New arrivals helping to free the Internet of its chains

Opening of the telecommunications market in Costa Rica is starting to provide real options for Internet consumers in Costa Rica. The biggest change happened earlier this year when Amnet cable decided to drop Radiográfica Costarricense S.A., the state-owned Internet provider, in favor of Navega as its Internet backbone provider.

Both companies are subsidiaries of the multinational parent company, Millicom. The relationship with Radiográfica did not make sense strategically as the company is competing head on to lay fiber optic cable in the ground for large businesses in Costa Rica.

The most visible change for residential Internet consumers came last week when a Venezuelan firm announced wireless broadband Internet for San José, Jacó, Quepos, and San Isidro de El General. The service based on WiMax technology competes directly with Radiográfica’s Evoluciona, and offers roughly twice the bandwidth for half of the monthly fee charged by Radiográfica, which is known as RACSA.

On the high end, Metro Wireless offers a package with 4 megabits of downstream bandwidth for $75 a month, which competes with ADSL connections offered by the state-owned telecom company, the Instituto Costarricense de Electricidad, for $102 a month plus the cost of a fixed telephone line. On the low end, Metro Wireless has a $23 package, which competes with RACSA at $29 and the Instituto Costarricense de Electricidad at $14 plus the $7 a month for the fixed phone line.

Calls to Metro Wireless confirmed that service connections are now available for the Central Valley. However service in the central Pacific is not quite ready. The company bought a local wireless provider, Skylynx, in May and plans to expand into Liberia and Guanacaste. A press spokesperson for RACSA confirmed the company is in the process of reevaluating price structure and service offerings.

WiMax or Worldwide Interoperability for Microwave Access should not be confused with the 3G Internet access provided via a cell phone networks. The WiMax implementation in Costa Rica uses fixed antennas with line of sight to receivers on mountain tops. Cellular Internet access is limited because battery-powered handheld devices receive relatively poor reception, and good service requires a high density of cell phone towers.

Expats in other areas of Costa Rica can also take advantage of broadband Internet delivered through a fixed Wimax antenna from authorized providers. The company CRWIFI serves customers in Alajuela, San Ramon, Grecia, Sarchi, Naranjo, Guacima, Santa Ana, and points along the Pan American highway from Barranca to Alajuela. San Carlos Wireless offers service to Grecia, San Ramón, San Carlos, Los Chiles, Guatuso, Upala, and as far northeast to the Nicaraguan border. Another company, Inasol, provides access primarily to beach areas, including Potrero, Lomas, Liberia, Playa Hermosa, Jacó, Esterillos, and in the southern zone, Matapalo, Puerto Jiménez, Mogos, Golfito, Pavones, Zancudo and Paso Canoas on the border with Panamá.

At present, the best that residential customers can count on in Costa Rica is a 4 megabit Internet connection for the same price that would get a customer on the East Coast of the United States between 20 and 100 megabits. Those U.S. customers who still prefer cable television to Internet movies and high definition broadcast television can order a triple play package with television, phone line and Internet for between $99 and $150 a month. Internet-only packages with 6 megabits of download are available for $50. However, apart from WiMax the Internet without a telephone or cable television subscription is not an option for residential customers in the Costa Rica.

Demand for broadband Internet access in Costa Rica will continue to grow as it has worldwide. However how broadband is defined here is likely to change. Ticos who can afford a broadband subscription rarely spend more than $30 a month for a 1-megabit connection. Costa Rica is preparing to equip schools with access nationwide and build computer centers for low-income people. One of the goals is to provide 6 megabits of bandwidth for every 10 students.

Keeping pace with the rest of the world will require that the definition of high-speed Internet in Costa Rica takes a leap forward. In the past, the private cable television providers have been reluctant to offer affordable broadband. Their business risk is that streaming video and Internet content in general reduces demand for cable television. Also, business and high-end users have been willing to pay the premium for higher bandwidth.

The biggest competitor for the cable companies has been the state-owned telephone company, which has an ADSL network limited to 4 megabits of download per connection. Over the years the rates and level of bandwidth provided by ADSL has set the market for Internet access in Costa Rica with the cable companies playing catch up. That system may now be near its end of life, especially given the worldwide trend is to replace traditional telephone wire with coaxial or fiber optic cable.

Experience in other countries shows that cable companies despite reluctance do offer robust broadband when sufficiently pressured by competition. Representatives for both Amnet and Cable Tica confirmed they have the capability and are currently evaluating plans to offer connections that exceed 4 megabits over their coaxial cable networks. Competition via WiMax and the possibility of a 4G network from a private cell phone provider may soon replace the market standard set by the state-owned telephone company.

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