Costa Rica telecom monopoly slow to unravel

May 15, 2009

The principal and only client of the recently created regulatory agency overseeing the opening of Costa Rica´s telecommunications market finally agreed to turn over the fees had collected to keep the agency afloat, bringing to an end a battle that threatened to close the regulator.

It wasn´t until the Comptroller General´s Office intervened Thursday on behalf of the Superintendent of Telecommunications (SUTEL) that the Costa Rican Electrical Institute (ICE), formerly a monopoly, reluctantly gave SUTEL the approximately $920,000 it was owed since January.

The turmoil has cast a shadow on the newly opened market, which still has only one provider to monitor – ICE. Meanwhile, at least 24 companies are interested in stepping into the market, which was just opened to competition at the beginning of the year.

On Saturday, the daily La Nación reported that SUTEL recommended that three companies be given permits to operate in Costa Rica.

While many have called some of ICE´s actions obstructive and claim they are trying to block out competitors, SUTEL has delayed taking direct action. Interested companies have been waiting five months, and even the three companies SUTEL recommended for approval may not be able to actually enter the market for another year, La Nación reported.

“This is a learning curve,” said Lynda Solar, the executive director of the Costa Rican-American Chamber of Commerce. “It´s like SUTEL is starting at, well, zero, really.”

The chamber released a statement condemning ICE´s reluctance to pay SUTEL on Friday, and said the government needed to take quick action to resolve the issue.

“This is how it goes in Costa Rica,” Solar said. “Literally, you wait until the shoe drops off the foot and then react. It´s always reactive here, never proactive.”

SUTEL was created as a regulator of the telecommunications market in January. As part of the Central American Free Trade Agreement with the United States, Costa Rica was forced to open certain markets to competition – one of those being Internet and cell phone services.

SUTEL went from being a small division within the Public Services Regulatory Agency to becoming a much bigger, autonomous agency facing the gigantic task of opening up the market.

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