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Telecom firms finally asked to enter bids

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Telecom firms finally asked
to enter bids for cell service


For The CAFTA Report

(Aug.31, 2010) Finally the telecom agency has published an invitation for companies to bid for spectrum space to run cell phone services in Costa Rica. The La Gaceta government newspaper carried the legal item Tuesday.

The La Gaceta government newspaper is supposed to be carrying this morning the invitation to bid for cell telephone concessions.

The Superintendencia de Telecomunicaciones is offering a thick document with all the details on the spectrum auction for $100 at its Sabana Sur offices.


Cell phone use predicted to skyrocket . . . . HERE!


At stake are three sets of frequencies that will allow the development of a cell telephone service. The requirements are strict. A bidder must show annual income of $450 million and 1.8 million telephone subscribers elsewhere. The firm also has to have five years experience in operating such a system and has to have experience in setting up a new system.

There are about a half dozen companies that fill the bill. They have 45 days to prepare the bid and submit it. A company may only win rights to one frequency set. The telecom agency established a minimum bid of $70 million. This may be optimistic in that companies like Google and Skype offer very cheap international calls and because the technology exists for Internet telephony in Costa Rica.

Casa Presidencial characterized what follows as a long and complex process. The Superintendencia has to evaluate the offers and any eventual contracts must be reviewed by the Contraloría de la República. Telecom sources said that it may be a year before the first non-government cell telephone is offered to the public.

Casa Presidencial said the executive branch was counting on the good disposition of the Instituto Costarricense de Electricidad, which now operates the telephones. Any new arrival will be a direct competitor, and the former telecom monopoly fought hard to make the auctioning of the spectrum as long and difficult as possible. There also is the possibility of prolonged court battles that might make the prediction of a year's wait very optimistic.

The Superintendencia is acting after the Sala IV constitutional court said that it must resolve the matter quickly.

In early August the high court gave public officials three months to award concessions for the frequencies. Specifically the Sala IV ordered the Ministerio de Ambiente, Energía y Telecomunicaciones, the Superintendencia de Telecomunicaciones and the Instituto Costarricense de Electricidad to coordinate their efforts so that the award of cell telephone concessions would take place in three months.

Companies will bid on one of three packages of spectrum. Concessions one and two each consist of 15 MHz in the 1800 MHz frequency and 15 MHz in the 1.9/2.1 GHz range, with uplink and downlink for a total of 60 MHz.

Concession three has three frequency bands, with 5 MHz in the 850 MHz range, 15 MHz in the 1800 MHz spectrum, and 10 MHz of 1.9/2.1.

The concession decisions will be the end of a long road that began in 1995 when the U.S.-based Millicom was forced to end cellular telephone service. The Sala IV determined that the new innovation infringed on the monopoly that was guaranteed to the Instituto Costarricense de Electricidad. Millicom had been offering the cell service here since 1989. It took the government monopoly more than a year to resume the cell service.

Once before the government tried to open up the telephone industry to private companies. Riots ensued and the idea was abandoned. The current opening is due to the free trade treaty with the United States. Having lost its monopoly service, the government-owned Instituto Costarricense de Electricidad fears a loss of income. The fears are well grounded because local telephone service, including cell service, is offered at less than cost.

The government telecom company has been dogged by complaints of poor coverage, overloaded systems and other flaws, not to mention less than stellar customer service.

Contact us here: Editor@TheCaftaReport.com



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