San José, Costa Rica, since 1956

Cell Phone Options Scarce for Foreigners

It’s hard enough for Costa Ricans to get cell phones, with lines stretching around the block outside the Costa Rican Electricity Institute (ICE) buildings every time the Institute offers new cell phone lines.

But the headache foreigners experience just to chat on their Nokias in Costa Rica is legendary, thanks to the state monopoly that grants scarce cell phone lines only to Costa Ricans and legal residents.

Expatriates can often jerryrig something together, by having a Tico friend sign up for a cell phone line or by “inheriting” or “buying” a line from another owner (see sidebar).

For most business travelers and tourists, however, it seems a local cell phone is out of the question, since they will not be here long enough to arrange one. Roaming on the ICE network with their existing calling plans, or renting a cell phone here, are options for some foreigners, but usually extremely expensive ones.

Other options, however, are popping up. Some come from the private sector, in the form of pre-paid worldwide roaming services of varying price and quality.

The most promising possible option is the shimmering chimera of over-the-counter pre-paid cell phone service offered by ICE itself. So far, such service has remained elusive, even though practically every other country in the world offers it.

That may be about to change. On July 27, the Public Services Regulatory Authority (ARESEP) proposed rates for a possible prepaid phone service and urged ICE to offer the service (TT, Aug. 3).

In the meantime, foreigners have few other options, and all of them are based on the concept of the roaming agreement. A roaming agreement is a contract between the owner of a cell phone network (in this case, ICE) and a service provider who wants to use that network.

U.S.-based T-Mobile, for example, has a roaming agreement with ICE, which means the company pays ICE a fee so that its customers can use their cell phones on ICE’s network. That fee, of course, is passed on to the customer, with some hair-raising results.

T-Mobile customers talking on their cell phones in Costa Rica pay $1.99 per minute. Likewise, AT&T Wireless customers, whose service provider also has a roaming agreement with ICE, pay between $2.29 and $1.99 per minute, depending on their plan.

Those rates, said business owner and telecom professional Jenny Callicott, do not represent the cost of the roaming agreement with ICE – the majority of those steep fees end up in the phone company’s pocket.

She would know. After living for years in Costa Rica and wrangling quite a bit with the cell phone issue, Callicott moved back to the United States, where she started her own phone company called CelTrek.

CelTrek sells pre-paid Subscriber Identity Module (SIM) cards (see sidebar) that can snap into the back of a GSM cell phone and allow it to work nearly anywhere in the world. The trick, Callicott said, is those roaming agreements: CelTrek has them with more than 300 networks around the world, including ICE in Costa Rica.

A call to the United States from Costa Rica using CelTrek’s SIM card costs 29 cents per minute, close to the 27 cents per minute ICE charges its regular customers for those international calls. Local calls cost 29 cents a minute as well, and all received calls cost 19 cents a minute.

“It’s an amazing system, obviously,” Callicott said, adding that this kind of arrangement isn’t unusual in Costa Rica: “If you add it up, ICE earns a lot of money” from roaming agreements, she said.

Indeed, ICE officials confirmed that the Institute has roaming agreements with 152 service providers in 75 countries.

Although CelTrek isn’t the only company offering international pre-paid roaming, it might be the easiest to use. A dizzying number of companies can be found in all the nooks and crannies of the Internet offering the service, but with varying prices, caveats and levels of transparency.

And how soon will ICE offer pre-paid service? Perhaps as soon as next year, though it’s anybody’s guess.

On July 27, ARESEP began the twomonth process to set rates for pre-paid cell phone service.

The move is a significant step forward, said ARESEP Assistant Director Guillermo Muñoz. Last year, ICE asked ARESEP to set fees for pre-paid cell service, but ARESEP refused on the grounds that ICE’s infrastructure wasn’t ready.

“Right now, the capacity that ICE has, it’s not possible for ICE to offer pre-paid services,” Muñoz said.

That will change come 2008, when ICE will be receiving another 300,000 GSM lines from Ericsson, pending approval of the contract by the Comptroller General’s Office (TT, Aug. 10).

