US Trade Rep Calls Out Costa Rica on Cellular Delay

April 16, 2010

Costa Rica must finally open up its cellular phone market to fulfill its end of the

deal as a member of the Central American Free-Trade Agreement with the United States (CAFTA), a U.S. government trade report said this week.

The U.S. Trade Representative’s Office (USTR) singled out Costa Rica from a list of 20 or so other countries that presented “key issues” in the office’s annual review of telecommunications trade agreements.

The agreement, also known as CAFTADR, because it includes the Dominican Republic, was signed by Costa Rica in November 2007 but not ratified until January 2009. Major reforms of key trade policies and industries, including telecommunications, were needed to comply with requirements for joining the region’s trade club with the United States.

One such reform involved loosening the state-run Costa Rican Electricity Institute’s (ICE) grip on mobile phone service. Under CAFTA, Costa Rica must freely allocate frequencies in order to allow for market competition. This has not yet happened.

The USTR cited two of the factors responsible for delaying the process, which was slated to begin Feb. 5.

One trip-up involved allegations that there was a conflict of interest relating to a potential bidder’s past work. ICE officials said the case has been investigated and resolved, that the bidder is in the clear, and that the auction should go forward.

However, a technical difficulty continues to hamper Costa Rica’s ability to fulfill this central piece of the trade treaty. Bidders need access to microwave frequencies to connect their base stations to cell towers throughout the country; the towers are currently run by a handful of state and private operators. The USTR received notification from Costa Rican officials that they need to implement a regime to ensure that operators will share access to their frequencies with prospective businesses.

“USTR urges Costa Rica to resolve the microwave frequency issue and complete the mobile telephony frequency auction,” the report said, “so that it can fulfill its CAFTA-DR commitment to introduce much needed competition into the mobile telephone market.”

–Alex Leff

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