A lot of people think that now there will be wholesale changes now that ICE will face competition.  I am not so sure… at least in the short term.  Let’s examine what has been happening. If this topic interests you, read on!

First,  ICE states that it will close or at least restructure Radiográfica Costarricense  (RACSA), its 245 employees, and move all those  Internet customers from Racsa, its wholly owned subsidiary, to its own network, affecting maybe  80.000 users.  RACSA customers would therefore be serviced by ICE and the rates would be unified.  Sound easy?  Nothing is so easy in Costa Rica.  Two issues here… and this gets a little screwy, so take notes!  Remember that RACSA, while owned by ICE, runs its own show.  RACSA customer service and in fact their overall service has been improving over the past several years  to the point where I now tell people they are quite good! RACSA also sells only Internet services (high speed and modem) but not communications.

ICE, however, is renowned for just terrible customer service and doing everything even remotely possible to inconvenience the customer base.  This is something that should not surprise anyone as most monopolies never have to compete and therefore do not have to deal with the concept of making the customer happy.   Further, the technicians at RACSA are clearly more knowledgeable, or perhaps they are more accessible.  Hard to tell… but either way, they solve issues whereas ICE techs often blame the problem on you or deny there is a problem.

OK… so with the existing structure, RACSA can re-sell Internet  service (i.e. wholesale it) and they do.  Two of their customers are Cabletica and Amnet both distributors of cable TV services. Both of those companies sell cable TV with optional Internet (cable modem Internet).  You can buy cable TV with no Internet connectivity, but you can not buy Internet service from them without buying the cable TV service as well.

Now when ICE restructures RACSA, Amnet and CableTica customers will be moved to ICE.  ICE though, does not sell cable services so far as I know… so that means if I am getting this correctly,  AMNET and CableTica customers will have to all have new DSL installs, new equipment, etc.  UGH! This will effectively put Amnet and CableTica out of the Internet business.  Why do we (or at least I) care?  Because CableTica has  hands down the best customer services of all the companies in my opinion. Those businesses using cable modem service from either company may therefore have some serious issues ahead of them. But…. now we have this:

THIS week,  Amnet has announced they will cut the umbilical with RACSA and sell Internet services directly.  How?  They must, of course, buy services and connectivity directly from ICE and must also arrange to connect to the two underwater international cables in Parrita and Limon that connect to the Internet backbone.

Sounds simple… huh? Oh, did I forget to mention that Amnet also announced that they will compete with ICE for the cell phone business in Costa Rica?  Amnet was purchased last year by cellular service provider Millicom International Cellular, S.A. .  Gee!  I wonder if ICE is happy about that! I betcha not!

Nothing so far from CableTica.

So why am I writing all this? Well for those of you old enough to remember, once upon a time in the giant country to the North, there was a pretty GOOD communications monopoly called American Telephone and Telegraph (AT&T). Their service was just about as good as you an get anywhere.

Well one day, the mean old US government said, “NO MORE MONOPOLIES”  and broke apart AT&T.  The problem was that AT&T owned all the land, all the infrastructure, all the wiring, all the central offices… well you get the point. Startup company MCI just did not open the doors.  AT&T made life VERY difficult with major issues as regarded setting wholesale rates to providing access to all the above infrastructure. On the surface, they seemed cheerful enough about having the competition… but that was on the surface.  It took years and a zillion law suits and more zillions or dollars before MCI truly entered the US communications market.

ICE has kind made it clear they have no plans to go peacefully into the night…. so I asked myself, “I wonder who in Costa Rica  owns all the land, all the infrastructure, all the wiring, all the central offices, routers, contracts with backbone providers….”.  Things that make you go… hmmmm.

I have no idea how communiations and Internet services in Costa Rica will be affected.  Maybe everyone will just get along and overall, services and customer support will reign supreme with many happy and properous companies each providing these better services at lower prices.  Or not….?  Comment welcome~!

