Broadband Development in Costa Rica
By José Manuel Berruecos
With a population of some 4.2 million
people, Costa Rica usually pops up more
often in the news for its eco-tourism
packages or growing retirement communities
than for its telecommunications development.
However, the Central American country has
turned more than a few heads of late because
it's opening up its telecoms market, taking
away the monopoly held until now by
state-owned telco ICE and its ISP Racsa.
One area within the market is internet
connectivity, and in its latest broadband
barometer study, Cisco found that the number
of broadband connections in Costa Rica grew
21.5% in the second half of 2008, ending the
year with a total 218,836 and representing
nationwide penetration of 5%. The government
has a goal of reaching 325,000 broadband
connections by 2010.
BNamericas spoke with José Manuel Berruecos,
CEO of Cisco Central America, the Caribbean
and the north of South America, regarding
the developments of the broadband market in
Costa Rica and the challenges it faces.
BNamericas: With regards to the broadband
barometer, how does Costa Rica compare to
the other countries covered within Latin
America?
Berruecos: Costa Rica saw interesting
growth, 21.5% [in the second half of] 2008.
That brings broadband penetration to around
5%, which is still low compared to other
countries, including other countries in
Latin America. The region is at about 4.6%,
but there are many other countries that are
well above that, such as Chile which is at
8.8%.
So it could grow more, but the expansion is
good - there's interest, there's investment,
and we're seeing a repeating trend in many
places [in Latin America] - the growth is
typically in the biggest cities.
It's important to increase efforts to bring
broadband to rural areas. It's harder, but
it will bring a higher benefit in terms of
the community and its people.
BNamericas: What are some of the ways that
you think connectivity could be brought to
rural areas? WiMax or some other type of
technology?
Berruecos: There are many different ways of
getting to rural areas. It depends on
governments pushing for this to happen. You
also need companies that are committed to
doing it. The technology is there - WiMax,
fixed lines - but investment is needed.
Content is also an important issue. You need
to promote the use of more apps, more things
that happen on the web so that people get
more interested in accessing and using
broadband - from their homes and places of
work.
BNamericas: So you're talking about more
local content?
Berruecos: Yes, [municipal and central]
governments can begin to promote the use of
internet as an alternative, so that people
don't have to go out and form lines [for
processes]. You can do it all online and
don't have to leave the house.
When you're talking about rural areas, the
issue of getting around is not minor. It's
not easy to get to the office where you need
to file your request, be that regarding
health, government or anything that has to
do with solving problems. One way of doing
this all much quicker is by making it
available through broadband.
So to answer your question, there is lots of
technology out there, with lots of options
for getting [to rural areas], not just WiMax.
BNamericas: More than just the will to do
it, what other things can a government do to
create a healthy environment to expand
connectivity?
Berruecos: Where we're seeing a lot of
interest in terms of broadband use is in
three areas: government, education and
health.
You see education all over the place. The
new generation [of youth] is very
interested, given today's technology and
social networks. Distance learning, courses
and other content all make a person want to
be connected. There is a need there.
In terms of health, it's important to be
able to communicate different health issues
- document events, who can take care of a
sickness and how and where it can be
treated, making an appointment. Instead of
having to do all that over the phone, you
can connect on the internet and send your
problem [for the health institution to find
the solution]. Treating a sick person can be
much quicker.
You can start to simplify some processes.
The same for the government. Any type of
process or paperwork that needs to be done,
from getting a copy of a birth certificate,
paying your taxes. Not having to go out and
get in a line, doing it all over internet is
a fantastic thing.
BNamericas: Costa Rica grew at 21.5% in
2H08. Apart from starting from a fairly
small base, to what can this growth be
credited?
Berruecos: You've already said it. They're
starting from a small base. The goal is to
get to 325,000 [broadband connections] by
2010, which would mean 7% penetration.
When you have such a small base, installing
the infrastructure [to expand services] is
easy and fast.
BNamericas: The study also found that the
connections over 2Mbps fell 20%. What is the
reason behind this? Generally speaking,
faster connections tend to grow.
Berruecos: It's a price issue. In many
countries within Latin America, prices for
broadband connections were reduced. Except
in Costa Rica. Prices have not been
adjusted. So people were looking to save in
the difference between 1Mbps and 2Mbps, or
500kbps and 1Mbps - of course they'd like to
have more speed, but people are looking to
pay less.
BNamericas: So people are looking to save in
response to the worldwide financial crisis?
Berruecos: That could be. I think that the
impact was mostly in that rates weren't
adjusted. So that had a direct impact on the
broadband speed that people subscribed to.
BNamericas: Do you have any price
references?
Berruecos: In Latin America, the highest
download speeds saw prices fall 30%. In the
slower speeds, the reduction was 45%. But
prices were stagnant in Costa Rica.
BNamericas: Is this due to the fact that
ICE/Racsa has a monopoly on the Costa Rican
telco market and there is no competition to
bring prices down?
Berruecos: I wouldn't be able to answer
that. But providing extended services
requires a high investment, and I think that
this is reflected in the price to the end
user. They're still making heavy investments
in Costa Rica [to deploy broadband
services].
BNamericas: There's a lot of interest in
Costa Rica with the opening up of the
telecoms market and the entrance of new
players. What are some of the trends that
you see, or do you have any predictions as
to what will happen in the market?
Berruecos: The only thing that I can say for
now is that in terms of broadband, the fact
that there will be more players will
obviously allow people to have more options,
and the service will get to more places.
This will benefit penetration.
BNamericas: Mobile broadband surged 154%.
Again, we're talking about starting from a
small base, but what are some of the offers
being made for this?
Berruecos: This will grow more. People still
aren't used to using their mobile devices
for getting onto internet. Right now only
3.4% of cell phones have internet access. We
believe that as more of these types of cell
phones are adopted and device prices fall,
mobile internet traffic will pick up.
BNamericas: Is the country on track to meet
the government goal of 325,000 broadband
connections by 2010?
Berruecos: I think it's on track. With this
type of growth, there will be no problem in
reaching that goal. The goal is low. In
order to be more competitive in this
environment, we need to be more ambitious.
Why be aiming for 7% [penetration] when
other countries are looking at 60-80%
penetration?
Seven percent is not bad when you're
comparing with 3%, but if the technology is
there, it can be deployed, and it brings
high benefits for all - education, for SMEs,
government, health - why not push for
further development?
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