March 23, 2000: Send out letter to potential members of the Telecommunications Reform Coalition, including foreign and domestic businesses and organizations. Solicit white papers from organizations such as the Union of Private Business Chambers and Associations.¹

March 30, 2000: Hold a meeting with interested members to coordinate the lobbying effort. Draw up a list of deputies, determine their current attitude toward the pending reform legislation, determine which organization faces the greatest chance of swaying or solidifying the vote of each member.

April 1, 2000: Begin lobbying deputies. Visit the offices of each deputy, talk to staff members or the deputies themselves if possible, leave behind informational materials and drafts of possible amendments. Focus on the benefits of telecommunications reform for Costa Rica, not on the commercial opportunity for GlobalCom.²

April 6, 2000: Release op-ed pieces to all major newspapers.³

April 10, 2000: Begin media campaign, distribute first newspaper insert.⁴

April 20, 2000: Release second newspaper insert, or TV ad.

April 30, 2000: End of the extraordinary legislative session. The law must be passed by this date or telecommunications reform must wait for the bill to pass in the following two sessions, which will take well over a year. Lobbying efforts should be heaviest in April.

Between the end of the current legislative session and the beginning of the next: Conduct a media campaign that informs the public of the benefits of liberalization. Use this campaign to make telecommunications reform an issue for electoral candidates. Build public support that may be used in the lobbying effort in the upcoming legislative session.

Beginning of the next legislative session: Re-visit deputies to ensure passage of the bill for the second time. Push for an amendment to bind Costa Rica’s obligations in the WTO Basic Agreement on Telecommunications.

The proposed strategy is extremely cost efficient because GlobalCom already has its own representative in Costa Rica with all of the connections, supplies, and know-how to conduct and organize a campaign. GlobalCom will incur virtually no extra costs. Rather it can redirect the efforts of its San José representative toward the lobbying and media campaigns for the next several months. There will be, of course, the opportunity cost of not having this representative working on projects in other parts of the region.

The following is a list of additional costs beyond the use of the part-time representative:

• Hosting a meeting of interested parties in order to coordinate the campaign.
• $5,000
• Newspaper inserts⁵
• $2,000 per insert, per paper, per day
• 15 inserts = $30,000
• Other media releases (TV, Radio, etc)⁶
• ¢75,000 per TV station, per ad, per week
• 4 stations = ¢525,000
• 2 weeks = ¢1,050,000 = $3,500

The total cost of this entire campaign, not including the salary of GlobalCom’s representative in Costa Rica, will be between $38,500 and $50,000 depending on the extent of media coverage. This investment is extremely low compared to the financial and strategic gains that are likely to be produced.

This budget only reflects the strategy to pass the first bill during this extraordinary legislative session. It does not include a commercial media campaign to build up GlobalCom’s image before liberalization or a more extensive campaign that will likely be needed in order to ensure that Costa Rica signs onto the WTO Basic Telecommunications Agreement. Even an extended campaign, however, will not cost an exorbitant amount of money. Lobbying is not expensive, particularly because GlobalCom already has a representative in place, and advertising is not unreasonably expensive since Costa Rica is such a small country.

The only long-term expense that GlobalCom will incur is the cost of additional media coverage. Depending on the extent to which GlobalCom wishes to invest in a commercial or political media campaign the long-term investment is not likely to exceed $100,000. This is still a very minimal amount of capital compared to the commercial benefits it might secure. GlobalCom may wish to hire its current San José representative as a full-time employee or even hire an additional representative that will enable the company to keep up the San José representative’s current activities as well as cover the issue of Costa Rican telecommunications reform. This would cost the company up to $75,000 for one-and-a-half employees.

In this case, the grand total of both the short- and long-term campaigns will be $225,000 over the next year. This figure, a high estimate, is the equivalent of only 4.5 percent of the first year’s anticipated revenue. Of course, GlobalCom’s costs would be reduced even further if other coalition partners also pay for a portion of the media campaign, which is likely.

Fuerza Democratica
José Manuel Núñez González, jmnunez@congreso.aleg.go.cr
José Merino del Río, jmerino@congreso.aleg.go.cr
Célimo Guido Cruz, cguido@congreso.aleg.go.cr
Acción Laborista Agrícola
Guido Octavio Vargas Artavia, govargas@congreso.aleg.go.c
Integración Nacional
Wálter Muñoz Céspedes, wmunoz@congreso.aleg.go.cr
Movimiento Libertario
Otto Guevara Guth, oguevara@congreso.aleg.go.cr
Renovación Costarricense
Gerardo Justo Orozco Álvarez, jorozco@congreso.aleg.go.cr

The liberalization of Costa Rica’s telecommunications sector will include the introduction of free and fair competition among telecommunications service providers both foreign and domestic. Understanding the special circumstances of this liberalization process, that is the quasi-governmental nature of ICETEL, it is recognized that free and fair competition must not only be supported in the language of the law, but must also be recognized in its substance.

