Letter Prompts Delay In Cell Market Opening

February 5, 2010

Just when it seemed the cellular telephone market was on track to open for competition, the Telecommunications Superintendency (SUTEL) announced another postponement on Thursday afternoon.

The decision to delay the opening comes in response to political bickering sparked this week by Ottón Solís, the presidential hopeful of the Citizen Action Party (PAC), who sent a letter to President Oscar Arias urging him to delay the opening of the cellular market a month.

In a proposed schedule for the opening of the cellular phone market, SUTEL announced in January that the final signature on the bill ushering in the new market competitors would be May 5, three days prior to Arias leaving office. Solís argued that the signing should be bumped back a month to allow the new president to ring in the opening of the cellular phone market.

Competition in the cell phone market was officially opened on Jan. 1, 2009, when the Central American Free Trade Agreement with the United States (CAFTA) went into effect, breaking up the long-standing monopoly the state-run Costa Rican Electricity Institute (ICE) had held over the telecommunications market.

“The decision to postpone the opening of the market is a political decision,” said Carolina Mora, the communications officer for SUTEL. “It is a logistical decision … Currently, we do not know when we will reschedule a date for the opening of the market.”

The recent date reshuffling was prompted by the letter from Solís, who last Friday wrote to Arias, saying, “Your administration has pressured the licensing process for the awarding of the cellular telephone frequencies and the executive branch is trying to sign the contracts of the concession on May 5, just before the transfer of powers.”

Solís then asked, “Why rush the awarding and final signing of the cellular telephone contracts?”

The letter said that delaying the signing would provide the country greater “transparency” in the process of opening the cellular market frequencies.

On Tuesday, Arias responded to the letter from Solís.

“The calendar for the opening of the telecommunications market is established by the Telecommunications Superintendency (SUTEL) and not the government,” he said. “This was done a long time ago, there have been many delays.”

Arias said that he prefers the incoming government to have a hand in the signing of the agreement.

“If the calendar indicates that I have to give closure to the opening of the telecommunications three days before finishing my term, truly I prefer that it is done in the next government. The false idea that we are running to do it ourselves is not so.”

The response of Arias prompted SUTEL to redesign the timeline for entry of new competitors into the national cell phone market. Originally, SUTEL had planned to begin accepting applications from interested cellular companies today.

The process of selecting the new entrants into the market is anticipated to be a three-month process in which SUTEL will hold a “hybrid auction” to determine the best qualified companies to provide cellular phone service to Costa Rica. Of the many providers looking to enter the Tico market, three companies will be selected that have the most comprehensive financial and technical plans for market entry. Once admitted into the market, the new entrants will begin to compete for cell phone coverage with ICE, who held a monopoly over the national telecommunications market for decades.

–Adam Williams

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