Network Access

Costa Rica gets its telecommunication services from a state-owned monopoly company called Grupo ICE. This conglomerate of companies is mainly composed by the Costa Rican Electrican Institute (ICE), which provides local and international telephone services, and Radiografica Costarricense SA (RACSA), which is responsible for data telecommunications, national and international, including the Internet.

It can be concluded that according to the “Readiness for the Networked World” framework under the network access, Costa Rica would be in stage 3. Despite the fact of a stated owned and controlled provider of telecommunications, great effort has been made to provide an extensive range of services at a reachable prices for the majority of the population. However, this same monopoly is the reason why Costa Rica is behind in areas of support and telecommunications penetration. This monopoly is one of the factors behind Costa Rica’s inability to move to stage 4.

The following sections are based on studies by Monge and Cespedes (2002) and data provided by GrupoICE and its affiliates websites, as well as data collected and analyze by the authors.

Information Infrastructure

Costa Rica has a sizeable penetration of fixed line telephony at a density of 27 fixed telephone lines per 100 inhabitants. This teledensity varies widely across the country with a 28/100 in the metropolitan area to 13/100 in the rural areas. Currently out of the approximate 1.05 million fixed lines installed, there are about 860 thousand in active service in estimated terms of 80% residential use, 15% commercial and 5% in Private Branch Exchange.

In the area of fixed-line public phone service there is a penetration of 6/100. ICE has allocated about 15 thousand lines for this area using a variety of types of services, from coin dropping to prepaid cards.

The area of cellular services is the fastest growing area in recent years in Costa Rica. In the last 6 years the penetration has experienced an increase of 750% to be at a level of 15/100. About 40% of the territorial extension of the country was covered by cellular telephony in 2001, providing services for GSM technology primarily but some TDMA lines are available. Currently there are an estimated 500 thousand wireless lines activated.

Costa Rica Telephone lines per 100 inhabitants

	1996	1997	1998	1999	2000	2001	2002
Fixed-Lines	17.9	19.5	20.9	22.4	23.5	24.7	27
Cellular	1.4	2.0	3.0	3.9	5.4	7.7	15
Public	--	--	2.7	2.8	3.3	4.3	5.9

The services of cable television are provided in Costa Rica by 3 independent companies. By the year 2000 this type of service had achieved a penetration of 12.5% of the estimated households in Costa Rica. Cable TV has a higher level of penetration in the metropolitan households of about 22% comparable to only 3% on the rural parts. As of recently the services of DirectTV can also be obtained in this country.

Internet Availability

In regards to Internet availability, RACSA provides a wide range of services that includes Dial-up, Cable modem, DSL and wireless connectivity. RACSA has been providing Internet services commercially since October of 1994. Given the teledensity of the country Dial-up services is one of the most sought after ways to connect to the Internet. Currently RACSA has 150,000 available connection ports for Dial-up services, but the demand for this service has it only utilizing 60% of this capacity at the moment.

RACSA has contracted out the services of Internet access via cable modem with 2 of the 3 cable television providers in the country. This service is offered in two modalities that represent a synchronous and asynchronous connection to the Internet. In the asynchronous mode, called one way, the user will download data using the cable modem connection and the Dial-up service for uploads. The two way service, synchronous connections, the user has the advantage to use the cable modem for download and upload of data. The speed of these services range from 64Kbps to 1Mbps.

In the area of DSL services there was a pilot program set to start in 2002, which has encountered some delays. The expectation from RACSA is to offer this service with an initial capacity to handle up to100 thousand users with speeds of 128Kbps and 256Kbps.

Another service provided by RACSA is wireless access. For text messaging and web browsing on mobile devices, RACSA has implemented a network using General Packet Radio Services (GPRS), which provides connectivity of up to 80,000 users at speeds ranging from 56Kbps to 114Kbps. RACSA also offers other types of wireless services for difficult access or rural areas. These services include the RACSARID network with a capacity for 30,000 users and low bandwidths, 9.6Kbps to 64Kbps, which connects users to the closest entry port to the Costa Rican fiber optic backbone. The other system, VSAT, provides access via satellite connection directly to a port connection to the backbone network in the United States.

