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.
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