Costa Rica Sees Large Fluctuation in Monthly Costs
ICE Takes Advantage of Lack of Competition in Telecommunications Market.
Consumers in Costa Rica can expect to see big changes in their bills this month, both positive and negative. An anticipated drop in gas and internet prices will be counterbalanced by an increase in telephone and electricity fees. The main player in these changes is the ex-state monopoly, the Costa Rican Electricity Institute (ICE). This time, under the pretext of the newly implemented free trade agreement, the telecommunications wing of the company has decided to do things on its own terms, ignoring the strong disapproval of the Public Services Regulating Authority (Aresep).
First, for the good news: A global drop in gas prices has filtered down to the small Central American nation, allowing Aresep to approve price drops from ¢66 for Plus gasoline to ¢95 for Diesel. With the change, Super with drop from ¢488 to ¢416, Super will drop from ¢474 to ¢408 and Diesel will go from ¢522 to ¢427, per liter of gas.
As for Internet prices, ICE’s Acelera Internet customers will see a 40% drop in monthly Internet fees. However, rather than automatically drop the prices, ICE will give all of its 80,000 customers a free Internet speed upgrade. Should customers prefer to return to their previous speeds, they must fill out the required paperwork, which will allow them to pay a lower monthly fee. For example, a customer paying /month for 512 kbps internet will soon receive 1,024 kbps for the same price. This does not apply for Racsa internet customers.
This kind gesture may not be enough to suppress client anger over ICE’s new price increase for land line and cellular telephones, however. The company decided to read into the terms of CAFTA as they saw fit, announcing a 10% increase in phone prices for the end of the month. Aresep, who previously had to give ICE official approval on any telecommunications price changes, fiercely disapproves of the move because the Telecommunications Superintendent, a government body that will regulate the newly open sector has not even been organized yet, nor do any competing companies exist in the market.
The new basic monthly cell phone fee will go from ¢2,900 to ¢3,190 for the first 60 minutes of call time. After that, peak hour minutes will now cost ¢33 (up from ¢30) and non-peak minutes will go from ¢23 to ¢25. Text messages will increase from ¢1.5 to ¢5.25. As for landlines, the basic fee will rise from ¢1,850 to ¢2,035, while peak minutes will cost ¢4.5 instead of ¢4.1 and non-peak minutes will cost ¢2.25 instead of ¢2.
The sneakiest part of the new payment plan was ICE’s decision to change the definition of peak hours from the current 7 a.m. to 7 p.m. and add six additional hours, making it 6 a.m. to 12 midnight. Additionally, Saturdays will no longer be exempt from the peak hour schedule, helping them to draw in higher prices for the same service.
Another dispute between ICE and Aresep is in regard to electricity prices. In this industry, ICE still holds a government monopoly on energy distribution and must succumb to the Regulating Authority’s final decision. The company was upset last month after Aresep’s approval of a 15% increase in electricity rates, despite ICE’s request for 40% higher fees.
After last Thursday’s earthquake caused severe damage to the Cariblanco hydroelectric generating station in San Miguel de Sarapiquí de Alajuela, ICE is renewing its threat that rolling blackouts throughout the country will be necessary, as the current prices will not cover the cost of fossil fuel to produce the electricity demanded by the population. In the past, Aresep has advised that the company take out a government loan rather than pass such prices onto customers. Only time will tell which argument or use of force will win, and what the effects will be on the consumer.
As for clients of the Compañía Nacional de Fuerza y Luz (CNFL), their rates will increase by 25% next month. The company gets most of its energy from ICE, and even though they held steady through ICE’s rate increase in November, they are now feeling the affects and were forced to increase prices. That could mean 0 more a month for medium sized businesses, and about more for the average Costa Rican family.
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