To supply the demand of commercial business needs to dedicated lines, RACSA offers the ability to provide connectivity for up to 8 IP addresses per dedicated line. Businesses can satisfy their needs by contracting lines at different capacities from 64Kbps to 768Kbps and even T1, 1.5Mbps, and E1 lines, 2Mbps.

Another type of Internet availability is found in the increasingly popular Internet Cafes. It is estimated that they are currently more than 300 of this type of establishment all around the country. They provide their customers with individual working stations, printers, scanners, and either Dial-up or cable modem connections.

A recent study provided by CID Gallup indicates that even though only 800 thousand Costa Ricans currently access the Internet, the capacity exists to provide real access to about 2 million Costa Ricans, or 50% of the population.

Internet Affordability

The pricing policy for telephone and Internet services in Costa Rica is regulated by the governmental agency Regulatory Authority of Public Services (ARESEP, initials in Spanish).

The most popular medium of connection is Dial-up service that users can obtain on a monthly or hourly rate. The monthly home program costs $15, plus telephone charges of $0.80/minute in peak time and $0.040 on non-peak time. This home program includes unlimited access and utilizing a single phone number that guarantees connection to the closest network entry point. Also, individual and commercial users can use an hourly-based program using a 900 number at a price of about $1 per hour.

The service of cable modem has an initial cost of $250 for the installation and equipment. The monthly fee for the one-way program is $30 for a bandwidth of 64Kbps. The two-way program for monthly residential service ranges from $40 for a service of 128 Kbps to $80 for 256 Kbps. For commercial use there is a greater range of options that depends on the amount of ports available and the speed, ranging in prices from $100/month for 64 Kbps and up to 20 ports to $1500/month for 1Mbps and 20 plus ports.

In the area of DSL services, no official rates have been set yet for this type of service, but some experts considered that it would be about $30/month.

These services of the RACSARID network, depending of geographical location in the country, can range from a bandwidth of 9.6Kbps for $650/month to 64Kbps for $1000/month. The access to the VSAT satellite connection can be contracted for commercial use at a monthly rate of $500 and for individual use at $320.

In the market of dedicated lines, businesses can contract a T1 line for about $2600/month. The ultimate connectivity of E1 lines at 2 Mbps will cost $3000/month. For less expensive solutions, RACSA offers services from 64Kbps to 768Kbps with prices ranging from $350/month to $1500/month. RACSA offers considerable discounts of up to 30% for contract extensions of 3 years.

The prices for the services provided by Internet Cafes are regulated by the forces of the market and are outside the reach of ARASEP. Depending on the type of access from Dial-up to Cable modem and the location in the country the hourly rates ranges from $1 to $8.

A recent survey among the Costa Rican population shows that 53% of the population considers the prices for Internet service as low and acceptable.

Network Speed and Quality

In the area of infrastructure, Costa Rica counts on a backbone of a mostly fiber optic network supported by digital switches providing services of voice, data, and video. This backbone can transmit at speeds between 155 and 622Mbps, using the technology of Synchronous Digital Hierarchy, SDH. ICE is also implementing multiplexing technology, Dense Wavelength Division Multiplexing (DWDM) that would allow each DWDM channel to deliver at speeds of 2.5Gbps. This would also allow the flexibility to increase to speeds of 12.5, 30 or 40Gpbs, by adding additional circuit cards without any changes to the fiber or transmission equipment. This roughly translates to a capacity of transmitting a total of 40 thousand 56Kbps dial-up connections, 20 thousand 128Kbps videoconferencing sessions, and 1200 2Mbps E1 WANs data connections.

(Costa Rica: Fiber Optic Network across the country.)

