Information Technology Landscape
in COSTA RICA
Privatization and Deregulation
Currently, all telecommunications efforts are controlled by the Instituto
Costarricense de Electricidad (ICE), the state-owned monopoly. Although
this sentiment is eroding, it remains difficult to enact serious reform
because of broad popular and political support. Reform must be shown
to be absolutely necessary. ICE was formed as a solution to specific
problems during the depression between WWI and WWII.20
The primary reason for the government's desire to retain control of certain
profitable state enterprises is that they yield a substantial surplus to
the consolidated public sector budget. Without these profits, the
government would be unable to finance itself without asking the Legislative
Assembly for major new taxes. Any major reform in the new future
is unlikely. However, awareness and need for competition is mounting
and creating pressures.
-
ICE
World-wide direct dialing telephone services, telex, telegram, facsimile
and data transmission services are provided by ICE. (See Telecommunications
Infrastructure for statistics.) In addition, ICE provides cellular
telephone service. 15 other companies have received permits to provide
two-way mobile phone services as well.
-
Millicom and ICE
In May of 1995, U.S.-based Millicom which pioneered cellular telephone
communications in the country, was forced to cease operations by the Costa
Rican Supreme Court. The reason was because the 1989 concession was
supposedly in conflict with the constitutional monopoly granted to ICE.
-
Recent progress towards Privitization/Deregulation
Although Costa Rica lags far behind its neighbors in Central America
in introducing competition into state sectors, President Miguel Angel Rodriguez
announced during the week of August 25, 1998, plans to open up the country's
electricity market to competition.16
This announcement has shown commitment and effort towards becoming a viable
technology center for the Americas. (Please see Computer
Hardware/Software, Internet and IT
Geographics for a description of companies currently positioning themselves
to take advantage should this announcement become reality.) The plan
encompasses sending a bill to the national assembly that will allow private
companies to generate power and sell it to ICE as well as other large customers.
However, there are no plans for restructuring or selling off the telecommunications
state utility.
In addition, Infrastructure, for example, has recently received an important
boost with the approval of the new Concessions Law, which, as has been
the case in other countries, offers maximum legal securities as well as
efficiency and transparency in all administrative proceedings.
-
Monopoly Considerations
It is important to note that since most of the telecommunications effort
in Costa Rica has been regulated by a government controlled monopoly, gathering
data on supply and demand is difficult. Having the industry artificially
constrained, does not allow the traditional supply and demand model to
work where the demand for the product/service increases as the price falls
and the supply of a product increases as the price rises.
-
Universal Access Approach
In order to really understand the goals and approach taken by a country
such as Costa Rica, it is necessary to understand their definition of universal
access. In the United States or any highly developed country this
would be defined as one telephone per household. In contrast, Costa
Rica's definition of universal access is one telephone "within one kilometer
of both public and private access" as compared to "a telephone booth within
five kilometers (two hours walk)" in Burkina Faso. 14
| Country |
Universal Access Policy |
Operator Obligations |
| Costa Rica |
Within 1 kilometer of both public and private access. |
No regulated obligations. |
| Chile |
By 1997 no community of more than 50 inhabitants should remain without
a pay phone. |
No obligations on operators. Government pursuing through
Telecommunication Development Fund. |
| Peru |
On a needs assessed basis to provide at least one public phone to each
of the 70’000 inhabited rural counties without service.
|
License requirements include having to install at least one pay phone
in 1’500 of the 2’900 population centers of 500-
3’000 persons (and all towns of greater than 3’000 persons) by 1999. |
* Source ITU/BDT Regulatory Survey
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Last updated December 18, 1998