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Can (and Will) ICE Cellular Survive?

April 12th, 2011

ICE Offices - Cost RicaOver history, I suppose most monopolies were not good for their customers…. certainly some of the early ones in the US were not. One exception we old folks remember was AT&T and their technical arm, Bell Laboratories.  They provided world class telephone service and technology that most certainly allowed the USA to become a worldwide business and technological powerhouse.  They offered excellent services, excellent customer support, excellent technology and all at an excellent price.

However…  The thing about being a monopoly is that, if you want to,  you can pretty much give the finger to your customers every day for years and know they must just accept the insult.  There is no option. You own the marbles and anyone who wants to play must play by your rules.  You set the (cellular) rates (which, by the way and in the case of ICE are REALLY very good!), and make all the rules your customers must obey if they want to have cell phone service.

Now in some cases, the customers do not know they are being maltreated because there is no other option, so they believe this is as good as it gets! Let the learning curve begin!

The bad things about being a monopoly, though, is that for good or bad, your monopoly can end, in this case as a result of the Central American Free Trade Agreement (CAFTA).  The bigger bad thing is that a lot of those customers that you mistreated and abused for many years have long memories.

Interested in this topic? Read on!

La Nación published a fine article yesterday (and a decent op/ed piece today) about just what The Instituto Costarricense de Electricidad (ICE) is facing… and it is not lookin’ good.

My  translation:  “The Instituto Costarricense de Electricidad (ICE) runs the risk of losing half of its customers once competitive cell phone providers open for service in Costa Rica.”

The actual number per a survey commissioned by La Nación, is that 23% of current users will probably switch to one of the new companies (Claro or Movistar) and 28% are somewhat likely to switch.

Those most likely to flee are in the age group 25-29.

I think that baring a tremendous effort on the part of ICE, the above numbers may be low.

Why? A few reasons!

1. The younger users are more tech savvy and far more likely to know what they have been missing, and as some old saying goes… Youth must be served.  I expect the competition to cater to that group.

2. The median age in Costa Rica is  28.8 year  (males: 28.4 years and females: 29.2 years (2011 est.). What does that tell you?

3. As I mentioned, there is a huge number of Ticos who simply do/did not know what they have been missing… but they will!  They advertising barrage is coming sure as the rain.

4. Ticos talk.  Families communicate… and as cell phones are as common here as fine looking women, the word WILL get out. Fast.

5. Outages like the famous one in February where 800,000 customers were without service can never happen again. Bets on probability?

6.  These (new) competitors know how to market.  Who knows if they will give away costly phones in exchange for a multi-year contract, but they WILL do something.

7. And sadly, while I have noticed many positive changes at ICE in the past year (and I deal with them a LOT), they still just do stuff so damned stupid as to make you wanna go bang your head on the wall!

Examples?  Here is a couple just from today’s visit:

If your cell phone is in a corporate name, you need to get a fresh personeria (meaning one less than 30 days old) for just doing everyday customer service.  This means a trip to the registro (always fun!) or paying your attorney some cash to get a current personeria. Why??  Want another?  Prepaid SIMS have an expiration date!  If you do not dial 1150 to check…  you can miss the expiration and lose your balance!  Why? I could go on…. for decades… but you get the point.

I think ICE would be well served by hiring some marketing and tech consultants from outside of Costa Rica to provide them with a virtual) or maybe real) head slap!  They need perspective!  If it were me, I’d actually try to steal away someone from Claro or Moviestar, because I can promise with almost 100% accuracy that these folks aren’t gonna serve up business as usual.

I actually believe it is not too late.  Even some kind of advisory group would be helpful, but time is running out. A lot of people will lose a lot of jobs if management fails to get real.

While I have not been happy with ICE, I AM very happy with Costa Rica, and if at all possible I prefer to give my loyalty to the Costa Rican people and some fine employees at ICE who are trapped by crummy planning,  management and policies.  Might not be possible of course, but I prefer the colones remain in this country.

But… I also read yesterday (my translation):

“In January, ICE’s chief executive, Eduardo Doryan, told The Nation that ICE seeks to maintain a 55% stake in the cellular market by 2014.”

Wow…

Perhaps not all is lost… Walmart (Mexico and Central America) just today announced their plans to open 24 new stores generating 800 new jobs.

 


9 Responses to “Can (and Will) ICE Cellular Survive?”

  1. Steve Truesdale on April 13, 2011 8:32 am

    Like you said, Tim, you like to keep your money in Costa Rica – not Arkansas.

  2. TrueINK on April 13, 2011 10:47 am

    ICE hasn’t got a clue about what to do and I believe they will fall and fall fast once Claro and Movistar get rolling. Being from the USA I know “what else” is out there as far as customer service and I don’t see ICE getting it right, not without letting go ALL the employees that they’ve empowered over the years to treat us like dirt and verbally abuse us.