A pre-paid system would cost between ¢28 ($0.05) and ¢40 ($0.07) per minute,with time available in ¢2,500, ¢5,000 and ¢10,000 chunks.

Cell phones using the pre-paid SIM cards would have their own phone numbers and would be able to receive calls free of charge, which Muñoz noted would be a great advantage to small business owners – such as taxi drivers – who need a cheap way for customers to get in touch with them.

ICE Assistant Telecommunications Director Claudio Bermúdez said in an emailed response to questions that ICE plans to have the service ready to go by next year. Some people say it’s about time.

“The truth of it is that part of the strategic plans of all the companies in the world that offer cellular services (is to have prepaid calling) in their bundle of services,” said Juan Manuel Campos, the co-chair of the Costa Rican-American Chamber of Commerce’s Committee on Technology and Communication, as well as the head of the Costa Rican Info-Communication Chamber.

Muñoz said that ARESEP estimates that pre-paid calling in Costa Rica will require roughly 200,000 cell phone lines.

Cell Phones Under the Table

It’s true that only Costa Ricans and legal residents can get their very own cell phone lines. That doesn’t mean nonresident foreigners haven’t figured out ways around the system, however.

Though it’s not exactly legal, there is a sizeable gray market in cell phone lines among foreigners who live in Costa Rica but don’t have residency.

Various options exist. A common one is to ask a Costa Rican friend to go to ICE and sign up for a new cell phone line. The foreigner pays the bill, and since unpaid phone bills in Costa Rica do not damage a credit rating, there is not much risk for the Tico. Another option for foreigners is to buy a used cell phone that happens to come with a line.

All these options can be somewhat risky for the user, because the owner of the line can cancel or change the service at any time.

Finally, since the expatriate community is such a mobile group, it’s not uncommon for foreigners to “inherit” a cell phone line that is passed on from a friend who is leaving the country.

What does it all mean?

(A handy little glossary for all this cell phone jargon)

Network: Refers to all the cellular phone towers that project the signal through the air and to your phone. Not all networks are the same: A network has to operate using a certain technology, and networks using different technologies are not compatible. Costa Rica has two different networks that operate with different technologies, a GSM network and a TDMA network.

GSM: Global System for Mobile Currently the most popular cell phone standard in the world. It originated in Europe and spread from there. Costa Rica has a GSM network with 600,000 lines, but high demand and poor planning on the part of ICE produce chronic shortages. The advantage of GSM technology is its ubiquity, as people with a GSM phone can roam on networks all over the world (though often at a hefty cost).

TDMA: Time Division Multiple Access Refers to an outdated technology that is being phased out throughout the world and in Costa Rica. Ironically, Costa Rica’s old TDMA network often offers better coverage than the newer GSM technology, according to both customers and ARESEP reports.

SIM: Subscriber Identity Module This fingernail-sized chip of silicone and plastic is the heart of your GSM mobile phone. It tells the cellular network who you are and contains the code to let you use that network to make phone calls. It can be transferred between handsets. SIM cards are also the way the network keeps track of who is paying for the calls.

1800 mhtz: The only frequency band supported by Costa Rica’s GSM network. There are four bands that are commonly used for cellular phones throughout the world. If you want to use a certain cell phone handset in Costa Rica, it has to support this band.

Roaming: Talking on your cell phone using someone else’s network. For example, if your service provider in the United States is T-Mobile, you typically use TMobile’s network. Using your cell phone in Costa Rica on ICE’s network is roaming. Roaming is possible only when network operators have roaming agreements that allow their customers to talk on the other network. Roaming usually implies an added cost for the user.

3G: Third Generation: Refers to the next generation of GSM technology. Currently, the GSM technology in Costa Rica is second generation (2G). Third generation technology allows faster Internet browsing on cell phones and more video, audio and other data applications. ICE Assistant Telecommunications Manager Claudio Bermúdez said ICE will acquire 1.5 million 3G lines by 2008.

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