Enhanced communication

Author: | Published: 1 Oct 2008
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Costa Rica has had a liberalised telecommunications model since October 2007, following the Central American Free Trade Agreement between the United States of America, Central America and the Dominican Republic (CAFTA) referendum and in conformity with what was stated by the Supreme Electoral Tribunal (TSE) in resolution 2944-E on October 22 2007. This liberalisation process was carried out in the presence of a regulator and a director that, through two operators (the ICE and the RACSA), would have due presence.

Before liberalisation, only the Costa Rican Institute of Electricity (ICE) and the Costa Rican Radiographic Corporation (RACSA) exploited the respective legal telecommunication concessions. But this only affirmed the presence of a public monopoly, which did not necessarily allow the provision of competent services. Although this is not constitutionally correct, in Article 121of the Political Constitution two modes of exploitation are provided: by general law or by special concession from the Legislative Assembly to an administration or an individual.

The majority of the Costa Rican population having agreed upon the CAFTA referendum, the Legislative Assembly has been endorsing a complementary agenda, which is more than just a group of laws intended to fulfill the commitments of adaptation and preparation of the country's legal framework, through the CAFTA. Under this, we have the approved General Law of Telecommunications and the Law of the Strengthening and Modernisation of Public Telecommunication Entities, but we are still waiting for the executive power to enact the regulations.

Telecommunications

Before May 2006, there was no formal telecommunications industry in Costa Rica. Therefore, the legal body was made up of negligent, partial standards enacted in different periods, which made regulation difficult. In response to this, regarding the administration and control of the radio-electric spectrum, Radio Law 1758 of June 19 1954 attributed this competence to the Department of the Interior, which it exercised with the assessment of the National Directorate of Radio Control. But due to the limitations resulting from the implementation of this law, this legal authority was also limited in its own exercise. The Attorney General's Office (in Decision C-031-90 of February 5 1990) and the Constitutional Court (Vote 6053-2002 of June 19 2002) indicated many times that this law could not be considered a legal framework to allow the provision of telecommunication services of frequencies within the radio-electric spectrum. Because of this, the ICE and the RACSA have been exploiting telecommunications by means of a special condition provided by law, but without suggesting a monopoly of the provision of such telecommunication services, nor the exclusivity of the subject matter. In reality, though, these organisations have been enjoying a de facto monopoly.

Data from 2006 indicated that while 72% of the urban population had access to land telephone lines, only 27% of the rural population had such access. If we observe mobile phone service statistics, the numbers are even more telling. Mobile phones have been considered a luxury item that only the middle classes upwards can have access to. The same is the case with internet connection.

On average, 4.9 public telephones were available for every 1000 inhabitants in September 2005 and, according to one of the multiple purpose residential surveys by the National Institute of Statistics and Census (INEC) for the same year, the number of homes with basic internet service totaled 113,672, which represents 10.2% of homes in the country. As previously mentioned, this service is focused specifically on urban areas. However, the internet service provided is not necessarily broadband: it is estimated that only 22.7% of homes have broadband internet.

This service is far from adequate in the business sector. This has caused some investors to migrate because the country offers few telecommunications alternatives. These services are expanding according to the planned progress and purchasing processes of the ICE and the RACSA, even with the two organisations being subjected to an aging and complex control system.

The general rule has not necessarily been to privatise, but neither have the antimonopoly decisions in the hands of the state or private operators been observed. The general rule inclines towards liberalisation, with a strong regulatory model. In general, former public services now offer competitive services (telecommunications, insurance, postal service and transportation, among others), which nonetheless provokes the presence of competitors who tend to provide better quality services with prices that are constantly driven downwards or at least within the realms of reasonable cost.

When competition exists, services are provided more efficiently. Telecommunications are an instrument of development, not just a benefit enjoyed by developed countries. Such is the spirit that enthused the signing of the CAFTA: the idea was confirmed by several votes drawn by the Constitutional Court when it reviewed the Free Trade Agreement and its complementing laws. An example of this is a law that provided the ICE and its companies a special administrative regimen in order to compete in a better legal landscape via the constitution of the Superintendence of Telecommunications (SUTEL), the National Telecommunications Fund (FONATEL) and a Minister of the Directorate.

The General Law of Telecommunications, for example, stems from a philosophy of generating, by engaging new stakeholders (operators, among others), increased employment and improved technology that will guarantee competition and therefore increase the number of services, which will in turn lower prices and improve quality. This model introduces the regulatory figure, which serves the purpose of ensuring effective competitiveness, with a SUTEL comprising of three individuals and engaging the Comptroller's General Office (CGR) regarding aspects of contracting, either by tender revisions or awards of those concessions that the executive power decides to grant.