• Under no circumstances will ICETEL or any of its subsidiary organizations receive favorable or preferential treatment not afforded to its competitors on the basis of its special relationship with the government of Costa Rica. Such treatment includes, but is not limited to the areas of government procurement, frequency concessions, and regulation.
• ICETEL will receive no aid or support from the Costa Rican government not afforded to its competitors.
• ICETEL will be allowed to go out of business like any of its competitors.
• ICETEL may not use its relationship with former ICE divisions (i.e. ICELEC) to unfairly harm the competitive advantage of its competitors.
• ARETEL is tasked with monitoring ICETEL to see that it complies with the above-stated criteria; ARATEL and maintains the authority to penalize ICETEL if it does not. Financial penalties shall be equal to the amount found to be gained by any of ICETEL’s illicit actions.
• Costa Rica will sign the WTO Basic Telecommunications Agreement, binding under international law all commitments to liberalization included within this document.

These stipulations are deemed appropriate considering the special nature of ICETEL as a quasi-governmental institution. They exist to reassure foreign competitors that the Costa Rican market will be truly free and fair, thus encouraging foreign telecommunications service providers to enter the market and compete with ICETEL.

This is the fiftieth anniversary of ICE, an institution that has served Costa Rica admirably and effectively, not only by providing essential services to our population, but also by helping to distribute the technology and know-how that make our people the most educated and technically adept in Central America. ICE has helped make Costa Rica into an attractive investment target for Intel and other foreign companies, and such foreign investment helps our economy grow and raises the welfare of our citizenry. We thank ICE for all that it has done, but we recognize that the time has come for change.

Opening the telecommunications sector to competition will lower prices, improve service, and increase the variety of payment and service options available to Costa Rican businesses and individuals. Maintaining a closed telecommunications sector threatens to undermine Costa Rica’s attractiveness to foreign investors and erode the efficiency of local businesses. It is our opinion that liberalization of the telecommunications sector will greatly benefit Costa Rica’s economic development.

Opponents of liberalization claim that it is risky to allow a strategic sector such as telecommunications to be controlled by foreign enterprises. They also argue that relinquishing the government monopoly on telecommunications will subject this country’s citizens to potential rate hikes that push the cost of basic telecommunications services beyond the reach of everyday Costa Ricans.

We believe that it is far riskier to continue to under-invest in telecommunications and that liberalization alone will bring investment levels up to a rate that provides the latest information and communication technology. Furthermore, we believe that, with liberalization:

• The average Costa Rican business and citizen will benefit from lower—not higher—prices, and they will receive more—not fewer—services and service options.
• The Costa Rican government will be freed from the cost of maintaining a modern telecommunications system at a time when such costs are rapidly rising.
• Potential foreign investors will take a closer look at Costa Rica as a target for investment.

According to ICE’s own statistics, approximately 40,000 Costa Ricans are waiting to have telephone lines installed. Over the past ten years ICE has never been able to bring this list of customers below 28,000, and in the last five years the number has been closer to 60,000. The time that these businesses and individuals wait for a line to be installed reduces their productive efficiency and creates a drag on the Costa Rican economy.

At the present time, ICE is able to charge any price it wants to Costa Ricans who have no other choice than to accept it. While policymakers currently determine the price based on a variety of economic and social factors, it is highly unlikely that the price of a phone call accurately reflects the underlying costs for that service. In fact, ICE uses revenues from its telecommunications division to support other endeavors in energy-generation. This artificially raises the price of telecommunications, and revenues that should go to improving or maintaining the telecommunications system are instead used to improve energy generation. Indeed, Costa Rica has not invested at levels sufficient to maintain current telecommunications standards, let alone improve them.

In a liberalized market, foreign or domestic competitors will have a commercial incentive to offer the highest quality service at the lowest possible price. In this way, the price of telecommunications will reflect the true value of that service, plus the cost of maintaining and improving the service in the future. Telecommunications companies will find it to their advantage to maintain state-of-the-art telecom systems that are reliable and cost-efficient. The key to success for these providers will be to reduce the number of disconnections, breakdowns and interruptions at the lowest possible cost.

Introducing competition in the telecommunications sector will not threaten Costa Rica’s strategic interests; in fact competition supports these interests by giving all companies an incentive to improve the existing system. Our telecommunications infrastructure, which is critical to the economic development of our nation, will be strengthened—not weakened—through liberalization because companies will have the same interest as our citizens: a strong, reliable, and efficient infrastructure.

