Agreement paves way for telecoms liberalisation

5 Jan 2004

Negotiations are reportedly underway to provide for the partial liberalisation of the Costa Rican telecoms sector with an agreement set to be signed as early as the end of this month. According to BNAmericas, US and Costa Rican trade negotiators have reached agreement on a timeframe to open up the internet and value added markets for corporate data communications services within the next year or two, with mobile services to follow in three to four years. As it stands, all telecoms services are provided by state-owned behemoth ICE (formerly ICETel), while data services are offered by another government-controlled entity, Racsa.

The Costa Rican government has repeatedly failed to open up the fixed line market to competitors; following its first attempt in 1997-98, which was to be teamed with the privatisation of ICE but was defeated by public vote, the industry regulator Aresep announced in early 2001 that the market would be liberalised on 1 January 2002. However, the plan fell through yet again because of strong opposition from the ICE Workers’ Union, which is against any form of privatisation. Despite this latest development it is likely that full liberalisation will take time to reach fruition as Costa Rica needs first to overhaul and replace its existing telecoms laws and establish an independent regulator. Under the proposals now being put forward, ICE will be treated as the dominant operator and as such will face more stringent regulations, while major institutional reforms of the state-owned telcos are also being suggested. Agreement on a partial liberalisation deal enables Costa Rica to join the Central American Free Trade Agreement (Cafta) with the US and four other countries.