Monday 29 June 2020

Costa Rica Telecom Market is Evolving Rapidly

With Long Term Evolution (LTE) rapid expansion and slowdown in 2G and 3G services, the Costa Rica telecom market is evolving rapidly. Embracing mobile connectivity, IoT, cloud services and smartphones has become vital for telecom companies. Operators are forced to adapt to these emerging market changes to sustain revenue and profit.

There are 3 network providers on the air in Costa Rica: ICE, with its prepaid product called kölbi (state owned), Movistar (sold by Telefónica to Millicon, possible rebrand to Tigo) and  Claro (Mexican owned by América Móvil).

Although the state-owned operator ICE remains the dominant provider of fixed-line services, the regional operators Claro and Movistar are significant players in the important mobile services market. Considerable change to the market emerged from the 2019 sale of Movistar to Millicom International, trading as Tigo. The deal, still to be finalised, was part of a wider plan which also saw Tigo acquire Movistar’s business units in Panama and Nicaragua.

BuddeComm notes that the outbreak of the Coronavirus in 2020 is having a significant impact on production and supply chains globally. During the coming year the telecoms sector to various degrees is likely to experience a downturn in mobile device production, while it may also be difficult for network operators to manage workflows when maintaining and upgrading existing infrastructure. Overall progress towards 5G may be postponed or slowed down in some countries.

ICE or Instituto Costarricense de Electricidad, is the state-run electricity and incumbent telco service provider. Their prepaid product is called kölbi. They used to have the monopoly until 2011 and are now down to 52% of all users in the country in 2017. 2G (to EDGE) on 1800 MHz, wide coverage, 3G (to HSDPA) in the populated areas on 850 MHz: 2G/3G/4G coverage map. 4G/LTE has been rolled out this year as the first provider on 2600 MHz (band 7) mostly in the Central Valley but is gradually expanded to more towns.

Movistar by Spanish Telefónica is the 2nd network. 2G is on 1800 MHz, 3G on 850 and 2100 MHz and 4G/LTE has started in San José on 1800 MHz (Band 3) and spread major towns in the provinces so far with a 70% coverage: Movistar coverage map. It has a market share of 26% in 2019.
In 2019 Telefónica sold its Central American networks to Millicom. So a possible rebrand to Tigo can be expected once the acquisition is closed.

Claro is the latest arrival and 3rd network in the country. It has good coverage in the Central Valley, but can be quite patchy elsewhere. 2G is on 1800 MHz, 3G (to HSDPA) on 2100 MHz in the centers only. 4G started on 1800 MHz (Band 3) in the Central Valley mostly Claro Coverage Map and now has CA on 2100 MHz too. In 2019 it has around 21% of the country's users.

In the recent Open Signal report Costa Rica, Kölbi remains the dominant operator across the majority of our mobile experience measurements, but  this is starting to change as its peers are now slowly closing the gap. Kölbi won four out of eight award categories — Video Experience, 4G Coverage Experience, Download and Upload Speed Experience. Claro won the Games Experience award, and broke the dead-heat between it and Kölbi that was seen in the previous report to win the Voice App Experience award outright. Meanwhile, Movistar won the 4G Availability award for the second report in a row.

This report examined the mobile network experience of the three main mobile network operators in Costa Rica: Kölbi, Claro and Movistar, over a period of 90 days beginning February 1, 2020, to see how they fared on real-world measurements. They further delved deeper into five regions — Alajuela, Cartago, Heredia, Puntarenas and San José — comparing the experience users received on these three operators.

Costa Rica has also recently completed a six-year program to expand fixed and mobile broadband access, new opportunities are emerging for operators who have yet to help the country close a 60% gap in 4G mobile penetration. Significant results were achieve in 2019  with the deployment of telecommunications infrastructure, especially in those areas operators shied away from due to high costs and low demand.  And the country's three main mobile operators increased their coverage as Telefónica left the Central American market.

Telecom regulator Sutel reported at the end of 2019 that it had accomplished 301 new wireless-internet zones, 130,000 new connected homes and connectivity in 103 new districts and one indigenous territory through the four US$222mn programs that telecom fund Fonatel finances.
But the programs are not over yet, and Sutel, trusted with the supervision of the projects, has 83 isolated districts and 17 indigenous territories left to connect this year.

Costa Rica was the Central American country with the most fiber optics imports in the first half of 2019. Monge whose company has actively participated in the deployment of new infrastructure in isolated territories, also said that Costa Rica’s current 4G mobile penetration stands at 40%, “which means they still have 60% left to invest and to reach that, they need more sites with broadband.

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