La Nación article that while competition is good, he believes that allowing three competitors in at this point in time is too much given the size of the market in Costa Rica.  The four that plan to initially bid for the right to enter already have plans to open offices in the country, where they believe exist segments of very low penetration that present great opportunities.  Jorge Nicolau, who represents Cable and Wireless, stated that the investment in infrastructure that will be required will exceed $400 million.  Representatives all highlighted the need to have a clear regulatory framework for operating in the country.

Link to Article in La Nación

A recent article in La Nación indicates that companies such as Microsoft and Motorola have big plans to help the citizenry of Costa Rica to get more connected.  Already Costa Ricans have a reputation for being the Latin American country where every person has a cell phone.  At least it certainly would seem so.  I often joke that every child born in Costa Rica is given a cell phone before a nipple.  At the moment, the sole provider of both cell phone and internet services in Costa Rica is our beloved ICE and RACSA (never-mind what those acronyms stand for…..poor service!), but there is high hopes that the recent passage of the TLC and the telecommunications bills now working their way through the legislature as a result will open the way for more and better service.  At the IX Encuentro Iberoamericano de Ciudades Digitales firms such as Microsoft and Motorola gave a preview of their plans for Costa Rica. Specifically Microsoft is talking about a Plataforma de Servicio al Ciudadano, that would facilitate simple access to municipal services via cell phones and internet.  They plan to initiate the project within the city of San Jose, but the plan has potential to be extended in the future to all local governments throughout the country.  Motorola is taking about wider access to wireless internet service throughout the country.  Also, ICE has plans to roll out services for Blackberries this August and in the medium term, Apple iPhones.  Such extensions of services will no doubt be a great benefit to Costa Ricans and also to tourists and business people visiting our country that need to stay connected.

Link to Article in La Nación (in Spanish):

http://www.nacion.com/ln_ee/2008/junio/17/aldea1581091.html