Multinationals Set Eyes on Costa Rica Telecom Industry
Costa Rica Cell Phone Industry of Interest to Multinationals
Despite the fact that the Costa Rican Legislative Assembly just approved the bill that sets the stage to open up the telecommunications industry earlier this week, a few multinationals have had their eyes set on the market for several years now. While the country has a relatively small population, Costa Ricans are ranked 3rd in the world for the amount of minutes they talk on their telephones, after Japan and the United States, making them a very desirable market
The companies have been patiently waiting for the Costa Rican government to allow for outside competition to enter into the Costa Rica cellphone and Internet industries, which until now have been dominated by the state-run telecom monopoly ICE (the Costa Rican Institute of Electricity).
ICE, which does not have a great reputation for service, recently flooded the cellphone market offering over 340,000 GSM lines for the first time, in an attempt to remove the appeal of the cellphone industry for foreign companies. However, ICE lacks many of the services that are currently in high demand throughout the rest of Latin America, opening up plenty of room for competing companies.
One of the main niches that foreign companies are looking to fill is prepaid cellphones. This is a very popular, economical service for part-time visitors to a country, as well as parents who want to limit their children’s time spent talking on the phone.
America Movil, a Mexican company, was the first to look into the Costa Rican market when they registered with the Intelectual Property Registry in the country. Telefonica, a Spanish company, followed in their footsteps and registered their brand name in April of 2006 as well. Other companies that have their eyes on the market include AT&T, Digicel and the Chinese telecom company Huawei.
While competition is generally seen as a good thing in world markets, the opponents of the free trade agreement and the newly passed General Law of Telecommunications claim that prices for telephone services will rise, denying service to a large portion of the population. Others are much more optimistic and tired of ICE getting away with mediocre service. They say competition will drive down prices for cellphones. Currently, the cheapest cellphone in Costa Rica will cost you around $70, where as in a country such as Panama where multinationals such as Cable & Wireless and Telefonica (Movistar) reign, you can find a prepaid phone for $20.
| Written by Claire Saylor |  |
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Filed under: Business on February 15th, 2008
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We love costa rica. We just got back from our 4th costa rica family vacation. It is so frustrating not to be able to get cell service down there. We are looking forward to these improvements.
i like how they-the article forgot to mention that the government owned telecommunications lets people send free text messages anywhere in the country.
this may account for why they are supposedly 3rd in the world when it comes to cell phones
joe, you seem to be very ignorant of what actually goes on in Costa Rica. Do you even live here?
Text messages are not free in Costa Rica, ICE does charge for them. Right before this law was passed ICE flooded the market with thousands of new lines, making it unlikely that foreign participation would affect ICE’s position within the market. Worldwide, Costa Rica’s cell phone initiative is at the top level in terms of participation and accessibility. ICE is sufficiently positioned in the market to give any foreign investor a run for their money. Decades of monopoly indeed do help. Oh, and by the way, the term “3rd wold” is obsolete and an economic over-simplification.
If my wife is anything like the other Ticas I understand why the cell phone usage is third in the world
I don’t think an hour goes by that she doesn’t have to phone a family member and tell them something. That’s OK though as I do the same thing with e-mail.
I think if we had a “friends and family” type network plan (like I had with my family in the states) our bills would actually be less. My parents have two free phones (The same ones we paid $250 each for here) and call each all they want for about $50 per month. That’s less than what my wife spends alone. The difference is that here it’s cheap to have a phone and not use it much (after you buy the expensive phone), but when you use it a lot it’s more expensive.
I’m looking forward tot he competition. Introducing pre-paid will actually lower the cost for those who don’t use it much, and adding bulk and network type plans will make it cheaper for the bulk users. I think that the cell phone service is fine, but going to ICE to change something on the line is a nightmare. I have two options, get to ICE at 7am for a one hour line, or get there after 9am for a two or three hour line. For me it’s better for pay a few thousand colones more a month so that things are easy. For others it might not be, but they’ll still have ICE. The thing is with the competition, ICE will want to give better service. I know so many Ticos (no just us gringos) who are sick of needing to wait in long lines and have unfriendly service.
[...] telephone lines, cell phone coverage and internet access for Costa Rica. With this change new international telecom companies will be able to compete to offer these [...]