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Costa Rica 2018 | TELECOMS & IT | REVIEW

The Costa Rican telecommunications market continues to expand quickly as regulators liberate mobile prices and push for greater access to the internet.

Home to some of the strongest telecoms infrastructure in Central America, the Costa Rican telecommunications market continues to show strong growth. In 2016 alone, internet penetration climbed 8% to reach 65% of the population, even as the number of computers per home decreased. Mobile phone penetration reached around 170% the same year.

While widespread penetration has been reached, Costa Rican internet users now face a battle for speed. British company Open Signal published, in early 2017, a report evaluating mobile internet access speeds in 87 countries and concluded that Costa Rica has the slowest mobile internet connection of the lot, at 2.69Mbps. That is around 14 times slower than the highest ranking country, South Korea, where users can connect at speeds of 37.54Mbps.

The issue is of particular relevance as 89% of internet connections in Costa Rica are done through mobile networks. Landline internet connectivity remains relatively small in the country.

In light of these challenges, Superintendencia de Telecomunicaciones (SUTEL), the national telecoms regulator, imposed connection-speed restrictions for users with post-paid plans that go above their awarded quota of monthly internet access in a move to try to assure internet speeds for paying customers and restrict abuse by heavy consumers like internet cafes. The policy, called Uso Justo, or “Fair Use," had to be reviewed by the country's constitutional court as there were fears it would undermine user rights. The need for the policy is representative of the challenges facing the market.

Access to Everyone

SUTEL has also put in place a number of measures to try to provide more Costa Ricans with access to the internet.

In November 2017, the regulator announced a USD65.7 million investment in a program dubbed Espacios Públicos Conectados, or “connected public spaces," which will see the introduction of wireless internet infrastructure in 515 different locations spread around 360 districts.

The plan, implemented with the resources of the national telecommunications fund (FONATEL), will target parks, public libraries, train stations, civic centers, and universities. Once implemented, the program will increase the connection speed it makes available to users on a yearly basis, with 5Mbps in the first year, 8Mbps in the second, 10Mbps in the third, 12Mbps in the fourth, and 15Mbps after five years. The project will be open for bids until late December 2017 to interested operators, and SUTEL has pledged to reach a decision within 45 days after the closing of the bid. Once awarded, the new operator will have 24 months to implement the countrywide plan and will operate the network for 10 years. This means that Costa Rica's citizens should be able to access the service everywhere in the country by early 2020.

In tandem with this development, the government is rolling out Programa Hogares Connectados, or “Connected Homes Program," which is providing 140,000 low-income families with a computer and landline internet access across Costa Rica. With an investment topping USD128 million also coming from FONATEL, the country's poorer homes will have the opportunity to access 2-Mbps connections at subsidized rates and acquire a laptop computer at a reduced price. First initiated in 2016, the end of 2017 should see all of the 140,000 eligible families connected. This and other programs have made Costa Rica the Central American country with the highest internet penetration.

Addressing Mobile

An important development for the mobile segment took place in September 2017, when SUTEL declared the full liberalization of market pricing. The move is expected to raise competition and improve both the quality of services and the pricing. Claro (America Movil), Movistar (Telefónica), and the state teleco, Kolbi (Instituto Costarricense de Electricidad – ICE), the country's three existing operators, will now have the freedom to offer new bundles, plans, and discount schemes to attract customers. A previous regulation that forced the national operator ICE to have a dominant position in the sector has also been lifted.

Mobile operators had another important opportunity to expand their capabilities in July 2017 with the auction of 70MHz of radio spectrum, which became available with the introduction of digital television. Claro and Telefónica bought all the available spectrum blocks for a total value of USD43 million, which will revert to the FONATEL. The broadening of the available radio spectrum is expected to considerably improve the quality of mobile services in Costa Rica.