Part of the idea is for private and public entities that would move into the telecommunications industry to be instruments of national development and to provide competitive services. Therefore, the use of traditional communication media is lessened, a move towards increased speed is imposed and multiple added-value service options are included, among others. The analogue era must stand back and observe as the digital imposes itself. Regarding this matter, Costa Rica can wait no longer, much less be an observer.

Costa Rica: CAFTA and the laws

CAFTA basically agreed on a three-point liberalised process: private networks, wireless mobile and internet technology. Under such, the ICE and the RACSA would maintain their legal concessions in telecommunications but would be seen by the SUTEL as just two more operators alongside any other provider that may emerge.

The overall decision was to create a director located at the Ministry of the Environment, Energy and Telecommunications (MINAET), with a SUTEL adjoined to the ARESEP to regulate, strengthen and modernise the ICE and its companies with an advanced telecommunications legislation. There are therefore two laws to observe from now on: the General Law of Telecommunications of June 4 2008 and the Law of the Strengthening and Modernisation of Public Telecommunication Entities.

General telecoms law

This law regulates the industry. However, as a regulating law, its provisions must complement and observe the Law of the Strengthening and Modernisation of Public Telecommunication Entities of the telecommunication sector, and in which the latter has the obligation to establish the organisational basis of the sector.

This is how the telecommunications sector was created: the three roles of the state were clearly separated (director, regulator and operator), the functions and attributions of the public entities of the telecommunication sector were strengthened, modernised and developed by the Directorate Minister and the Ministry, the Telecommunications Regulatory Authority, the Costa Rican Institute of Electricity and its companies, the normative framework that governs the ICE and its companies was eased so that it could effectively compete with other operators that provide telecommunications services within a regulated market, the bases were set to allow the provision of telecommunication services by public and private operators (both subject to regulation) and a regulatory framework was created from the idea of this convergence.

The law has a technical order and structure with clear concepts and cohesive language, which increases its effectiveness when dealing with technological issues. Also, because of its structural dynamics, it tends to interact well with other markets and legislations.

The law has two pillars on which all of its chapters are based: current service and the extension of it to individuals who, due to their social or geographical condition, cannot enjoy this right, as well as ensuring the benefits of openness and competition (better prices and increased and better quality of services).

A multiple offer of networks and services is intended, with the purpose of promoting convergence, which would make it possible for information, content, imagery and audio to be more interactive and interoperable across all sorts of networks. As a matter of fact, this is one of the first laws of the American continent regarding issues of convergence, and hence one that would regulate such convergence, implying the assurance of interconnectivity between many different types of networks, with the presence of a strong and independent regulator and the inclusion of the principle of technological neutrality. Suppliers and operators would be seen from a perspective of equality, neutrality, transparency and objectivity.

It must be noted that radio and television services are excluded from the law, therefore Radio Law 1758 is still in effect (this law was amended by the General Law of Telecommunications), though it is evident that this will only be a judicial separation because, technologically speaking, the convergence of both television and radio grows every day.

In addition to the objectives of the law (Article 2), we have the directing principles (Article 3) of: universality, solidarity, user benefit, transparency, publicity, effective competence, non-discrimination, technological neutrality and environmental sustainability, among others. Also, Article 6 establishes definitions for a series of terms to aid comprehension of the legal text used (including terms such as universal access, access, digital agenda, convergence, economic group, interconnection, operator, telecommunications network, public telecommunications network and telecommunication services).

Regarding operation permits, the corresponding administrative procedures were developed (Article 11 and subsequent) for matters of concession of use and exploitation of frequencies of the radio-electric spectrum required for the operation and exploitation of telecommunications networks. We are faced with the fact that the radio-electric spectrum is a scarce resource, with the presence of enough public interest to ensure that services are supplied on a basis of quality and equality. Therefore, the rule was established by means of a bidding process in which the proposal for a tender can be objected to by a potential interested party before the CGR, by means of an evaluation of offers, selection and award. The awarding process can also be appealed against before the CGR. The tender is then drafted and stamped by the CGR.

Article 19 also establishes a direct concession when dealing with the operation of private network frequencies and those that do not require exclusive assignment for their optimum use. Also, any possible concession is also regulated conditional to the relevant decisions made by the executive power.

In any case, by constitutional rule, concessions will only be granted for a limited term and in accordance with the conditions and stipulations agreed upon. The law establishes a term of 15 years, expandable to a maximum of 25 years, if and only if the licensee has complied with the foreseen conditions of the concession.

