Friday 08 August
2008, San José, Costa
Rica
Chinese Only Bidders For
3G Cellular Network
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Insecurity
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Isla del Coco To Get
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No Water
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Desamparados Tomorrow
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Chinese Only Bidders For
3G Cellular Network
The Instituto
Costarricense de
Electricidad (ICE) - the
country's sole provider
of telecommunications -
has promised 1.5 million
cellular lines next
year, as it gears up for
the coming of cellular
services competition and
to meet the growing
demands for cellular
service. However, there
is one problem.
ICE began the tendering
process for bidders for
the new cellular system
called 3G. However, so
far only one bidder has
shown interest, a
Chinese consortium
Huadwei Techonologies
and at more than double
the price estimated by
ICE for the system.
Other potential bidders,
like the Ericsson de
Costa Rica (current
provider of one of the
country's two GSM
networks), Continuex
S.A. (distributor of
Samsung in Costa Rica,
ZTE Corp. and Nokia
Siemens Network, all
notified ICE in writing
on July 24 of their pull
out of the bidding.
In the letters the
companies said that the
risk is too great,
fearing that they may no
be able to fully comply
with ICE's demands and
the costs too
prohibitive.
The potential bidders
said that the
requirements set out by
ICE are cristal clear
and it would leave them
exposed to possible
lawsuits and fines over
items of "reasonable
doubt".
Pedro Pablo Quirós,
executive president of
ICE, said he questioned
the decision by the
group since they had a
year to review the
specifications and
requirements before ICE
got the final approval
to offer the contract
for bidding and their
decision with only days
before the bidding
closed.
Quirós said the group
has come together to "boycot"
ICE and prevent the
institution from being
ready for the
competition. The ICE
president called the
move a desertion.
ICE has been planning to
offer the new lines by
the first half of 2009.
"The challenge is to
have the market fully
supplied by the time the
competition begins",
said Quirós, following
the approval by
legislature in July to
end ICE's monopoly on
telecommunications and
allow competition to
enter the market to
offer cellular and
internet services.
Although it is not clear
what ICE will do, it
will likely reject the
Chinese deal simply on
the cost. ICE has
budgeted us$225 million
dollars for the purchase
and installation of the
network, while the
Chinese bid came in at
us$580 million.
The process to get the
3G network has been a
long one, beginning in
November 2004 when ICE
decided the country
needs to move to the
latest technology,
adding to the current
two GSM networds
(Alcatel and Ericsson)
and the TDMA, which it
plans to fade out once
the 3G network is in
place.
November 2007: ICE made
a deal with the Banco
Centroamericano de
Integración Económica (BCIE)
to purchase the 3G
network and lease it
back to ICE, with an
option to purchase.
Although the BCIE would
pay for and own the
network, it would be up
to ICE to set the
requirements and
maintenance.
February 2008: The
directors of the BCIE
approved the funds for
the purchase and
leaseback.
May 2008: ICE
cancels the BCIE deal
and decides to open the
bid with the BCIE.
June 2008: decides
to add 500 terminals
that are expected to be
part of the deal wtihout
additional cost.
July 2008: five of the
six bidders decide to
pull out of the bidding.
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