Internet & Commmunications in Costa Rica. Peace or War?

For a long time,  the Instituto Costarricense de Electricidad (ICE and pronounced EEEE-SAY) has enjoyed a monopoly on a wide variety of services. The two biggies are communications (cell and home phone service) and Internet connectivity. The end began with the passage and ratification of the Central America Free Trade Agreement (CAFTA) then last year the Ley General de Telecommunicaciones broke monopoly on telephone and internet services in Costa Rica enjoyed by ICE.

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!

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Huawei Wins $235 Million 3G Phone Bid

As most of you know, I am generally not a  fan of ICE, the nation’s soon to be ex-communications monopoly, but although they are, as usual, about three years late,  Instituto Costarricense de Electricidad (ICE) finally gave China’s Huawei Technologies the preliminary OK for a 235-million-dollar contract to install a third-generation (3G) system for 935,000 customers in Costa Rica.

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

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ICE’s Latest Fiasco

Back in June, I wrote about ICE’s plan to discontinue the TDMA cellular phone system beginning in 2009. I had my doubts that this would happen, but I wrote about it anyway.

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!

ICE to Discontinue TDMA Cell Phones in 2009

Those of you who live in Costa Rica are probably quite familiar with the cellular phone system here and most of you are also aware of just how lousy is the GSM system in particular. TDMA is still the only reliable system here in Costa Rica.

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.

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Well ICE ALMOST Got It Right!

So it was maybe 5:30AM, my normal get-up time, and I am “sleeping in” with my bride. Today is a feriado (holiday) and I figure maybe 7:30 is lookin’ good.

Then, my mind starts thinking… “After so many years in Costa Rica, when has ICE (our friendly local telecommunications monopoly) EVER gotten something right the first time!”. So I reach over to the bed side table and make a test phone call.

Sure enough, ICE has done it AGAIN! They switched to the new calling plan 24 hours early!!!! I have web sites to update, both my customers and my own… notification calls… all originally scheduled for tomorrow morning. Sheesh!

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The Change to 8 Digit Dialing draws near

On March 20, 2008, how you dial a number in Costa Rica is going to change. This not only affects those of us IN Costa Rica, it also will affect those in foreign lands who make call TO Costa Rica.

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

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ICE Incapable of Satisfying the Internet Needs of Costa Rica

Wow! Whatta surprise, huh? That was one of the headlines in yesterday’s La Nacion. It seems that once again, our friendly local communications monopoly has been caught totally unawares by the now 15 year old Internet revolution. Apparently, someone in the “strategic planning group” felt that the unprecedented growth of the Internet world-wide simply was not going to affect little old Costa Rica. According to this article, some 36 localities are affected to the point where new connections are very limited.

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Extra Charge Coming for Cellular Internet Service

Up until now, if you really didn’t care too much about using a GSM phone here in Costa Rica, you could at least feel good that when you phone DID have service, you also had free Internet access so you could check emails and do some browsing. That will soon begin to costa (sorry… I had to!) money.
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Surprise! The new GSM phones still don’t work!

Costa Rica signed a contract with the Ericsen folks to update the GSM cell phone systems in Costa Rica. This was in the wake of the scandal that sent three ex-presidents to jail for allegedly accepting bribes from the French company that originally installed the OLD GSM system that never worked worth a hoot.
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