Telephony in Transition

Depending on with whom you speak, life in Costa Rica is either about to improve drastically, or everything Costa Ricans hold dear is about to be destroyed. There is little middle ground, for in November, competition will arrive for the Costa Rican cellular phone industry. By the end of the month, Claro and Movistar are expected to begin offering pre-paid and contract service in the capital region. Is this a sad defeat for a national institution, or a new dawn of competitive services?

This debate is due to finally having a choice in internet and cell phone providers. In Costa Rica, the arrival of competition is a statement on Costa Rica’s history, the role of the welfare state in an increasingly free market age, even a referendum on Costa Rica’s economic and cultural independence. As such, choosing one’s provider is, for many, about more than the offers of free Android phones or discounted calls on Sundays. How can the choice of who sends your text messages be such a matter of national debate?

Movistar ad at the airport. It reads, 'The happiest country in the world deserves to be connected.' The smaller text reads 'Shared, life is better.' Photo by the author.

It is because this competition was made possible by the complex and fiercely debated Central American Free Trade Agreement (CAFTA). Although the treaty was signed in 2004, it was not officially ratified until 2007, and the first changes to Costa Rican law did not begin until January 2009. The debate over CAFTA was fierce and, for Costa Rica, violent, and it was ratified with only a 51% majority. Costa Ricans feared the influx of foreign investment, foreign ownership of natural and economic resources, and the privatization the treaty demanded.

Since its creation in 1949, the Instituto Costarricense de Electricidad (Costa Rican Electricity Institute – ICE), a nationally-owned utility, has never had competition for either its electricity or telecommunications branches. ICE, its supporters argued, was not only part of national patrimony, it existed to serve all Costa Ricans, regardless of where they lived or what they could afford to pay. It is a daily, visible reminder of the welfare state apparatus, which also includes nationalized insurance, social security, health care, and education, and where all natural resources – including the rivers and dams that provide the country’s hydroelectric power – belong to the state.

However much Costa Ricans complain about the inefficiency of state bureaucracy, they point to its longevity alongside the other markers of national pride – longstanding democracy, biodiversity and tourism appeal, the lack of an army, and its apparent evasion of the U.S. imperialism that has so strongly shaped Central America. And with the first visible changes to daily life under CAFTA coming in the form of cell phones, much of the vitriol and frustration that marked CAFTA’s passage in 2007 has been renewed.

For example, there is a Facebook page entitled ‘Porque amo a mi país defiendo al ICE: No a las transnacionales telefónicas’ (Because I love my country I defend ICE: No to transnational telephone companies). There is also ‘Me quedo con el ICE’ (I will stay with ICE), ‘Grupo Pro ICE,” (Group in favor of ICE), and “El ICE no se vende, el ICE se defiende’ (ICE is not for sale, it is to be defended). As of 27 October, 54% of respondents on the La Nación newspaper’s home page stated that they would stay loyal to ICE no matter what other companies offered.

There is something to be said for competition. When I first visited Costa Rica in 2008, it was impossible for nonresident foreigners to obtain a cell phone. Residents had months-long waits to acquire a new line, and there were limits on how many numbers a person could have. Prepaid plans were not available, service was slow and sporadic, and cell phone rentals were outrageously priced.

By March 2011 kiosks and stores advertising the availability of prepaid lines had sprung up in even the smallest towns. Kölbi, the prepaid service offered by ICE, was suddenly a household name. Anyone with a passport or resident ID could obtain a phone within minutes. Every store with a computer and internet access could recharge your phone, in amounts as small as 500 colones ($1). On-demand internet access allows you to pay for as little as an hour or as much as a month of service at once. Prices are currently the lowest in the hemisphere for both texts and calls.

The new Kölbi logo. From grupoice.com.

So what will Claro and Movistar bring? Destruction, or improvement? The current lack of portability of phone numbers to the new providers may make some hesitant to change, though this service will be available by the end of next year. Claro has already received complaints both for installing cellular towers on top of archaeological sites and for protesting the inclusion of national hero and sprinter Nery Brenes in the Pan-American Games because his image was used in an ICE advertisement. The ICE fan pages abound with anecdotal accounts of the problems Claro and Movistar clients have faced in other countries.

Yet ICE’s allegedly high-speed internet is sometimes barely faster than dialup, and text messages sometimes take a day to arrive. The current expectation is that prices will rise for everyone – but perhaps, the level of service will rise as well. Regardless, the question of Costa Rica’s economic and cultural sovereignty will remain a pressing one as more and more of CAFTA’s provisions are due to be enacted over the coming year. The only question is how many of those discussions will be taking place on non-ICE lines.