In the metropolitan area, Grupo ICE has laid out a ring topology network of 14 interconnected fiber optic rings. Furthermore, RACSA has implemented a wireless network, code name RACSARID, to cover the remote areas outside the reach of the main backbone. This network uses a technology of Time Delayed Multiplexing, TDM, providing a total of 55 64Kbps channels. Using the RACSARID network users can connect back to the closest entry point of the main backbone via wireless access.

Costa Rica is connected to the rest of the world mainly by the use of two submarine fiber optic cables. In the Maya and Arcos cable, Grupo ICE is currently contracting a total capacity of 954 Mbps. According to the most current available information, about 98% of the international traffic from Costa Rica is transmitted via these 2 cables connections.

Also, Costa Rica is part of the Central American Digital Network (CADN) that uses terrestrial microwave systems to connect the region’s capital cities along with Mexico and the USA. Costa Rica has 2 stations that connect to CADN, each capable of transmitting 140Mbps. Furthermore, Grupo ICE has the capacity of 120Mbps satellite bandwidth, using about 2074 64Kbps channels on different satellites like Solidaridad II, SATMEX-V, PANAMSAT, and various INTELSATs.

(Costa Rica: Submarine Cable and CADN connection.)

In regards to the quality of service in telephones, the reports available by ICE shows that in fixed line telephones they get reports of 5 faults per year for each 100 lines. Meanwhile in the wireless services they get an average of 6/100. Grupo ICE indicates that in 2002 on the metropolitan area 86% of reported problems were fixed within 24 hours. As far as the quality of service for Internet connectivity, RACSA does not provide a Quality of Service contract. Their estimated up time is about 99% of the time. A recent survey among the Costa Rican population rates Grupo ICE with 88% favorable terms in area of the quality of their service.

Hardware and Software

According to the Costa Rican association of software developers, it is estimated that the industry of software development number over 150 companies. These companies provide applications in multiple market areas, from word processing to financial analysis and data migration, satisfying local needs in the native language. It is estimated that 85% of these companies also export their products to international markets (Caprosoft). Few of them have even reached international recognition by companies like Microsoft and Oracle for their excellence products and have been given media coverage in computer related magazines like ComputerWorld and InfoWorld (Artinsoft).

Besides the local software applications, a variety of software solutions from producers like Microsoft, Oracle, IBM and others can be found in the local retailers. The retail prices of some of these products are above the expectations of some individuals and businesses, which then opens the gates for software piracy.

The Hardware computer market in Costa Rica is floated by the so-called “Clone” computers. These are computers that are assembled in Costa Rica with hardware components that are produced nationally or are imported. For individual hardware devices, like CD-ROM, Network cards, and Monitors, the market also belongs to non- braded devices.

According to Dora Camacho, representative of Datatek a local retailer, the price difference between branded components like HP, Sony, IBM, DELL to Clones or non-branded devices is significant from one product to another. She continues to point out that some of the differences in price in the computer market can be accounted for the fact that imported assembly parts are tax exempt while finished products are not covered by this umbrella. Besides price, the quality of the Clone computers or non-branded devices has also made them preferred among the general public, as they rate them in favorable terms.

Service and Support

This is an area of the networked readiness in which Costa Rica is staying behind because of the inabilities of ICE to provide a quick turnaround on installation of service. Despite the appearance of an oversupply of fixed telephone lines, as of October of 2001, there was a list of 130 thousand pending requests, most of them with over 6 months of waiting time. And on the list for wireless telephone services, 296 thousand users have to wait the agonizing time of well over 6 months and in some cases over a year. ICE claims that with the acquisition of new equipment it will be able to provide new services at a rate of 5,000 users a month for fixed telephone lines and 20,000 for wireless phones.

In the area of services, Costa Rica counts with an extensive list of providers for web designs, technicians and administrators, which can be shown by the search results obtained by web search engines. All of them provide ample services in the areas of web development and hosting and using latest technologies.