Mobile penetration to reach 100% in 3 years - watchdog

Thursday, March 24, 2011

Costa Rica is likely to reach mobile penetration of 100% in three years, boosted by the entrance of new competitors América Móvil (NYSE: AMX) and Telefónica, which won licenses for the newly liberalized market this year, Maryleana Méndez, head of telecoms watchdog Sutel, told BNamericas.

Méndez, who assumed the post of Sutel council president at the beginning of March, said current state telecoms monopoly ICE has registered more than 3mn mobile subscribers of a population of 4.5mn, giving the country a penetration rate of approximately 67%.

"The companies that enter the market will have the important task of reaching 100% coverage with very high standards of quality. According to Sutel's coverage plan, we should reach that in three years," Méndez said. The new mobile entrants are expected to launch 3G services.

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In January, América Móvil and Telefónica won two of three spectrum blocks up for grabs, with no winner for the third. Méndez said re-auctioning the third block is a decision for the government to make.


The Sutel head said one of the major challenges in her new position is to "provide a social element to liberalization," ensuring that universal services fund Fonatel gets up and running.

Fonatel is reported to have collected only US$2mn of the US$20mn it was expected to have in its coffers by now. The fund was expected to collect 1.5% of gross revenues from operators in the telecoms sector.

Méndez confirmed that the fund will receive the US$170mn in proceeds from the mobile spectrum licenses awarded in January.

"With that money we'll seek to narrow the digital divide and spread telecommunications services. The law establishes that only 1% of the fund can go for administrative purposes," Méndez said.


Two years since Sutel was set up, the regulator now aims to be more rigorous in its application of regulation, the official said.

"These first two years have been a difficult experience for the country. The Costa Rican market went from being one of a monopoly to one of regulated competition," Méndez said.

"Two years ago the process of liberalization began, and as a result we have 100 companies operating as service providers of different sizes and activities, and we will soon make concrete the liberalization of mobile telephony," the official added.

There are also a small number of VoIP providers with their own numbers and interconnected with ICE's fixed-line network, Méndez said. The cable TV market is also growing, and to date 16 licenses have been granted.