  3. Marilyn Drummond on April 13, 2011 11:29 am

    For those of you who doubt Tim’s assessment of Customer Service here this may give you another clue. I once took 4 of my husbands dress shirts to the laundry (before we had a maid that could iron). When I picked them up, I noticed that 2 were perfect, but 1 had a collar side rumpled & ironed down & the last one had both sides of the collar very rumpled & ironed down. I spoke to the clerk to inquire if they could redo the collars on the “bad” ones. Her reply was to go & get the manager. He told me without batting an eye….I am NOT KIDDING! that if I didn’t like the way the shirts were ironed I should take my business somewhere else.

  4. Harley on April 18, 2011 1:59 pm

    I hope ICE falls fast and HARD and I agree with the person above who wants all the emmployees who have been empowered by ICE management, to be FIRED and told NEVER to come back! I was late paying my cel phone bill and went into ICE to get re-connected- I was told they were destroying my number and I could not have cell service for 6 months as a penality- I almost shit!!!! Again- I hope ICE falls FAST and HARD and who cares if colones are kept here in CR. The costa Ricans hate us and are jealous of us and have mentalities of between 10 and 15 yrs old. And if you don’t believe these statements- you have your head in the sand. You are just not living reality- they HATE us ( Gringos) Because we are (1) smarter)(2) know how to manage money) and therefore aren’t poor, on and on. They smile in our faces and lie and cheat every chance they get. And who doesn’t know that they are raised to lie and cheat and steal? And do NOT get hurt and taken to a hospital because they WILL steal your kidneys if given a chance- just research Tico Times article about the poor Canadian who had his kidney atolen at Calderon Guardia hospital. What a shame to be a costa rican- shame shame shame on the whole people- just the lowest form on the planet

  5. Walter Freeman on April 19, 2011 12:32 am

    I have noticed that new businesses coming into CR are initially interested in having aggressive pricing and offering decent customer service. Over time a peculiar thing happens; the new kids become just like the old clunkers in every way.

    I can only speculate but wonder if the CR labor pool eventually infiltrates the new business and overwhelms the desires of the foreign management. The mid-management positions themselves are probably given to “old-school” nationals once the start-up phase is complete. Then the resulting inefficiency forces diminished margins causing prices to rise and then it’s back to the SOS.

    And yes, I DO love it here – just not expecting miracles.

  6. Mark Gnagy on May 16, 2011 7:16 pm

    I believe that the new cellular providers coming in to Costa Rica will not have an easy time of it. Already many municipalities have been blocking attempts at erecting new cellphone towers. As part of their contracts the companies have some unrealistic (for CR) deadlines they have to meet for providing service. ICE has never faced these sort of hurdles but they have convinced the govt. to impose them on their competitors. Also, you have to remember that many ticos are, if not brand loyal, creatures of habit who resist trying new things. Huggies continue to outsell Pampers because they were first in CR. Same with Colgate toothpaste. Crest cannot get a foothold.

    I agree with you 100% Tim that ICE could definately use some outside help. They need to learn how to operate in a competetive market which they have never had to do. In fact, I believe that this is a big reason why so many entities seem so disfunctional in CR. There is not the breadth of talent in a country of 4 million people to get the job done. Sure, there is someone standing at the teller window or sitting behind that desk but are they really capable? In many cases not! The entire country should bite the bullet and get some help.

  7. Tim on May 24, 2011 7:08 am

    Hi Mark
    “Already many municipalities have been blocking attempts at erecting new cellphone towers.” is not quite right as I understand it. This was caused by their (municipalities) inaction many years ago when the very thought of ICE having competition could not even be fathomed. They approved permits for ICE but never set up a process to even accept applications from other companies. Why would they? Now the process will be nasty and slow… Sadly, my town was one of them and it is now scrambling.

  8. Casey on July 11, 2011 3:53 pm

    Tim, “scrambling”? 🙂 The day I see a government body here “scrambling” (and I don’t mean as in eggs) that is the day I will see swarms of barnyard animals flying overhead. Truthfully, though, be glad that in general the governments here are slow. When they actually do get efficient you will be drowned in regulatory mazes (costly mazes) just like in the U.S. where you can’t move left or right without having to get a permit for something.

    Anyway, I don’t care much about the new competition in cellular services ICE is facing, their current service is good enough and way cheap. I do care about improved Internet service (hell, just being able to acquire service in a timely manner) and I don’t see any improvement in that area in the foreseeable future. Internet over cellular sucks and always will.

    Speaking of red tape, this vid says it all:
    http://www.youtube.com/watch?v=XXWZ3uAEKswj

    Pura vida,

    Casey

  9. Texas Brown on November 18, 2011 12:05 pm

    Since this blog is about communications (cell phones/internet), I would very much to learn more about two things:
    1. Which phones can I bring from the USA, that can work in CR?? When I permanently retire in CR; iPhone? Android? 3G, 4G? locked or unlocked?

    2. Is Wifi available as a service in homes? If not what internet provider service is available in the home?

    Thanks.

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