Final approval must come from the Comptroller (Costa Rica’s equivalent to the General Accounting Office) before the deal is finalized.  Huawei won in a bidding war against Sweden’s Ericcson and China rival ZTE Corporation

The 3G move will give mobile users access to high-end data applications on their phones, including high-speed interactive gaming and Internet access, prepaid video- localization, video, multimedia messaging, voice and data roaming, video conferencing, video streaming and other multimedia features. Apple’s popular iPhone uses the 3G technology. ICE has stated that the new lines and service will be available by the end of 2009, though I am skeptical of that. ICE ha a poor track record for meeting deadlines.

As everyone knows, the current GSM system is just horrible with crummy coverage and cut-off services everywhere. It also supports voice mail only in Spanish which annoys a lot of foreigners.

I am still unclear exactly what ICE bought for $235 million. Obviously the system itself, but I am also presuming praying that they are finally going to put up a ton of new towers as the coverage area for GSM is just horrendous!  ICE promises better coverage but….  Quien sabe?

I am also hoping that unlike the Alcatel deal (the company that installed the faulty GSM system while making a LOT of polititions and executives quite rich) this will be a clean deal… no payoffs.

The little i have heard of Huawei has all been good and they certainly have the experince and expertise to get it done.  Now… if ICE can just let them do it….

Some background for readers. There are two cellular systems here, TDMA being the oldest and the only one the works pretty much all of the time, and the GSM system, that should work better, but does not. In fact, it works poorly at best. Callers often get the “Try again later” message and even when there is cell service, connections are not always stable. In general, TDMA is the way to go though there are a few locations (Dominical, Nosara and Samara come to mind) where the only system that works well is a GSM phone. So you want a TDMA phone? Interestingly, there are no more new TDMA phones available in Costa Rica. Any you buy are reconditioned. Besides… there are no phones lines available anyway. Sheesh!

The plan to discontinue the TDMA system was based on ICE planned upgrading of the current GSM system to the Third Generation GSM known as 3G, a vastly superior communications system (and part of Apple’s new iPhone configuration). It is faster and offers a ton of options including Internet. Of course future success would also be based on having the towers available, etc… but that is a different story.

In any case, ICE’s plans were basically correct and once installed and the tower location issues fixed, it should have allowed for the discontinuation of TDMA and offered users a fine, though more costly, solution. Of course THAT was before ICE sent out the bids to install the new 3G system.

The bids went out and only one company bid the project, Huawei Technologies. Well that would be fine as Huawei is most certainly a capable business partner, but ICE planned a budget of $224 million and Huawei submitted a bid of $580 million. Oops! Did someone make a really big error in calculation? As ICE has a history of poor planning, this would not be a really big surprise. In fact, it appears that (though I cannot confirm this), ICE changed the bid specs in June, 2008 adding 500 terminals to the specs but expecting no increase in cost. Huh? I admit to not knowing what is a terminal… but adding 500 of anything would seem to me to be an additional expense that needed to be considered.

Of the six bidders, FIVE (like the Ericsson de Costa Rica (current provider of one of the country’s two GSM networks), Continuex S.A. (distributor of Samsung in Costa Rica, ZTE Corp. and Nokia Siemens Network) decided not to bid citing fears of not being able to deliver to ICE’s specs.

So now what? Who knows?? The $356 million difference is huge and ICE clearly will have to go back to the planning stage. It seems unlikely they will or even can accept Huawei’s bid. They do not have the funding… or maybe they do!

Just this week, ICE announced that they wish to expand services to other Central American countries. Of course those of you who are skeptics might suggest that ICE put its own house in order before planning such an expansion…. the more pragmatic might just suggest ICE forego expansion and use THAT money to get a good funcional and working GSM system.

As always… more shall be revealed!

To provide a bit of background for newcomers, visitors and tourists, there are currently two cell phone systems here in Costa Rica. The first, TDMA , often referred to as “the old system” and GSM, “the new system”. New is better, right? Often true, but in this case… totally not true.

