U.S. Trade representative call out Costa RIca on cellular delay

April 9, 2010

Costa Rica must finally open up its cellular phone market to fulfill its end of the deal as a member of the Central American Free-Trade Agreement with the United States (CAFTA), a U.S. government trade report said this week.

The U.S. Trade Representative´s Office (USTR) singled out Costa Rica among a list of 20 or so other countries that presented “key issues” in the office´s annual Review of Telecommunications Trade Agreements.

This country had to push through reforms of key trade policies and industries, such as telecommunications, in order to join the region´s trade club with the United States in January 2009. One leading reform was to release the state-run Costa Rican Electricity Institute´s (ICE) grip on mobile phone lines. As part of the deal, Costa Rica has to allocate frequencies to introduce competition into the market. This has not happened.

The USTR cites a couple of main factors that forced this country to delay the process, which was to begin Feb. 5.

One trip-up involved allegations that interests were colliding over one potential bidder´s past work. After an investigation, telecom officials said the case is resolved, the bidder is in the clear and the auction should go forward.

However, a technical difficulty has arisen that is making it difficult for Costa Rica to fulfill this central piece of the trade treaty (which is often called CAFTA-DR, because it includes the Dominican Republic ). Bidders will need access to microwave frequencies to connect their base stations to cell towers throughout the country, which are currently in the hands of a few state and privately run operators. The USTR said Costa Rican officials have informed its office that this country first needs to implement a regime to ensure that the operators share access to their frequencies with the prospective businesses.

“USTR urges Costa Rica to resolve the microwave frequency issue and complete the mobile telephony frequency auction,” the report said, “so that it can fulfill its CAFTA-DR commitment to introduce much needed competition into the mobile telephony market.”

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