Costa Rica Bandwidth
Sale Pulls Wide Interest
By
Ronald Buchanan
Latin America's mobile phone companies will
have a rare chance to move into virgin
territory as Costa Rica breaks a 40-year
state monopoly and invites bids for a
bandwidth auction.
Aside from Cuba, Costa Rica operates the
last remaining state telecommunications
monopoly in Latin America and an open
telephone market was a condition of joining
CAFTA, the free trade agreement
binding the US with Central America and the
Dominican Republic.
The country may only have a population of
4.5 million people but living standards are
relatively high. Costa Rica and Panama are
the only Central American countries within
the World Bank's category of upper middle
income countries. But while Panama has 112
mobile-phone subscriptions per 100
inhabitants, Costa Rica has 42, the lowest
penetration in the region.
Attracted by the potential for growth, the
five leading Latin American and Caribbean
cellular operators have already begun to
hold talks with the Costa Rican regulator,
Sutel.
The companies are América Móvil, the market
leader controlled by the Mexican billionaire
Carlos Slim; Spain's Telefónica; the
Luxembourg-based specialist in emerging
markets Millicom; and two Caribbean
operators: Digicel, the Jamaican operator
controlled by the Irish magnate Denis
O'Brien, and CWI, the international division
of UK-based Cable & Wireless.
América Móvil, trading under the Claro
brand, operates in all the other Central
American countries. Telefónica, known to its
consumers as Movistar, is in all countries
except Honduras. Millicom's Tigo brand is
present in Honduras, El Salvador and
Guatemala. Digicel, a relative newcomer to
Central America, has operations in Panama,
Honduras and El Salvador. CWI operates
mobile services only in Panama, but is
dominant there.
All five are described by the International
Telecommunications Union as strategic
investors. "No other region has such a
strong presence of multinational mobile
groups," it said in a recent study.
"Collectively, these five strategic
investors account for some three out of
every four mobile subscriptions in Latin
America and the Caribbean."
Other, smaller, competitors could also
emerge. Yota, a Russian company, which is
building a Wi-Max network in Costa Rica and
Huawei of China has installed Costa Rica's
recently launched thirdgeneration network.
George Miley, the Sutel president, has made
it clear that there can be only three
winners of the auction, one for each of the
bandwidths on offer. If all goes well, the
results should be known on May 5.
The three newcomers will only be allowed to
offer wireless services in Costa Rica -
rather than the triple- and even
quadruple-play services available in other
markets. And the winning companies will then
have to compete alongside the state
monopoly, the Costa Rican Electricity
Institute (ICE).
That will not necessarily be easy.
One of the main benefits provided by ICE has
been price. "It is one of the cheapest cell
phone services in the hemisphere," says Fred
Blaser, publisher of Costa Rica's business
daily, La República. "Another advantage is
coverage throughout almost the entire
country, which is not always the case in the
rest of the region," adds Mr Blaser.
But ICE has been hamstrung by clumsy
customer service, a near-non-existent
pre-payment option, a patchy service at busy
times and not a single modern store offering
options to buy phones. |
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