In terms of strategic interests, allowing our system of telecommunications to stagnate or even decay due to a lack of funds on the part of the Costa Rican government is a much more dangerous proposition. The Forum for National Consensus Building has noted that Costa Rica has not invested enough in telecommunications to maintain the country’s current level of welfare. If Costa Rica cannot afford to maintain its current level of welfare now, there is little chance that it will be able to do so in the future, particularly because the price of maintaining and developing cellular, satellite, fixed-line, and information technology systems is increasing rapidly. If our infrastructure continues to fall short of international standards in terms of efficiency and reliability, Costa Rica will fall further and further behind.

In today’s economy, information transfers are a key part of more and more business activities. In turn, this makes reliable and efficient telecommunications systems indispensable. If Costa Rica is seen as having an unreliable, or a declining telecommunications system, foreign companies will be discouraged from investing in our country, particularly because competitor countries are facilitating massive private-sponsored improvements in their own telecommunications infrastructures.

Given a choice between two comparable countries with reasonably well-educated work forces and relatively low labor costs, a company looking for investment opportunities will surely choose to invest in countries with better infrastructures, including telecommunications infrastructures.

Foreign investment is important to Costa Rica’s current economic transformation. Foreign investors bring capital, jobs, and know-how to our country and thereby increase GDP and employment. A decrease in the flow of foreign direct investment could have significant negative consequences for our economy.

As Costa Rican businesses, we operate in a free market, competing with foreign entities and amongst ourselves in order to stay in business. Competition makes us stronger by penalizing us for inefficiency and waste. Because our customers may at any time choose our competitors, we are forced to offer reasonable prices and high quality services. Competition will strengthen the telecommunications sector in exactly the same way.

There is no risk involved in liberalization. Liberalization will drive down telecommunications prices and raise service standards. It may appear that liberalization will allow the private sector, even foreign companies, to control a vital sector of our economy. The real controlling force, however, will be competition, which will command every enterprise to offer reasonable prices and efficient, reliable service.

ICE has supported Costa Rica’s economic development for fifty years, distributing technology and know-how across the country. For this we thank ICE. The functioning and development of our economy is based on infrastructure that ICE has provided.

Nonetheless, globalization and technological development are placing new demands on our infrastructure—demands that won’t be met by ICE alone. We implore the Legislative Assembly to pass the Combo Energético so that Costa Rica can continue to prosper in the new millennium.

Liberalization of the telecommunications sector will attract foreign telecommunications service providers who maintain state-of-the-art systems that function reliably and efficiently. These providers will offer services heretofore unavailable in Costa Rica. They will compete with each other for Costa Rican customers through price reductions and improved service quality. Perhaps more significantly, they will expand their base of customers by financing the installation of telecommunications systems in previously ignored parts of the country.

Indeed, competition will take the telecommunications pricing system out of the hands of politicians and allow the market to determine prices—which will make prices more predictable and therefore attractive to foreign investors, such as Intel, who are deciding whether to invest in Costa Rica. Higher quality services will also attract investors who, up until now, were turned off by low completion rates for domestic and international calls and the lengthy waiting list for line installation. Liberalization of the telecommunications market will increase the efficiency of businesses across the country since they will spend less time and money dealing with bad connections or waiting for new lines.

Of course the benefits of competition will only be realized if competitors choose to enter the market. Foreign telecommunications service providers will not enter the Costa Rican market if they perceive it to be biased in favor of the current state monopoly provider. Deputies in the Legislative Assembly must recognize this and add specific wording to the reform legislation that will address head-on the fears of foreign competitors. The language should specify that ICETEL will receive no preferential treatment or support from the Costa Rican government.

Telecommunications liberalization will promote Costa Rica’s economic development in the years to come. Introducing foreign competitors into our market is not an indictment of ICE but rather an acceptance of the realities of today’s global economy. Once again we thank ICE for the leadership that it has provided over the last fifty years.

ICE deserves our warmest thanks and appreciation for providing Costa Rica with first-rate telecommunications services over the last fifty years. This remarkable institution has driven our economy by providing businesspeople with the means to connect with partners and customers.

Now, a liberalized telecommunications sector will build on this foundation by providing better technology and higher levels of investment than Costa Rica has ever seen. Private companies with enormous financial resources can develop an infrastructure that will streamline communications and effectively promote the use of the Internet for businesses and individuals. Support this process as it carries Costa Rica into the 21^st century by supporting the passage of the Combo Energético, and by supporting pre-candidates who believe in telecommunications reform.

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