The GSM system was installed some years ago by Alcatel, a French company under contract to ICE the government-run monopoly that controls all telecommunications in Costa Rica. Apparently not satisfied with just trying to win this huge contract in a competitive manner, Alcatel decided to spend some cash in order to bribe some key decision makers in ICE and in the Costa Rican government. About $11 million as I recall! This was also distributed to at least two and probably three ex-Presidents of Costa Rica, two of whom spent some time in prison for accepting these bribes, and a third who is currently hiding out in Switzerland, unable and apparently unwilling to return to Costa Rica for fear of also passing a few hours in the slammer.

This is important to know because the GSM system installed by Alcatel simply did not and still does not work well at all… and it will soon be the only system available.

Recently, ICE announced, in their incredible wisdom, plans to phase out the TDMA system over a three year period beginning in 2009. I am presuming that their intentions are good, pehaps wanting to update and maintain a more current technology. I would support this decision enthusiastically if only the GSM system worked! It does not.

There are huge areas where the GSM system simply does not work and far more areas where it just works poorly. I live and work midway between San Jose and the San Jose airport, and a GSM phone will not work in the home or office. I need to walk down the road 200-300 yards to get service. Many parts of Santa Ana, Urica, and other populous suburbs of San Jose have spotty coverage at BEST!

Even if you are lucky to be in a zone that does have coverage, you are often told that you cannot connect or are told to place your call later. I have lost count of the times I have called my son only to hear that service is not available. This does not mean he is out of service zone; it means the stupid system cannot process the call. During rush hour or bad weather, just forget calling anyone or receiving calls. Theoretically, GSM phones can be set up via Bluetooth to provide Internet access. Internet is offered as a costly service on GSM phones. I tried it and the service is terrible, often not working at all.

The Southern Zone (near the Panama border) has fine TDMA coverage but crummy GSM coverage. As many people use their cell phones as the only form of communication, when the TDMA system shuts down, they will be without communications. Remember it can take years to get a land line installed, so mobile communications is often the only option.

I think by now you get the point. GSM is not a good solution!

So how does this affect Ticos? It screws them of course!

ICE has announced that they want those TDMA phones back so they can be recycled. Good idea. So that means every person who is currently using TDMA must go out and buy a new GSM phone and return their old one. But… GSM phones are not cheap here. All are sold at retail. Buyers could easily have to pony up $300 or more for a new (basic) GSM phone. Some readers might think that $300 is not too bad, but you must consider that that is more than the entire monthly income for hundreds of thousands of Tico households! To place this in perspective, if you currently earn $60,000 per year in the USA, you would need to shell out $5,000 for a cell phone! That is a big expense and this will most assuredly be a burden on low and even middle income families. I am guessing that this will leave many low income families completely without communications. That, or they will buy on credit further exacerbating the huge outstanding credit problems in CR.

Another problem! Costa Rica is now becoming home to more and more foreigners who do not speak the language. The voice mail system on the GSM phones is not available in any language other than Spanish. Now I admit to not feeling real bad about this as it is my opinion that if you are going to live in a Latin country, you must learn the language! However few foreigners arrive here already speaking Spanish, and a cell phone really is a necessity.

All and all, this is a bad idea that helps nobody except the cell phone retailers and the credit card companies. It will hurt a lot of low income families. There should be a better plan.

If you fall into either of the above categories, by all means read on!

Basically, the change is pretty simple. If you are calling any cell phone number, you must now dial 8 first. If you are dialing to any landline phone (home, office etc.) you must first dial 2.

How do you know if a number belongs to a cell phone or is a land line? Easy! All cell phones begin with 3, 8, or 9 (NOT 900 numbers though!)

Anything else is a land line.

Examples:

From Costa Rica dialing to a cell phone, you will dial: 8-xxx-xxxx where xxx-xxxx is the current cell phone number.

