Fernanda Mello Veiga
Better late than never: Telecoms Law approved in Costa Rica
Costa Rican Congress yesterday approved its General Telecommunications Law in a first round of debate. Some amendments will be required and the law should be approved in a second debate by the Congress, which is expected to happen within a month.Nevertheless, the country has until 29 February to pass the Telecommunications Law (and another 11 key requirements) as part of the implementation of the Central America-Dominican Republic free trade agreement (CAFTA-DR) with the US made in October 2007. Costa Rican president Oscar Arias will request an extension to this deadline.Comment: The approval of the Telecoms Law will allow Costa Rica to establish telecoms regulation, create a national regulator, open its telecoms sector to competition and it may also enable it to implement a national telecommunications fund. Costa Rica is one of the last Latin American countries to approve its Telecoms Law. Privatisation and liberalisation processes began more than 10 years ago in Latin America so it is a late start for Costa Rica, but we expect the Costa Rican population to benefit from a wider portfolio of telecoms services and cheaper prices. In 2007, Costa Rica had relatively acceptable fixed-line (27%) and mobile (44%) penetration rates compared to other countries in Latin America, although broadband penetration is still very low. However, we believe prices are still expensive and that there still is a very limited range of telecoms services. Note that prepaid mobile services are still not offered and there is still a shortage of GSM handsets in the country. However, we don't expect these problems to continue when the telecoms market opens up because it is likely other players will enter the Costa Rican market with aggressive strategies (i.e. Telefonica Moviles and America Movil).
