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Telecom Bill Passes

February 15, 2008

Lawmakers voted this week to end the state’s 59-year-old monopoly on telecommunications services.

The controversial measure, passed Wednesday in the first of two votes, would allow other national and foreign firms to join the Costa Rican Electricity Institute (ICE) in offering cell phone, Internet, radio and other telecom services here.

The bill would put Costa Rica in compliance with perhaps the most hotly contested part of the Central American Free-Trade Agreement with the United States (CAFTA), ratified by referendum in October.

The leftist anti-CAFTA Citizen Action Party (PAC) will now question the bill’s constitutionality before the Constitutional Chamber of the Supreme Court (Sala IV), said PAC lawmaker Ronald Solís. The Sala IV has one month to make a nonbinding decision, then lawmakers can pass the bill in a second and final vote.

The opening of the telecom industry has long divided the country and serves as a rallying point for CAFTA detractors. Lawmakers rejected a similar proposal in 2000 after ICE unions paralyzed the country for 19 days with protests and street blockades.

The bill’s supporters say the increased competition would improve services and reduce prices. Solís said the bill could  encourage oligarchy and weaken ICE, a veteransocial service provider and a symbol of national identity.

Under the bill, the Ministry of Environment and Energy (MINAE) would become the “Ministry of Environment, Energy and Telecommunications” (MINAET). The ministry, together with the president, would assign firms segments of the radio electric spectrum to provide telecom services.

A “Telecommunications Bureau,” a new state body, would regulate fees for telecom services until the market becomes truly competitive.

Telecom firms would also have to pay up to 3% of their annual income to a fund to provide services in rural, indigenous and sparsely populated areas, which may not be profitable enough to attract private business otherwise.

Presidency Minister Rodrigo Arias cheered the bill’s passage, calling it part of CAFTA’s “spine.”

The bill faces a rocky road. Independent lawmaker Evita Arguedas, who supports CAFTA, promised last year not to vote on the bill because of an apparent conflict of interest: Her husband owns a firm that provides radio communication services.

Arguedas’ vote did not matter this week because only a simple majority was required to pass the bill. But depending on how the Constitution is interpreted, final passage may require a two-thirds majority, or 38 votes.

Arguedas would be the crucial 38th vote. She said she would decide whether to vote after the Sala IV rules on how many votes are required.

Lawmakers have passed in an initial vote six of the 11 bills required, in some form, to implement CAFTA. The remaining five include controversial proposals to crack down on intellectual property violators and open the state insurance monopoly to competition.

Rodrigo Arias, who maintains the deadline for implementing CAFTA is Feb. 29, said Foreign Minister Marco Vinicio Ruiz will visit the U.S. Trade Office representative in Washington, D.C., at the end of February to seek more time.

 

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