From Costa Rica dialing to a land line phone, you will dial: 2-xxx-xxxx where xxx-xxxx is the current land line phone number.

From outside Costa Rica, you will dial your international access code (in the US that would be 011) then the NEW dialing codes, then the number.

Example: From the USA calling a Costa Rica land Line, you will dial 011-506-2-xxx-xxxx and to a Costa Rica cell phone, you would dial 011-506-8-xxx-xxxx.

Now I am sure this is going to cause vast confusion, but if ICE does their job, and they appear to doing so, this should go smoothly.

800 numbers (free) and 900 number (the ones that cost YOU to dial) are unaffected.

The ICE three digit service numbers (113, 115, 199, 193 etc) likewise remain unchanged.

Want more info?

Check out these links (in English)

http://www.grupoice.com/esp/temas/camp/2_8_dig/index_eng.htm

and

http://www.grupoice.com/esp/temas/camp/2_8_dig/doc/preg_frecuentes_7_8_dig_eng.pdf

If you are doing business in Costa Rica, you need to get on the stick to get business cards, stationery, and web sites changed.

If you are from another country doing business here, or if you have family here and need make calls into Costa Rica, you should notify family and employees of these changes.

The sad thing is that cellular Internet service will continue to be so slow as to make anything other than checking email an almost impossible task. The new service will offer a 56k connect speed… Equivalent to modem service.

ICE has been firmly against the Central America Free Trade Agreement (TLC) as they are fearful of job loss. They wield incredible power in Costa Rica. The tide seems to be changing though as Costa Ricans tire of high rates, poor service, and generally crummy customer service. Should the TLC pass, ICE will most certainly have to improve there services in all areas.

What is still a bit odd and I do not understand, is that the only ICE employees who need worry about their jobs are those who are just not doing their jobs. The ones that ARE, (and there are many!) will either continue to work at ICE, but with higher wages, or will gravitate to foreign service providers who will come to Costa Rica offering better training, wages and benefits.

In my businesses here, I am a heavy user of ICE cell service and I have already noticed a HUGE improvement in (business) client support. This improvement has still not trickled down to the average Tico however, and user’s impatience is beginning to show as more and more. Recent polls show strong support for change. The TLC would, over time, eliminate the stranglehold of the big three monopolies in Costa Rica: Telecommunications, Insurance, and CAJA.

A note: My reference to the TLC here is not one of support or non support… only that in the case of prices and services in telecommunications, it is my opinion that the TLC will likely result in lower prices and better service for all Costa Rica.

Whatta surprise! They STILL don’t work!

GSM is the “new” technology. The phones are more expensive and some are equipped to read email and browse the Internet. Sadly, those services do not work well either. They ARE more sexy though than the older TDMA technology.

My wife and I have been looking for new furniture for the patio, so I made about 10 trips throughout the Central Valley to various places where they make rattan, wicker and other stuff. I also dropped my wife at a hotel (Alta) and later retrieved her. In between, I returned home to where I live near Cariari. This gave me a great opportunity to test the new system.

For testing, I used a brand new Motorola GSM phone.

I found this new phone did not work in:

Santa Ana
San Antonio de Belen
Uruca
Escazu
Hotel Alta outside the reception area (outdoors)
The autopista general canas (Panamerican highway to Panama and Nicaragua) in numerous spots and
Numerous parts of Heredia.

It also did not work in my home, but worked in my driveway… sort of.

Side note: I also took my personal phone (TDMA technology) and that phone worked perfectly in every one of the locations above.

Not surprisingly, a recently published report indicates folks are not happy with the cell phone coverage and of course that means the NEW and IMPROVED GSM phones.

For those of you living or moving to Costa Rica and intend to buy a cell phone or those who intend to rent a cellphone for your trip here, INSIST on the OLD (but very much functional) TDMA phone. You will be very unhappy if you do not.

Exception! The area around Dominical is the exception! GSM phones actually work there, but the others do not.