On the other hand, those private and public networks that do not require the radio-electric spectrum are subject to authorisation, including any operator or supplier that meets such legal requirements. Furthermore, authorisation is required for those who do not make commercial use of the radio-electric spectrum or who provide telecommunications services available to the public by means of public networks not under its operation. In this case, Article 23 and subsequent articles of the law must be observed.

Also, permits are introduced for those types that are classified as non-commercial use of the spectrum, including official, security, first-aid and emergency uses, in accordance with Articles 9 and 26.

It is crucial to note that there is also a fundamental management regime under which the issues of service, universal access and solidarity are established and provisioned as follows: "The following chapter establishes the mechanisms for the funding, assignment, administration and control of resources destined for the compliance of the objectives of universal access, universal service and solidarity. The SUTEL is responsible for guaranteeing that operators and suppliers comply with that set forth in this chapter, and that which is established by the regulation."

Furthermore, the development of the objectives of universal access, universal service and solidarity (Article 33) is regulated, serving as a preamble for the creation of the FONATEL, based on numeral 34. This is ordered as a fund and serves as an administrative instrument for those resources, to finance compliance with the objectives of universal access, universal service and solidarity established in the law, as well as with the goals and priorities defined in the National Plan of Telecommunication Development. This fund has the power to constitute trust deed contracts in order to better fulfill its purpose.

It is important to highlight the fact that the regulations, the agreements with operators and suppliers, the stipulations in the concessions and authorisations and in general any obligation emerging from the provision of telecommunications services in conformance with this law, must abide by the principles of universality, solidarity and universal access. From this perspective, it is important to emphasise that the chapter on universal access and service is a complete and integral system and not just the fulfillment of needs by means of the FONATEL's resources.

Article 41 introduces a regulation for the protection of the privacy and rights of end users. There are 29 rights recognised, and the SUTEL has complete competence to oblige operators to respect such rights. A detailed complaint procedure is imposed upon the operator and before the SUTEL. A few of these rights include:

* to request and receive true, prompt and adequate information regarding the provision of services, which are regulated by this law and the Regimen of End User Protection;

  • to select and freely change service providers; and
  • to previously authorise a change of service provider.

Article 59 regulates access and interconnection. Its purpose is to guarantee access to and interconnection with the public telecommunications network in order to promote efficiency, effectiveness, the optimal use of scarce resources and a greater benefit for users. In this case, the SUTEL must guarantee that access and interconnection is provided in a timely manner and under terms and conditions that are non-discriminatory, reasonable, transparent, provide for intended use and require no more than is necessary for the adequate operation of the foreseen service, as cited by the regulation.

Furthermore, the obligations concerning access and interconnection and other conditions imposed by the SUTEL must be reasonable, transparent, non-discriminatory, provide for the intended use and require no more than is necessary for the adequate operation of the foreseen service. This issue is relevant for those network operators already operating in the country, in other words the ICE and the RACSA, which can basically be considered the National Power and Electric Corporation. The same can be said for other networks of certain cooperatives or private entities. This is why any regulations and decisions made must be reasonable, due to the fact that any new operators will most certainly request access.

Under Article 62 and subsequent articles, three commission fees are established for the administration of telecommunications: a fee for regulation, which applies to all operators and suppliers of telecommunications in conformance with the procedure established by the law of the ARESEP, a directorship fee so that the MINAET can fully carry out its functions of directorship throughout the entire sector and a commission fee for the use of the radio-electric spectrum, in light of its importance and the complexity of the administration of this scarce resource, which requires the services of qualified technical personnel in order to ensure its correct use.

Author biographies

Juan Carlos Castro Loría

C & S Law Group

Juan Carlos Castro Loría received his licentiate in law (specialising in public law) in 1988 and went on to receive his PhD. He is a lecturer on administrative and constitutional law and procedural administrative law, an experienced speaker at seminars sponsored by the United Nations Interregional Crime And Justice Research Institute (UNICRI) and the author and editor of many publications focusing on public law. These include Action for Infringement of Fundamental Rights and Freedoms and Habeas Corpus (commission by the European Community, 1993), and Sanctioning Public Law and Constitutional Guarantees (Fondo de Promoción al Derecho Públi0c, 2006). Juan is the founder of C & S Law Group, as well of C & S Accountants and Tax Consultants. He has worked as a legal consultant at the Constitutional Chamber of the Supreme Court, has occupied the position of Administrative Jurisdiction Judge and Superior Judge of the Administrative Jurisdiction Court, is a founder member of the Costa Rican Constitutional Law Association and is a member of the Argentinean Association of Administrative Law. Juan is also appointed as Iuris Arbiter at the International Arbitration and Conciliation Center of the American Chamber of Commerce (AMCHAM), as well as being a member of the Conciliation and Arbitration Center of the Latin-American Center of Corporate Arbitration (CLAE).