ICE Says It Will Not Be Able To Compete With Large Multinationals
Is the Instituto Costarricense de Electricidad (ICE) ready to face the coming competition resulting from the free trade agreement with the United States? Without giving too much thought on the matter, ICE technicians told the Spanish language daily newspaper La Prensa Libre, no, it cannot.

Telecommunications giants like Telmex and Telefónica have their eyes on Costa Rica and according to the report by ICE technicians and supported by the ICE directors, ICE cannot compete with these and other telecommunications giants.

In the case of Telmex, the Mexican telephone company, it is 40 times the size of ICE and has invested in the last decade some us$1 billion dollars in Latin America through its subsidiary, América Móvil, buying up smaller telecommunications companies.

The Telefónica telecommunications company, made up of Spanish and United States pension fund capital, is some 60 times the size of ICE.

The free trade agreement with the United States - the Tratado Libre de Comercio (TLC) as it is known locally - guarantees the privatization of telecommunications in Costa Rica.

The document states that if ICE does not make changes and take into account a number of considerations, ICE and the country will be greatly affected by the TLC. "We conclude that is the TLC is approved, as it is proposed, it will have a negative effect on Costa Rican society, as it will lose its strategy value in controlling energy and telecommunications to multinational companies", the report states.

The report calls for a discussion on the modernization and fortilization of ICE in the face of competition resulting from the TLC. "In Costa Rica telecommunications is a public good, to which all citizens must have access, according to the 'Constitución Política' (political constitution)... as it is constitutes an essential right of Costa Ricans, similar to the guarantee of access to education", the report indicates.

Private companies are not interested in fixed line telephone services, their interest lies in cellular and wireless telecommunications and the internet. These are services that generate 70% of the income for ICE and the most profitable parts of its telecommunications operations.

Like in many other countries, fixed line residential services are subsidized by business and cellular services.

The report states that in the medium range plan, a privatization of ICE is not to be sold directly to private companies, but rather, ICE must operate under the idea of it being a private company even though it remains a state institution.

Of course, one of the risks pointed out by the report is the "rebalancing" of rates to eliminate all the subsidized services (mainly fixed line residential services), which in consequence will mean high rates, forcing some customers to cut their services as they will not be able to afford it.

"It is probable that with the opening it will pass from a public national monopoly to a private monopoly by foreign international companies who will send their earnings offshore without any real re-investment, like ICE does now", says the report.

The report also says that, like in Europe and other parts of Latin America, the process of opening the telecommunications sector will take between six and eight years.