Auction to Determine Cell Providers

An official timeline for the opening of the cellular phone market in Costa Rica appears to be in place, finally.

According to the Superintendence of Telecommunications (SUTEL), three new cell phone companies will be named in the coming months and will get the green light to compete with their service plans and coverage by the first quarter of 2011.

The schedule for the opening of the cellular phone market, as well as a thorough explanation of how the new providers will gain entry, was presented Monday at a public forum held by SUTEL at the Hotel Real Intercontinental in Escazú, west ofSan José. More than 200 persons – many of whom represented companies interested in offering cell phone service in Costa Rica – attended the presentation. SUTEL said the attendees included representatives of Digicel, Millicom, Telefónica, Cable & Wireless y América Móvil.

“We are excited about the turnout and the interest and to see new faces and new competitors in the Costa Rican telecommunications market,” said George Miley, president of SUTEL. “Today marks the beginning of the process of granting approval into the mobile telephone market in the country. We believe that by September we will be giving approval to the country’s new operators.”

Miley, detailing the timeline, said applications for entry will be accepted by SUTEL as of Feb. 5 when a “hybrid auction” for companies interested in providing cellular service will be staged. During the following three months, the technical and financial plans of the companies will be reviewed.

Miley said the applicants must meet certain criteria – including at least five years of providing cell phone coverage and reputable track records in other countries – to be eligible for market entry.

“There will be winners,” Miley said. “The companies that present the most comprehensive business, technical and financial plans will be submitted for entry into the market. There will be three companies selected and they will join ICE in providing coverage in the country.”

On April 20, SUTEL will select the three companies determined to have the most comprehensive and appropriate plans for market entry, and these nominations will be sent to the executive branch for review.

If the plans of the three new companies are approved by the executive branch, President Oscar Arias will sign a decree on May 5 approving their participation in Costa Rica’s cell phone market. This will be just three days before the conclusion of Arias’ term on May 8.

From May to September, the approved companies will work alongside SUTEL and the Environment, Energy and Telecommunications Ministry (MINAET) on technical issues related to offering cell phone service tin Costa Rica. Cell phone coverage will be distributed along six frequency ranges.

SUTEL officials expect that the new companies will offer phones and service in the first three months of 2011. The approved companies will be granted access to Costa Rica’s airwaves for up to 15 years, with the possibility of renewing their contracts for an additional 10 years.

A Long Time Coming

The presentation of a timeline for the opening of the telecommunications market has temporarily eased the frustrations of would-be cell phone providers. These companies have been waiting for a chance to enter the market since January 2009 when the Central American Free Trade Agreement with the U.S. (CAFTA) went into effect, breaking up the long-standing telecommunications monopoly held by the Costa Rican Electricity Institute (ICE).

The process of opening the cell phone market has been a difficult one, with SUTEL and ICE wrangling during most of 2009 over the nature and scope of regulations to govern the opening.

On Monday, SUTEL’s Miley sought to reassure potential providers.

“We have always said that, as the telecommunications market opens, we will do our best to be as open and transparent as possible with everyone,” he said. “We will remain that way as we move towards the next phase of the market, which includes welcoming competition in telecommunications for the first time in the history of the country.”