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Telecommunications

Telecommunications regulator proposes lifting phone, internet rate controls

Costa Rica’s Telecommunications Superintendency (SUTEL) has proposed the elimination of all regulations on postpaid mobile, mobile internet, and international phone service rates, as soon as December.

The telecom watchdog would allow market competition to determine rates, and regulate only the quality of telecom services. SUTEL is recommending this change based on a technical study of the telecom market in the country and current competition levels.

If approved, the main change for subscribers would be internet rates for postpaid mobile services. For example, carriers would be allowed to charge for transferred data instead of charging for connection speed.

This means that instead of charging a monthly rate, carriers would charge customers for every time they open or send an email, access a website, download an audio or video, or open their Facebook or Twitter profiles.

Carriers of mobile internet — Claro, Movistar and ICE-Kölbi — must now charge flat monthly rates for postpaid mobile Internet plans and use data-transfer rates only for pre-paid plans.

The 1,175-page proposal is available for download on SUTEL’s website. The agency invites the public to read the document and submit their comments against or in favor of the plan. Interested parties can weigh in on the plan by email at gestiondocumental@sutel.go.cr.

SUTEL Marketing Director Walter Herrera said they hope many citizens will participate in this consultation.

At the end of next week, agency officials will review all messages received, then draft a recommendation for approval by the agency’s board of directors. If approved, the agency will submit the change to the official newspaper La Gaceta, and it will go into effect a month later.

Jaime Palermo, Telecommunications Manager of the state-owned carrier ICE-Kölbi, said the institution is in favor of the proposal. Kölbi is currently the carrier with the largest market share.

According to Palermo, SUTEL’s proposal fulfills an obligation SUTEL has toward ICE. He said the deregulation of rates “is necessary to eliminate market distortions and ensure equal competition.”

He noted that under current regulations, Kölbi is the only carrier that can be sanctioned for anti-competitive practices, and that it also is forced to comply with a series of regulations that do not apply for other carriers.

Lawmakers on watch

SUTEL’s proposal sparked reactions at the Legislative Assembly. Some lawmakers have already expressed their concerns about the regulator’s plan.

Broad Front (FA) lawmakers were the first to voice their opposition. FA legislator Edgardo Araya earlier this week said deregulating internet rates will limit internet access for large segments of the population.

FA’s Jorge Arguedas said SUTEL’s plan contradicts previous rulings from the Constitutional Chamber of the Supreme Court, or Sala IV. He noted that the Sala IV has demanded that SUTEL maintain flat monthly rates for post-paid plans.

Arguedas said that under Costa Rican law, internet access is considered a human right.

“SUTEL… considers that a human right can be regulated by free market competition,” he said.

Growing market

According to a SUTEL statistics report from 2015, prepaid users account for 59 percent of Costa Rica’s mobile market. However, postpaid users consume on average almost three times more data than prepaid users.

The report states that there are more phone lines than people here. There were 7.5 million mobile phone lines at the end of last year, 7 percent more than in 2014. Costa Rica’s population in 2015 was 4.8 million people, according to the National Statistics and Census Institute.

ICE, with 58 percent, has the largest market share of mobile Internet lines, followed by Telefónica’s Movistar with 22 percent, Claro with 19 percent, and Fullmóvil and Tuyo with 1 percent each.

Contact L. Arias at larias@ticotimes.net

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Ken Morris

I think this is a bad idea.

While in theory market competition would result in fairer and usually lower rates, in practice I suspect that the opposite would be the outcome.

Realistically, scant few customers are going to read the fine print of the postpaid contracts they sign, and even if they read it, not many will have the faintest idea of what fair rates are for the myriad services (sending an email, making a phone call, opening a website, etc.) Come on, the proposal is almost 1200 pages long. Customers don’t have the time, interest, or information required to make an informed consumer choice. This makes it very easy for the providers to trick customers into signing contracts that overcharge them. No wonder the providers favor the change.

Plus, let’s get real, when you walk into an ICE office and inquire about service, the last thing the sales clerk does is show you the contract. In fact, in my experience, the sales clerk never shows the customer the contract. I was only handed mine after I was asked to pay and sign the last page. When I got home and read the contract, it did not say what the sales clerk promised.

Market competition is nice in theory, and often it works in practice, but in this instance I fear that in the name of competition this change will simply encourage abusive marketing tactics by providers bent on taking advantage of the understandable ignorance of the vast majority of their customers.

I also find the sentence which says that the change “would allow market competition to determine rates,” and leave SUTEL to “regulate only the quality of telecom services” ridiculous. Yeah right. SUTEL’s own reports show that EVERY PROVIDER is delivering lower quality services than they promise, yet SUTEL is letting EVERY PROVIDER get away with it.

I think we’d be better off if SUTEL simply did its job of regulating the quality of telecom services and enforcing existing contracts rather than wasting its time playing Adam Smith and writing 1200-page treatises on the wonders of market competition. If SUTEL isn’t enforcing those wonders now, why should we believe it will enforce them when the opportunities for provider abuse are much greater?

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