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Proposed Telecom Law Splits CAFTA Coalition

November 9, 2007

The opening of the state telecommunications monopoly – alternatively loved and despised by cell phone users – is perhaps the most controversial requirement in the Central American Free-Trade Agreement with the United States (CAFTA).

A proposal to take that monopoly away from the Costa Rican Electricity Institute (ICE) – one of 11 bills in the so-called CAFTA implementation agenda – has created rifts even within the coalition of 38 legislators who support the free-trade agreement.

The Libertarian Movement Party (ML) disagrees with provisions in the telecommunications bill pushed by the National Liberation Party (PLN) and the Social Christian Unity Party (PUSC).

The bill has already been approved by a special legislative commission and is ready for debate by the full Legislative Assembly.

The Citizen Action Party (PAC), which opposes CAFTA, has vowed to vote against any version of the bill. Meanwhile, the Libertarians, a crucial ally in the 38-member bloc, are suggesting substantial changes, prompting Liberation and PUSC to say they are willing to negotiate – to a point.

First, the Libertarians say the bill errs in allowing political bodies – the executive branch and the newly enhanced Ministry of the Environment, Energy and Telecommunications (MINAET) – to give companies concessions to the radio spectrum. Libertarians argue that the Public Services Regulatory Authority (ARESEP), an apolitical body that regulates public services, should give the concessions.

Lorena Vázquez, PUSC faction head, said she would not negotiate that point because, she said, the Constitution mandates that a political body authorize concessions. But she said other parts of the bill are open to discussion.

“As long as (the law) has the same spirit, if there are some things we can negotiate on, of course we will,” Vázquez said.

One sticking point is rates for consumers. Under the PUSC-PLN bill, a branch of ARESEP would fix rates until the telecommunications market became truly competitive.

The Libertarians want rates to be fixed for just two years. After that, companies should be able to decide their own prices, notwithstanding the state of the market.

The Libertarians also say the bill charges companies too much in taxes and sanctions.

Under the PUSC-PLN bill, for example, companies would pay between 2-4% of their income to a state fund that would provide telecommunication services to rural areas, where private companies may not want to set up shop. The Libertarians want to lower that fee to between 1% and 2%.

At the end of the day, Libertarian legislator Carlos Gutiérrez said the party would support the bill as written. But not without a fight.

 

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